Sri Lanka`s controversial state-run budget carrier Mihin Lanka lost 930 million rupees in 2009, despite support from the island`s national carrier SriLankan, which itself made 12.2 billion rupees in operational losses, official data shows.
The two state airlines together have lost 13.1 billion rupees in operations according to data in the annual report of Sri Lanka`s central bank.
SriLankan airline is a full-service carrier but has tended to make losses from airline operations for much of its life.
It usually made net profits with positive margins from monopolies in food supply and ground handling at Sri Lanka`s only international airport. But now competition has been allowed in both areas and SriLankan still retains most of the market.
In the financial year to March 2009 SriLankan reported a net loss of 9.9 billion rupees, but is now hoping to slash losses after a 30-year ethnic war ended in May 2009 and tourism picked up.
Mihin Lanka was started as a budget carrier despite Sri Lanka`s past experience with state-run full service airlines, and has now become a high profile symbol of arbitrary state decision-making and wastage of people`s money on state business gambles.
Sri Lanka`s state airlines now have to compete with state airlines in better managed Asian nations such as Singapore and also cost-efficient privately owned budget carriers.
State carries from oil rich Middle Eastern nations run by largely expat managers with experience in competitive markets in Europe, are also taking market share.