Sri Lanka's national carrier SriLankan Airlines will lease a short-haul aircraft to Mihin Air, a state-run budget carrier, at a below market rate, after extending the dry lease of one of its own aircraft, an official said.
Mihin Air is now operating with a single aircraft after it was resurrected with a fresh handout set aside in the 2009 budget. The aircraft is wet-leased for three months at high cost with flying crew and maintenance.
"It is likely that once the current wet-lease of Mihin is over that Srilankan would be able to provide them with a wet-leased aircraft at a price advantage of the external market," SriLankan chief Manoj Gunewardena said.
"How we could do that is because the crew is based in Sri Lanka. Crew holding costs do not occur."
SriLankan is replacing its ageing Airbus A320 short haul fleet with newer aircraft. One newly acquired A320 aircraft is already in service and the next is due to come online after final checks.
Gunewardena says SriLankan is about to finalize the lease on yet another A320 aircraft.
The lease of one of the A320 aircraft is expiring in April.
"We have some aircraft which are due to be re-delivered to the lessor," says Gunewardena.
"We can extend those leases on advantageous terms and there is a cross utilization of our staff on maintenance and operations of those aircraft." The aircraft will be wet-leased with a SriLankan crew to Mihin Air at a rate that could bring about a 30 percent price advantage to the budget carrier.
The controversial budget airline ran aground last year after burning over three billion rupees of people's money and leaving bad loans at two state banks, the state petroleum utility and SriLankan itself.
Gunewardena says the wet-lease to Mihin would be done at 'full cost' and SriLankan would be protected with upfront payments.
"It is on this basis – on the basis of the full cost being transferred on a commercial basis - that we would be offering the aircraft to Mihin Air," he said.
Sri Lanka's government has prepared a report on how to integrate the two state carriers and keep Mihin alive.
"We have been talking about a program of co-operation with Mihin for quite a long time," says Gunewardena.
"From Sri Lankan's perspective we were talking about schedule co-ordination and marketing co-ordination."
Mihin Air has come under fire from critics as a high profile example of fiscal extravagance.
SriLankan is now on a tight cost-cutting program amid falling demand in a global tourism slump. Despite a big hit from rising fuel prices last year it survived on its own cash flows.
LBO
Mihin Air is now operating with a single aircraft after it was resurrected with a fresh handout set aside in the 2009 budget. The aircraft is wet-leased for three months at high cost with flying crew and maintenance.
"It is likely that once the current wet-lease of Mihin is over that Srilankan would be able to provide them with a wet-leased aircraft at a price advantage of the external market," SriLankan chief Manoj Gunewardena said.
"How we could do that is because the crew is based in Sri Lanka. Crew holding costs do not occur."
SriLankan is replacing its ageing Airbus A320 short haul fleet with newer aircraft. One newly acquired A320 aircraft is already in service and the next is due to come online after final checks.
Gunewardena says SriLankan is about to finalize the lease on yet another A320 aircraft.
The lease of one of the A320 aircraft is expiring in April.
"We have some aircraft which are due to be re-delivered to the lessor," says Gunewardena.
"We can extend those leases on advantageous terms and there is a cross utilization of our staff on maintenance and operations of those aircraft." The aircraft will be wet-leased with a SriLankan crew to Mihin Air at a rate that could bring about a 30 percent price advantage to the budget carrier.
The controversial budget airline ran aground last year after burning over three billion rupees of people's money and leaving bad loans at two state banks, the state petroleum utility and SriLankan itself.
Gunewardena says the wet-lease to Mihin would be done at 'full cost' and SriLankan would be protected with upfront payments.
"It is on this basis – on the basis of the full cost being transferred on a commercial basis - that we would be offering the aircraft to Mihin Air," he said.
Sri Lanka's government has prepared a report on how to integrate the two state carriers and keep Mihin alive.
"We have been talking about a program of co-operation with Mihin for quite a long time," says Gunewardena.
"From Sri Lankan's perspective we were talking about schedule co-ordination and marketing co-ordination."
Mihin Air has come under fire from critics as a high profile example of fiscal extravagance.
SriLankan is now on a tight cost-cutting program amid falling demand in a global tourism slump. Despite a big hit from rising fuel prices last year it survived on its own cash flows.
LBO
