Civil Court rules airport development charge invalid as GMR opens airline office complex

GMR today opened a new Airline Office Complex beneath the International Terminal in a step towards consolidating check-in and security procedures for passengers.

The Civil Court has meanwhile ruled against GMR in a case filed by the Dhivehi Qaumee Party (DQP), challenging its right to collect a US$25 (Rf385.5) Airport Development Charge (ADC) and US$2 (Rf30.8) Insurance Charge commencing January 2012. The DQP had claimed that a pre-existing Airport Service Charge (ASC) of US$18 (Rf277.56) invalidates the ADC. The legal dispute with DQP could cost GMR Infrastructure US$25 million annually, India’s The Economic Times estimated.

The Civil Court today ruled that the clause in the concession agreement with GMR violated the Airport Service Charges Act of 1978, which was amended in 2009 to raise the charge to US$18 for foreign passengers and US$12 for Maldivians above two years of age.

Judge Ali Rasheed Hussein ruled that the Airport Development Charge and insurance charge were service charges “under other names.”

He noted that the Airport Service Charges Act had been amended seven times to raise the charges since 1978 by the legislature, “based on the economic circumstances of the Maldives and the means of the public,” which showed that the purpose of the law was to ensure that enforcement agencies did not have the authority to raise the charges.

President Mohamed Nasheed’s Press Secretary Mohamed Zuhair said the government would likely appeal the lower court’s ruling given its contractual obligation to GMR.

“The government will do everything it can to adhere to the concession agreement,” he said.

GMR has not yet issued a formal response following the Civil Court ruling. However speaking today prior to the ruling, INIA CEO Andrew Harrison told Minivan News that GMR was “delighted to be subject to scrutiny, and will stand up to it.” He said the company was confident in its concession agreement with the government.

Harrison called the allegations and public criticism of GMR “unfair.”

“A lot has been done here,” he said, pointing to the number of renovations completed in the past six months. “I think you can see that locals and tourists are now getting the upgraded facilities befitting an airport like INIA.”

Harrison added that the next six months will see five new food and beverage facilities in international, domestic and land-side areas; a plaza for tourist arrivals; six new air service buses; and the beginning of a new terminal. “Many of these improvements go well beyond the concessionary agreement we have with the government,” said Harrison.

“It’s important to align the airport with passenger expectations, whether their destination is a resort or the warm welcome of a Maldivian home.”

At an event earlier today the company unveiled 30 new airline offices on the first floor next to Immigration.

“The old offices were small and since they were on the first floor rather than the ground floor, they were harder to access for passengers,” noted Harrison.

Airline personnel now have direct access to check-in counters from “some of the best offices in Male'”, situated along a bright white corridor.

The complex hosts four carriers with approximately five airlines per carrier; a few spaces have been left available for additional airline partners, such as Air France and AlItalia, which are expected to begin service to the Maldives in the next few months.

Harrison pointed out that the real reason for building a new complex was to centralise security check-points. Currently, security check points are located at gates one through three, and four through six. Passengers often face a queue, and are consequently more stressed about making their flights, Harrison explained.

“Now, that space is freed for all security check-point equipment to be located right next to Immigration, making passenger traffic smoother and allowing for more time in the airport terminal rather than in queues,” he said.

Harrison added that situating Immigration and Security offices in close proximity was a standard feature of international airports.

GMR is currently overseeing the renovation of INIA, as per a contract with the Maldivian government. In the past six months it has upgraded two lounges and expanded baggage beltways; it is currently adding eight check-in counters and two security lanes. Tourism Minister Maryam Zulfa previously expressed satisfaction with GMR as “an example for the Maldives as it moves forward.”

A groundbreaking ceremony for the new terminal will be held later this month – the structure is due for completion in 2014.

Maldives Airports Company Limited (MACL) today announced that the lease agreement between GMR and the government allows for a 10-year extension from the initial 25 year time frame, pending the agreement of both parties.

GMR began circulating the Airport Source Quality program survey in October to evaluate INIA’s ranking among 34 airports in the two to five million passenger category. The airport initially ranked 33rd, but Harrison said improvements are visible.

“In December alone it has already moved up three airports. By the time the new airport opens, we are convinced that INIA will be number one in the two to five million [passenger] category,” he said.


31 thoughts on “Civil Court rules airport development charge invalid as GMR opens airline office complex”

  1. The result of this ruling would be that we the people will ultimately lose out. Upto 90% of people who fly from the airport are foreigners - this tax would not be something that THEY would complain about because it is charged in a lot of other developing airports. When you buy a holiday for a minimum of 1000-2000USD - and most spend much much more than that - a $25 is nothing.

    Currently the concession agreement with GMR is such that the Govt gets a % of the total revenue that GMR gets. GMR will simply lower this by $25 million and the Maldivian taxpayer loses.

    Thanks DQP - hope this enables you to leach off another loser candidate in your unprincipled and incessant desire for power.

  2. This article is all about praising what GMR is doing. It doesn't say what they are really doing behind the back of Maldivians. First of all, the majority of the seniors posts in GMR are Indians. Locals make a small part of the GMR workforce in the airport. This is shocking and it is totally against what Harisson told last year December. Second of all, GMR has taken over the cargo handling in airport from 2 local companies thus more locals being unemployed again. They have taken down the duty free shops and plans to run their own shops. Plus they are taking over the resort airport reps and make it under GMR control. Everything from A to Z in the airport will be for GMR. This is a greedy, narcissistic and anti-comeptitive company who is to eat as much as they can.
    Sorry but I dont want any foreign company to do whatever the heck they want on our own airport!! The agreement between GMR and government was signed hastily and raised serious questions whether it was a fair deal for us locals. It was a corrupt deal.
    Justice has been done in this country. Thanks to judiciary.

  3. Is this a news report or an advertisment for GMR?
    Its either 'advertisments' like these or anti-islam news reports/ articles we see in minivan news.

  4. How can Zuhair promise to do something ruled as unlawful? Anyhow...GMR is known to be a big favourite with Zuhair..the way he rants on their behalf he is clarly in cahoots with them. And just as GMR is seen dragging their foot about effecting improvements...up comes Zuhair's sister Dr.Mariyam Zulfa..Talk about family influence..Zuhair, a known "India friend" hv made several visits to that country, while in opposition as well..including Hyderabad, home of GMR. People mistakenly speak about Zaki taking GMR jets. Actually it was Zuhair who was feted to a trip in their Lear jet, not Zaki...he was known to hv frolicked with the Rao family during the C'wealth games..and now the sister Zulfa joins up.....These people will sell off the country bit by bit to the Indians...

  5. I guess the opposition have realized that they cannot do anything to change this government through a ballot box, so they have decided to change the government through their appointed judiciary. This judge is legislating from his bench. He has a political goal and has no idea what the government has signed with GMR. Today we have appointed 2 judges with questionable background. With these types of idiots as judges, what do you expect.

  6. Maldivians are under the impression that a foreign investor will bring money to build their airport and we don't have to pay for it. This is not a grant from a another country. This is a business joint venture. Both investor and the people of Maldives must invest together and reap the benefits along the years.

  7. zuhair, investing and ripping off locals is 2 different things. get your facts straight!

  8. President Nasheed replaced the Chairman of Male' Airport Company with First Lady Laila Ali's brother in law the day before the agreement with GMR was changed...typical Golhaboa tactics. Given this fishy start we can expect many many more problems with GMR agreement. Most Maldivians are not ready to tolerate such tactics any longer.

  9. GMR should realise from this incident that they are being duped and conned to make the infrastructure of the airport and finally when the infrastructure and airport is built up ,GMR will be kicked out of this country..GMR will lose thier money.high time GMR realises this and go off from this country before its too late..

  10. Minivan News should first report the news with correct information. The new airport offices are not in the first floor and its nowhere near immigration. And Alitalia had operated to Maldives 17 years back and its starting again on 22nd dec.

  11. Hey all you that are criticizing GMR should give a thought... They are charging something that your govt agreed to, how can that be unlawful in its part? You should question your govt for striking such a deal... I am an indian and we do have similar charges in India...i am against them too...but the question should be against the govt and not against these private companies.. honestly GMR i find is one of the very good companies...that doesnt mean they will agree to loose profits.. Govt shd be careful when they sign deals.

  12. If Maldivains have been running airports for decades, why bring foreigners.

    My support is with MDP in everything except the GMR deal.

  13. local companies do worse than foreign companies in terms of how they treat the staff. dunno what goes in GMR but can tell that Universal resorts (a local bussiness) treats workers far worse than foreign managed resorts like soneva or even taj. so don't whine about foreign companies. most of them are better than the local ones!

  14. @ laila
    Agree with u.
    Eleanor Johnstones reports, as usual contain many errors and mistakes.

  15. Our politicians have no brains. All what they want to be the next President. They don't love this country. All what they see is the guy who left the office with millions of dollars in foreign banks. 70% of all national debt was spent on airport development. The guys who benefited are Koli Ali Maniku Ilyas Ibrahim (Gayoom and his family). With their ill gotten money they don't want to see any development without their involvement. The courts are hijacked by activist judges with a political agenda. God Bless the Maldives.

  16. The deal with GMR is a a comlete loss to the Maldivian tax payers. You cannot justify the huge unaffordable tax by showing a state of the airport. It is like me rebuilding your house without asking you and then suing you for millions of dollars you don't have using the beauty of the house as my main justification...

  17. @idreesbe
    what a dumb comment from you. local companies treating people badly is due to poor employment regulation and lack of labour power. that is something only the Government can correct. And why would prvt companies like Universal do it - afterall business companies are not charities. So don't blame regulation failure on pvt companies.

    wait and see how GMR uses that loophole far adversely than local companies. You are obviously thinking out of your bias than from your brain.

  18. Collected from foreign or local passengers, the charge must be legal and fair. The so-called Airport Development Charge (ADC) proposed by the GMR is illegal in that it is in breach of the Airport Service Charge Act. It is unfair as it is to be charged way before the airport is developed.

    The GMR was given the airport to develop and run not to run and develop. They are not supposed to create a development fund first and then implement the development. This is also against the IATA regulation. GMR was denied by the IATA to include it in the ticket fare and be collected by the airlines for the GMR. In defince to the IATA ruling, GMR decided to put up counters at the airport to collect the charge.

    Now it is for the local passengers to protest openly against the levy. United we stand, divided we fall. Give heed to this truth and stand united to protect our right and stop the GMR acting against public interest.

  19. @ democracy.
    you didn't notice that foreign companies operating here are also operating under the same rules no? but still they are more generous to staff. here is food for though..
    This is december right?
    In this month WMaldives staff are likely to get 1500$ alone as service charge..
    In this same month Kurunba staff will be lucky if they even got 400$ as service charge.
    Now by law 99%service charge should be paid to staff in all resorts.
    see the difference?

  20. Please leave us alone GMR! A brand new office complex? The rent would be thousands of dollars. so thats nothing to boast about. You are a greedy company who dont care about local businesses and people. Sponsoring SAFF championship was just PR.

  21. I voted for President Nasheed. I worked hard to get him elected. I still support him. He is a decent man trying his best to deal with the many challenges facing this country. I still believe that he is the best choice we have, amongst all the political "leaders" in this country.

    Having said that, let us go back in time to 1978. A "clean Islamic Scholar” took over as President of Maldives. There was great hope for reform when we heard the word ‘democracy’ being promoted by the new President for the first time in this country. He promised us development, freedom and democracy. In the end he ruled this country with an iron fist for 30 years. Yes, his name is Gayyoom (And we are still under the constant threat of his shadow!)

    One of the biggest failures of Gayyoom was his inability or unwillingness to deal with the corruption of his family members who were appointed to high government posts. Nepotism and cronyism resulted in greed and corruption at the highest level of government.

    Senior government officials and advisers surrounding the President were all "yes men" who felt that the "Islamic Scholar" knew everything. His words were perfect and he was to be followed blindly. No one had the guts or courage to tell Gayyoom when he was wrong or challenge him about any decision he made, however damaging it might have been.

    The “Yes men” thrived in the process accumulating vast amounts of wealth through corruption and various shady deals.

    So, the moral of the story is even if you are a supporter of the government or HEP Nasheed (Like I Am), we must have the decency and courage to tell the government when they are wrong. We must stand up and demand that the government investigates all cases of alleged corruption within the government when faced with credible allegations. We must be ready to admit when we make mistakes. We must be open to debate the pros and cons of decisions before making sudden decisions. We need genuine supporters and not “Yes men” who will see no wrong in the administration. We need to help HEP Nasheed to correct mistakes and call upon the government not to let a few bad apples ruin the reputation of this administration.

    This brings me to the question of the day namely, the verdict against GMR and how we came to this point.

    Before commenting on the court case it self, let me say that I fully support the "principle decision" to sign the concession agreement with GMR. The government does not have the resources to develop the Airport. Nor do we have the human resources necessary to manage Male Airport at the highest level that is needed. So there is no argument as to the merit of the Government’s decision to lease the management of the airport.

    Where the Government failed was when the Ministers responsible to negotiate the deal with GMR namely Mahmood Razi and Ali Hashim failed to negotiate with GMR to come to a fair agreement on our behalf. Ali Hashim and Mahmood Razi were the key people who negotiated the details of the Agreement and they were incapable of negotiating successfully for this country.

    Thus, the Government failed to sign a win-win agreement and ended up signing a one sided agreement where GMR was the clear winner. This is not how successful business deals are made. Both parties need to win.

    Without going into details of all the flaws within the agreement, let me say that the ADC of USD 25/- to be levied from every passenger departing from the Airport should never have been agreed by the Government. For several reasons:-

    1. It is too high
    2. Any Amount to be levied as an ADC has to be collected after the development of the Airport and for an agreed duration.
    3. The Amount has to be reasonable
    4. Maldivians should be exempt from such a charge
    5. It is ridiculous to expect people to pay for a “fund” to develop the airport in advance. What if GMR goes bankrupt before the development of the airport and they are unable to complete the development?
    6. The Project to develop and operate the airport is financially viable even without levying this charge.

    I can go on with many other points but shall not try to make this too long.

    Now that the court has declared the charge as illegal, the government should not rush to appeal the case. Instead the smart thing would be to ask GMR to come to the table and discuss the matter with the Majlis and Government together to find a solution.

    A possible solution can be a lesser amount (eg: USD 10/- per person for a foreigner with Maldivians exempted). It might be possible to legislate this into law whereby the levy will only be charged after the completion of the planned Development of the Airport and for an agreed number of years.

    This way both GMR and the people of this country will win. The Government which is the representative of the People should not feel they are loosing anything by taking this road.

    As for development funds for the airport, GMR has already raised the necessary debt from Axis Bank Singapore. A delay in the ADC or a reduction in the amount of the levy will not affect the viability of this project for GMR. With an annual “through put” of over 2 million passengers at Male Ibrahim Nasir International Airport, GMR is already whistling its way to the bank, counting the billions of dollars of profit that they are going to earn from this one sided deal of the century.

  22. @Ilyas Ahmed
    The way you understand the 'Yes man' is not how it works.

    What really happens is that a powerful group of people hijacks the president, build a wall around him, cuts him off from reality and pretend to be yes men. After a while it becomes the norm.

    I though some readers may wish to know.

  23. I think GMR should be kicked out of this country.
    Where is the former Z-DRP gang (renamed now as PPM) who thought they should sit on the runway and protest against GMR?
    Now that Umar Naseer is in charge of aiport security and Gayoom's son-in-law, Shuaib is their lawyer, no one will care to do it.
    So much for their talks, no?

  24. @Ilyas Ahmed - I also voted for President Nasheed and worked hard to get him elected. Sadly I don't support him any more. The day he appointed Shahid, involved in the killing of several of our soldiers and civilians, as State Minister for Defence, I realised that President Nasheed was not the decent person I thought he was. He was ready to rub our faces in the mud to achieve some devious plan of his. The replacement of the chairman of Airports company with first lady's brother in law the day before the agreement with GMR was signed, made me realise that President Nasheed was no better than President Gayoom. Just like Gayoom, President Nasheed also seem to have "Yes men/women" and every project that government carries out reeks of corruption.

  25. GMR sucks big time. they are greedy and corrupt and willing to do anything for money. No vote for Anni whatever 3D animations they keep showing us, I wwn't accept this!

  26. Look, GMR had the better accountants and the Maldivian government got the wool pulled over their eyes. The Maldivians couldn't do the sums properly and GMR is laughing all the way to their fat bank accounts.

    It will be nigh impossible to get out of this or any other charge now. They form a binding legal agreement between GRM and the government. If any part of this deal is deemed to fall foul of the law, the whole thing will fall apart. That has sever consequences, not only for the damaged international reputation of the country, but also for the costs that'll be involved.

    In more than one way, this is a loss to the Maldivians, because we were incompetent when we signed up to this!

  27. Ministers, MDP MPs and those affiliated with the Government praise GMR. But the service recipients from Airport do not agree.

    GMR has increased various charges by 2 - 3 fold and is asking Maldivian enterpreneurs to pack their bags and leave the airport.

    What has GMR done to improve the services?

    I do not see any improvement except some paint jobs and panelling and moving some partitions.

    GMR is going to squeeze blood out of every Maldivian. They have no fairness nor consideration for the needs of others.

    It seems they want to run travel agency and also tour operating. Maybe they will run a guest house in Male International airport.

    We should not allow this carnage to continue. We should stop this blook sucker.

    Lets streamline these money driven conglomorate. Perhaps no flights might land in this airport except the IC flight.

  28. As a quite frequent visitor of your wonderful country (13 times, from the mid 90´s to some months ago) i gladly accepted every raise in prices (by airlines, hotels, but also taxes, dive schools etc..) but recently i have the feeling that i am getting robbed everytime i come for a visit.. and you can be sure i am not the only one who is feeling like this. yes, we do spend a lot of money on these holidays, and 25 usd++ might not seem very much... but (nearly) every visitor has to save for some time before he can spend that much money. sorry to say that i will not be coming to this wonderful destination that often anymore. the increase in prices is not acceptable for me and many other visitors, maybe your economy will boost with a lesser number of visitors at higher prices(which i doubt, as the super luxury segment is extremely volatile). nowadays there are other wonderful destinations within easy reach. just my 50 cents..


Comments are closed.