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World Affairs



This is Paradise





 Issues East: First civilians, now policemen under attack Deliver us from evil


Mihin pondering the 'new deal'

Chamal Rajapakse and
Sajin Vaas Gunawardena

By Ranjith Jayasundera

The Sunday Leader has learnt that a scandalous agreement was signed last week at the Aviation Ministry premises in the presence of Aviation Minister Chamal Rajapakse, to look at the prospect of selling off Mihin Lanka's landing rights to a Malaysian company, Mindflow Technologies.

The MoU has all the hallmarks of a textbook Chinthana 'deal.' Under the contract, Mihin Lanka would once again wet lease aircraft for payment, this time to Mindflow. Despite the fact that Mihin is to pay Mindflow for the aircraft it is leasing, the airline will hand over its landing rights to the Malaysian company for Singapore, Bangkok, Malaysia and Dubai.

The proposal from Mindflow effectively will allow the Malaysian company to operate as an airline of its own, by leasing their aircraft to Mihin Lanka, who will absorb also all the other costs of the operation of the airline, and split the profits with Mindflow, who need put in no initial investment whatsoever.

What makes the proposal an exercise in prostitution is the fact that Mihin's landing rights in these countries were obtained on the merit of the airline being recognised as an arm of the Sri Lankan government.

Malaysian nationals

Mindflow Technologies is a company established in 2004, owned jointly by Thrinakarasi and Thirumaren Munisamy, who are both Malaysian nationals. Its nature of business is on record with the Malaysian Commission of Companies as "Managers, advisers and consultants in the formation, management, supervision especially in tourism, information, technology and services."

There is no mention of any interest in the aviation industry there. The company's audited profit and loss statement for 2005 (the last available year) shows that Mindflow made a loss of over US$ 26,000, and the company has no significant assets in its books.

It is this company that Mihin is considering handing over its operations to, adding Tehran as a destination, with all flights by the airline scheduled to go between Iran and these destinations (Singapore, Bangkok, Malaysia and Dubai) with just a 'technical stop' in Colombo.

Since Mindflow Technologies does not own its own aircraft, it will clearly be re-leasing planes that it sources from somewhere else at a margin, exploiting the Sri Lankan government's good graces and Mihin's current desperate situation to siphon off profits - if the Aviation Ministry and cabinet allow the deal to go through.

Executive mess

While the Aviation Minister must be commended for taking some first steps towards cleaning up the executive mess that is Mihin Lanka,no thanks to Sajin Vaas Gunawardena, he and his management must work harder to ensure that the overleaping influence of the first family and the Presidential Secretariat has been purged for good with the dismissal of Sajin Vaas.

Gunawardena's arrogance and audacity lasted up until his very last days at Mihin, aptly demonstrated by his bombastic behaviour at his penultimate press conference last month, wherein he casually outlined his plans to swallow up SriLankan Airlines and adjust vital civil aviation regulations to allow Mihin to import an antique Airbus from Turkey.

The legacy left by Sajin Vass upon his resignation would be the envy of any corporate anarchist. By the time Aviation Minister Chamal Rajapakse gathered the courage to show Vass the door, he had overseen the incineration of over 3 billion taxpayer rupees, and humiliated Sri Lanka amongst the European aviation industry with his shady business practices.

The first signs of the 'new leaf' however are not promising, as it appears that although Vass' monopoly over Mihin's reigns is no more, other minions of the state are moving in to fill the void left by Vass for putting through a good 'deal.'

Early signs in the market that such presidential hangers on as Goldquest pyramid scheme mastermind Anura Fernando, and Minister Chamal Rajapakse's own son, Shashendra Rajapakse are behind the Mindflow proposal, do not bode well for the clean aviation industry that the first brother is supposed to be trying valiantly to establish.

New management team

Despite the Aviation Ministry having appointed a new management team headed by CEO Anura Bandara, who is a former route manager for SriLankan Airlines, it is disappointing that such tomfoolery still goes on behind closed doors.

Speaking to The Sunday Leader, the new CEO of Mihin made it clear that the airline was trying to turn over a new leaf. "We are not rushing into anything," he emphasised, stressing that a detailed evaluation process was underway to identify the company's past mistakes and prevent them from recurring.

"Our Minister Chamal Rajapakse is keen to re-launch and restart flights as soon as possible, but we have responsibilities to fulfil before then." Bandara refused to comment further on how the airline plans to handle the breathtaking losses it suffered prior to his tenure, as he says the company has yet to finalise a firm business plan.

"If you speak to us again in a couple of weeks, we will be able to tell you more. Mihin Lanka will not be a burden to the people in the future, and we will turn this airline around into something the country can be proud of," he said.

Several years of experience

Although Bandara, unlike his predecessor, counts several years of experience in the airline industry, The Sunday Leader learns that his appointment is yet to be officially made by Mihin's board of directors, as per the procedure in the company's articles of association.

This legal loophole technically means that although Bandara is functioning in an official capacity - with the over 200 employees of Mihin Lanka acting under his direction - he has little liability for any decisions made by the company until his appointment has been properly made.

Asked about the agreement with Mindflow Technologies, Bandara declined to comment. "I can't confirm or deny this or say anything, as any agreements signed are internal matters until we are taking some firm steps."

A senior member of Mihin's management staff said that there is a marked change in the morale of the airline's employees after the departure of Vass, and that there is hope even amongst the private sector that the losses may be recovered and the airline turned to profit in the coming years, if it can be run in a disciplined manner. He was not, however, aware of the Mindflow MoU.


One of oursources who exposed the details behind the Mindflow Technologies deal was however disillusioned by the type of deals that are being proposed for taking the airline forward. "This kind of thing has to be nipped in the bud, especially when it has political backing, otherwise we will have something worse than another 'Emirates' deal on our hands."

A ranking administration staffer at the Aviation Ministry also told us that talks between SriLankan Airlines and Mihin Lanka were underway to look into "harmonising" a relationship between the two airlines. "By pooling our resources, we may be able to collaborate instead of compete, making both SriLankan and Mihin more profitable."

He said that since the management of both airlines were "under the same roof"- the Aviation Ministry - it would be viable to make both work together. SriLankan's Communications Manager, Ruwini Jayasinghe, said however that there were no plans to merge the two airlines.

In order to consider such 'synergies' if Mihin's merger plans are in fact real, there is much work left to be done for both airlines. SriLankan needs to restore confidence amongst its pilots after several of them abandoned the airline over the last few months.

Crippling effect

They also need to get their 'FlysMiles' frequent flyer programme up and running, to prevent Emirates from walking away with the bulk of their business, and minimise the crippling effect of being detached from the Skywards programme.

Mihin on its part would do well to start by dramatically reducing its costs. It would do well for the public image of the Aviation Ministry and the airline itself if Mihin were to make a visible effort to save money at a time when it is dormant and pondering its next step.

The airline currently runs three offices and call centres despite not being in a position to sell any tickets. Staff at the airline's offices are all friendly, and blush slightly when asked whether tickets can be booked at their offices, before replying that they are not flying and are not sure when their jobs will finally take on some meaning.

It is true that the recent changes in the top level management structure of the dilapidated, debt ridden budget airline may well shut the door on former CEO Sajin Vass Gunawardena's plans to rush into acquiring a new aircraft and hastily recommencing operations, but government plans to spread Mihin's tentacles into SriLankan Airlines, and enter into agreements that sell out the country's sovereign rights, must be made through the cabinet of ministers.

Notable changes

The Aviation Minister has indicated an intention to make some notable changes to the structure of Mihin, such as changing its status from a private limited company to an official government owned entity, and make the administration of the company more transparent and accountable to parliament.

Yet little has been done to publicise these moves or take them forward - which places the Minister in poor light given the fact that he presided over the signing of a suspicious MoU thatsmacks of a fix.

One can only imagine the fracas that would have followed if the Kumaratunga government signed an agreement with Emirates to lease all SriLankan's aircraft from the Saudis and split its profits with them for no significant initial investment.

Transparency is what Mihin requires the most at this juncture. Both CEO Anura Bandara and Aviation Minister Chamal Rajapakse would do well to come clean to the public at their earliest about how they plan to take the airline forward, without being seen to pursue deals that would bring them personally into disrepute.

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