Cheap Run

December 22, 2006 (LBO) – Sri Lanka plans to float a state-run no frills airline, the government said Friday, to fly to the Middle East and neighbouring Asian countries. The budget carrier, Mihin Air, is expected to cost around 1.5 billion rupees with the government initial setting aside 500 million rupees as working capital, director of the government information department, Anusha Pelpita said.

"The airline aims to provide affordable services to less affluent travelers, people leaving for overseas employment, particularly in the Middle East and Asian countries and to promote regional tourism," he said in a statement.

Financial backing is expected to come from state-run agencies like the Foreign Employment Bureau, the Employees Trust Fund, who will also take an equity stake in the venture, he said but did not give the breakdown of the equity structure.

"The annual funds spent by these agencies (Foreign Employment Bureau and Employees Trust Fund) together with various schemes that the government implements to promote exports could be channeled to the new airline," Pelpita said.

The new state budget carrier comes as a surprise to the aviation market as