Hemin hemin Mihin — a new Boss’s tenuous grasp-new Chief Executive Officer Kapila Chandrasena

Hemin hemin Mihin — a new Boss’s tenuous grasp

By Deshamithra Wickramasinghe

The controversial budget airline Mihin Lanka commenced its operations in the early part of this year with the objective of providing reasonable air-fares for people who are budget conscious. The airline was terminated due to it being a burden on the citizens of the country. However, ironically the airline was restarted with a cash injection of Rs.6 billion from the 2009 budget, with a promise to show profit shortly. And the six billion rupee cash injection will be utilized first to pay the urgent debt, it was leant..........
In connection with this resurrection of the Mihin Lanka license LAKBIMAnEWS contacted the new Chief Executive Officer Kapila Chandrasena to speak about the rejuvenation of the airline.

Q: Since Mihin Air was rejuvenated it was speculated that the first flight would take place on the 15 of this month, after the renewal of license. Did it take place according to plan?

A: I have seen some press articles about this matter but there has been no flight on the 15th. Also I have seen some speculation that a flight will take off on the 21. But we cannot as a company, confirm that it will be so, for we are still working on the required process under the requirements of our license.

If that is the case do you have any idea when the first flight would be and to where?

We have a few destinations in mind. We are looking at the Middle East and India mainly, but I don’t want to comment on a final destination till these are finalized. Certainly the focus would be to the Middle East and the Indian Sub Continent

Will Mihin Lanka be a classic budget airline —- will there be any sort of meals provided on board?

I don’t know what this classic budget airline is, but certainly we have to look at it as a low cost airline. Basically our objective is to give people affordable prices and competitive fairs to the destination we fly targeting the budget conscious traveller.
So if you are conscious about the cost of travelling we hope to be attractive in that segment. But whether we serve meals or not is a decision which will be taken depending on the route and the fairs we charge. But I cannot comment on those (matters) since I don’t have the sufficient information.

What will be Mihin Air’s target market? Is it still the migrant labourers and pilgrims?

Our market will be anyone who is interested in travelling for a reasonable fare. We are targeting specifically the people who are going on employment to the Middle East. People who go on business and who go on holidays who are generally conscious about their budget. We also have pilgrims; seasonal travellers to whom we try to give something which is value for money.

What are the world market prices of Aviation fuel and how does this affect the business?

The impact of fuel is quite substantial; during the last few weeks the prices have come down in the market so we are in a better situation than before. But we need to plan for the volatility.

How are you going to operate Mihin Air? What is your business plan? How can you assure that this time it will not be a flop?

In a business plan is, at the end of the day you need to look at the cost. It is really about managing the cost; that is how we can be competitive in the market. The plan is to fly to places where we see the demand and the segments that we address. On the other hand to be conscious of the cost factor we plan to run a very streamlineed airline where we will try to save on all aspects of costs in the operations. We target only specific destinations, we will not try to fly to Europe or America or any other destination.

If the airline is to run its operation with caution, can you mention something about the cost cutting you intend to make?

We are still starting our operations after being suspended....... so there is no cost cutting as such at the moment. But we are trying to keep the cost between manageable limits. So certainly in that sense we hope to look at the operational costs and fixed costs and keep them within manageable limits. Well in fixed costs we don’t have any control but the operational costs, we hope to streamline. If you look at any low cost model, we are trying to fit in to that......

The airline industry is an expensive business and with the 3 billion or so, the losses Mihin Lanka made, do you think that the 6 billion cash injection is sufficient for the Airline to start operations again. If not how much more do you require?

In my personal view the six billion capital injections would be sufficient. But again the idea is to not to rely too much on capital injections by the government. But once we start, we want look at different models; collaborative models- commercial collaborations where we can maintain a positive cash amount and look at making some profit along with the situation in the industry.
It is not that there is no need for cash injections, but the business plan would not entirely depend on capital injections from the government. So we need to look at other models that we can utilize in order to operate Mihin air.

Can you comment on the leasing of aircrafts? How will it be done? What will be the standards of the planes and what levels of fuel efficiency?

I don’t wish to comment on that because I joined quite recently and have not been handling that area. The chairman is managing that aspect. But definitely I can tell you that it will be a wet lease because we are recommencing operations. According to regulations we need to start with the wet lease with a view to transforming it into a lease that would best suit our business model.

Is there anyone in the company who has experience in the airline industry? Do you have experience in this industry?

Well I do not wish to comment on the expertise of the board. There is a god cross- section of people with expertise to run a good air line or any other business. But there is one person who has significant amount of experience in the industry.
Well this is a business like any other and you need not have special experience in the field if you are capable of managing a business.

Unlike the previous time, will Mihin Lanka’s operations be more transparent?

Certainly but again it is not really my place to comment on what happened in the past. We will run this as a business and as a company will be transparent in our activities. There is a Chairman who handles daily management so I do not wish to comment on this. It is best to ask him these types of questions.

Do you have a profit deadline? When do you hope to make profits in the business?

Any financial plan needs to look at (as) some kind of progressive movement to make profits and we have done all those exercises. But once we start operations we need to track that and if there are any sudden changes we need to quickly react to those. Our idea is to make Mihin Lanka a stand alone business operation.

How long do you think the company will take to show profit?

The industry is facing a sever downturn so, I don’t wish to comment when we are going to show profit. But within the next 2-3 year period we will try to be in a position without making losses. As to when we will become profitable I cannot say.

How many of the old management staff you have retained?

It’s just a week and a half after I have started work. So I don’t really have a very good idea as to what percentage of the old management is here.

There was an issue at one time that Mihin did not pay salaries for the staff. So are you going to pay the salaries for the old staff with arrears?

Well again I am not (inaudible) with all these. However we have a business plan and a financial plan and we work towards that. These types of questions are appropriate to be answered by the Chairman.

What will be the future relationship with Sri Lankan airlines?

Well I can’t comment on that. Basically we are looking to collaborate given that it is common ownership that we have. But where we are legally allowed we want to cooperate and see whether there are any ways we can benefit from each other. But in certain areas we need to run as separate organizations.They are two different business entities. However in the aspect of bringing the two airlines close —— whenever possible we will cooperate.