China to fund Malé-Hulhulé bridge, says minister

An agreement was penned today during President Abdulla Yameen’s visit to China for carrying out the ongoing feasibility survey of the Malé-Hulhulé bridge project with Chinese grant aid.

The “agreement on the economic and technical cooperation of grant” was signed after a meeting between President Yameen and Chinese vice president Li Yuanchao, according to the president’s office.

Speaking to reporters prior to departing to China last night, president’s office minister Mohamed Hussain Shareef said “a large portion” of the bridge project will be financed through Chinese free aid and the rest through concessional and commercial loans.

Along with the feasibility report, Shareef said the Chinese government will present options for building the bridge as well as the estimated cost for each option.

The government has previously said the project will cost between US$100 million and US$150 million.

China has previously said it would ‘favorably consider financing’ the bridge if the design proves feasible. The economic council has said the six-mile bridge will have six lanes and will span from Malé’s eastern edge to the western corner of Hulhule, where the airport is located.

Last month, a team of Chinese technicians began drilling bore holes on the ocean floor to gather information for the feasibility survey.

Shareef said last night that in his meeting with the Chinese vice president, President Yameen will discuss financing for the bridge project, projects in the Maldives under the Chinese maritime ‘Silk Route’ initiative and expediting a US$40 million loan from the Chinese EXIM bank for developing the international airport.

The government has previously said a total of US$600million is needed for the project. Although the economic council first said they will borrow the funds from China and Japan, the fisheries minister in March said Saudi Arabia had assured loan assistance at a low interest rate for airport development.

Shareef is accompanying President Yameen during his visit to China along with economic development minister Mohamed Saeed and representatives from Maldivian businesses. The president departed on Wednesday morning to attend the 3rd China-South Asia Exposition, and the 23rd Kunming Import and Export Commodities Fair.

The president is due to deliver a keynote address at the joint opening of the fairs. The fairs will take place from June 12-16.

According to state broadcaster Television Maldives, a symposium was held at the Grand Park Hotel in Kunming today to share information with Chinese investors.

More than 80 companies from the Yunnan province participated in the ‘Invest Maldives Symposium,’ said economic development minister Saeed.

An ‘Invest Maldives’ page was launched on Chinese social media network Weibo during the symposium as part of “promotional efforts” for an investment forum to be held in Beijing, Saeed said.

Businesses in the Yunnan province expressed interest in carrying out renewable energy projects in the Maldives, he added.

Shareef meanwhile said the Chinese government will cover almost all of the expenses for organising the investment forum in October. While sponsors funded the first investment forum held in Singapore last year, Shareef said the government covered some costs.

Following an official state visit to China in August last year, President Yameen said the likelihood of the bridge project being awarded to a Chinese company was “99 percent” and that “a large portion” of the project would be financed through free or concessional aid from China.

In a historic visit the following month, Chinese President Xi Jinpeng said he hoped the government would call the bridge “the China-Maldives friendship bridge”.


India should assist Maldivian people in changing the government, says Nasheed

Assistance in changing the government is the biggest relief the Indian government could offer the Maldives regarding compensation owed to GMR for the premature termination of its airport deal, former President Mohamed Nasheed has said.

Speaking at a rally at the reopened Maldivian Democratic Party (MDP) haruge (meeting hall) last night, the main opposition party’s acting president said he had learned that GMR would inform the Indian government of the situation.

“In my view, that relief is for that [Indian] government to work together with us, the Maldivian people, to change the government of the Maldives,” Nasheed said.

After 18 months of arbitration proceedings, a Singapore tribunal ruled last week that the concession agreement signed by the MDP government with the GMR-led consortium in June 2010 to manage and develop the Ibrahim Nasir International Airport (INIA) was “valid and binding.”

Former Attorney General Azima Shukoor – incumbent at the time of the termination – has this week maintained that the agreement was invalid under Maldivian law.

Nasheed yesterday contended that parties in the ruling coalition had fanned anti-Indian sentiment and incited anger among the public towards the country in their efforts to topple the MDP government, which he claimed were orchestrated by former President Maumoon Abdul Gayoom.

He also referred to anti-Indian rhetoric by senior officials of the current administration in the weeks leading up to the eviction of GMR in December 2012.

Former President Gayoom exploited nationalism and Islam – which are “accorded the highest place in the hearts of the Maldivian people” – to mislead the public with “lies”, Nasheed argued.

The MDP has also announced its intention to sue former President Dr Mohamed Waheed for defamation and damages caused by his administration’s unilateral termination of the concession agreement.

Sovereign debt crisis

The Singapore tribunal concluded that the Maldivian government and the Maldives Airports Company Ltd (MACL) were “jointly and severally liable in damages to GMIAL for loss caused by wrongful repudiation of the agreement as per the concession agreement.”

The Bangalore-based company is seeking US$1.4 billion in compensation for “wrongful termination” of the contract – an amount that eclipses the Maldives’ annual state budget.

The compensation owed is due to be determined in the second phase of the arbitration process.

In the wake of the arbitration decision, Attorney General Mohamed Anil said that current administration would honour the verdict and expressed confidence that the government would not have to pay the US$1.4 billion sought by GMR.

“According to the agreement, [we] mostly have to compensate for the investments made. We said we do not have to pay the amount GMR has claimed,” Anil told reporters on Thursday (June 19).

President Yameen had predicted in April that GMR would only be owed US$300 million in compensation.

Nasheed, however, predicted last night that the compensation figure would not be “lower than US$800 million”, a fee which would plunge the Maldives into a sovereign debt crisis as the foreign currency reserves are currently below US$100 million.

Warning of an impending economic crisis, Nasheed called on the public to awake from its “slumber” and “consider what is happening to our country”.

Nasheed also accused former Attorney General Azima Shukoor – who had advised cancellation of the contract on the grounds that it was void ab initio (invalid from the outset) – of attempting to mislead the public concerning the arbitration ruling.

Shukoor has told newspaper Haveeru that the contract was illegal under Maldivian law.

“Even if the agreement is legit under Common Law, it does not necessarily concur that the agreement had also been made according to Maldivian laws.

“Nobody sitting as AG in Maldives can still pronounce the deal to have been done as per the Public Finance Act. No one can. That’s why I spoke against it even then,” she was quoted as saying.

She further argued that the termination of the agreement was justified as the domestic economy would have suffered “unimaginable losses”.

Nasheed however questioned the “literacy” of ministers in the “coup government,” noting that a legal process for terminating the contract through arbitration was laid down in the concession agreement.

Public-private partnership

Nasheed also defended the initial awarding of the contract – in a bidding process overseen by the World Bank’s International Finance Corporation (IFC).

As public debt was over 60 percent of GDP when the MDP government took office in November 2008, Nasheed said his administration believed loans should only be obtained for capital investments and infrastructure projects.

The government decided to privatise the airport in a public-private partnership as loans could be put to better use to “upgrade hospitals, improve schools and build water and sewerage systems,” he explained.

Referring to the Anti-Corruption Commission (ACC) ruling out corruption in the airport privatisation deal, Nasheed noted that the commission had concluded that the government would have received US$534 million from the consortium during the 25-year lease period.

Conversely, MACL would have made a profit of about US$254 million in the same period if the airport was operated by the government-owned company.

While MACL paid on average MVR96 million (US$6.2 million) a year to the government from 2005 to 2010, Nasheed noted that GMR paid MVR872 million (US$56.5 million) in 2011 as concession fees.


Environmental regulations amended to allow dredging for Kulhudhuffushi airport

The government of Maldives has amended environmental regulations to allow dredging in protected areas in order to facilitate the development of an airport in the protected mangrove site on Kulhudhuffushi island.

Speaking at a press conference today, Minister of Transport Ameen Ibrahim said the government would seek advice from environmental specialists to decide to dredge all or part of Kulhudhuffushi’s only remaining mangrove.

“We have to dredge the mangrove. We will determine whether it will be part or whole of the mangrove later,” he said.

Amendments to the regulations on dredging islands and lagoons will allow the government to dredge protected areas for development projects on the condition that an area with similar geographical characteristics is designated as protected.

The government must also determine if dredging in an environmentally protected area would cause flooding or damage underground fresh water aquifers – a critical water resource in inhabited islands.

Establishing an airport on the most populous island in the north was a key campaign pledge of President Abdulla Yameen, although with a regional airport on Hanimadhoo Island – just 16.5 km or a 30 minute dhoni ride from Kulhudhuffushi, critics have questioned the feasibility and economic viability of the venture.

The government has said airport developers will be given a contract of 25 years and will be awarded an island for resort development for 50 years in order to subsidise the airport.

“It may not be profitable to only serve Kulhudhuffushi residents. But it will become a profitable investment when islands nearby are developed as resorts,” Ameen told the media today.

Environmental NGO Ecocare has expressed concern over the government’s plans to abrogate its constitutional responsibility to protect the environment as long as the proposed plans are termed ‘development’.

“Though the constitution itself calls for sustainable development, it is sad and absurd when politicians care less about the vulnerability of the Maldives and its ecological diversity,” Ecocare has said.

The group pointed out that – following the complete reclamation of the island’s southern mangrove for the construction of housing -the northern mangrove had been designated to be an environmentally protected zone.

Marine biologist with local environmental consultancy Seamarc, Sylvia Jagerroos, has explained the importance of such wetlands, describing them as “one of the most threatened ecosystems on earth”.

“Mangrove support the seabed meaning they prevent erosion on beachline and also enhance protection of the island in case of storm and higher sea levels,” she said.

“They support a nursery for fish and marine fauna and aid and the reef and seagrass in the food chain. The mangrove mud flats are also very important in the turnover of minerals and recycling.”


Airport development begins, with “no chance” of GMR returning to project

The Maldives Airports Company Limited (MACL) has begun a program to further develop the airport, to be done in multiple phases.

Launching a program worth US$5 million to develop Ibrahim Nasir International Airport’s (INIA) ground handling on Thursday, MACL Managing Director ‘Bandhu’ Ibrahim Saleem revealed that various plans had been set in place for the development of INIA.

President Abdulla Yameen has today been quoted in Indian media as stating that any future management of the airport will not be carried out by foreign companies – with the Maldives government itself the preferred overseer.

Saleem told local media that, in addition to the introduction of new baggage tractors – launched during Thursday’s event – the company will also be introducing four new passenger carrier buses, heavy load vehicles for baggage carrying, a new baggage staircase and a mechanism to assist with boarding and unboarding patients with medical conditions within a period of 60 days.

He added that the projects are being conducted under the government’s 100 day policy implementation plans.

The record US$511 million development of the airport under Indian infrastructure giant GMR was prematurely terminated under the previous administration, prompting the filing of a US$1.4 billion arbitration case in Singapore.

Saleem explained that the ground handling equipment currently in use is old and damaged, which causes unnecessary delays in operations, assuring that the introduction of new equipment will allow passengers to observe a “remarkable improvement” in the speed of service.

“We are spending company money on these programs. We have not been able to purchase any such equipment since 2007,” he was quoted as saying.

Many projects underway

According to Saleem, the program is one among many development plans the company is undertaking.

Stating that the biggest challenge faced by the airport today is the issue of flight trafficking, he said that a permanent solution to overcrowding in the airport can only be found through the building of a second runway. He did, however, note that such a project would take a “tremendous amount of time”.

Adding that a review of the previously compiled Scottwilson development master plan of the airport would commence in the next two weeks, Saleem said that compiling such a plan anew would take around one year. He stated that global experts will be arriving within two weeks to assist in reviewing and updating the plans.

While the government is deliberating on undertaking such a project, said Saleem, reclaiming land and building a new runway would itself take at least two years to reach completion.

“Flyme is bringing in a new plane. Maldivian is also bringing in another new plane. So we need a runway upgrade at the airport as soon as possible. Nevertheless, it is not an easy thing to do,” he said.

The managing director added that, while these projects are pending, the airport is currently implementing smaller development projects immediately. As an example, he revealed that the construction of a new 35,000 square meter flight apron will be contracted to an external party in the next two weeks.

“We cannot do airport development in bits and pieces separately. It must be done all together. Once the Stockwilson plan is reviewed, we can begin the main work,” he said.

Saleem added that in 2014 itself, the airport traffic will increase immensely, and that the government will be focusing on reviewing the Stockwilson plan with a focus on connecting the airport to Malé.

GMR welcome to engage in other projects, not airport development: president

Meanwhile, President Abdulla Yameen has told Indian media that the Maldivian government is not even considering resuming the airport development contract with Indian infrastructure giant GMR.

While he repeated that the government is seeking an out of court settlement regarding the arbitration case concerning the cancellation of the GMR contract in the Waheed administration, Yameen said that the Maldives “had nothing against the GMR itself”.

“I am not saying we are saying no to GMR. What I am saying is total management of the airport is far too important for the Maldivian government (to hand over). We have nothing against GMR of any Indian company. It is just that the international airport is far too important for us, commercially and from a security point of view,” Yameen is quoted as saying to Indian publication The Hindu.

“The total operation of our airport will probably not go to any foreign party. Probably not even go to a Maldivian company. It will be undertaken by the MACL, a 100 percent government company,” he stated.

Yameen affirmed that deliberations of settling the GMR issue out of court has already begun, adding that the company is welcome to pursue other projects in the country.


Thimarafushi airport opens in Thaa atoll

Thaa Atoll’s Thimarafushi airport was officially opened this morning by President Dr Mohamed Waheed Hassan. The airport was developed by state-run Maldives Transport and Contracting Company (MTCC).

The airport was developed to provide an efficient means of transport to the people, Haveeru reports, although as the airport does not have a control tower flights will only land during the day.

Addressing a crowd at the inauguration ceremony, President Waheed emphasized that the airport would facilitate faster development within the atoll, in part by improving tourist accessibility.

The President noted that certain infrastructural development requirements must be fulfilled for the airport to be considered fully complete, reports Haveeru.

The airport development project was originally awarded to Maldives Airports Company Limited (MACL) in April 2012. MACL subcontracted the project to MTCC for MVR32 million ($2.8 million) the following month. Delays, allegedly due to financial constraints, fueled political tensions earlier this year.

The airport will be operated by Island Aviation, which runs the Maldives national airline Maldivian Air.


Government “cynically used xenophobia, nationalism and religious extremism” to attack foreign investor: former President

Additional reporting by Neil Merrett and Mohamed Naahii

The Waheed government’s decision to void the GMR contract and issue the developer a seven day ultimatum will “put off potential investors for decades,” former President Mohamed Nasheed has said.

“Waheed’s government has cynically used xenophobia, nationalism and religious extremism to attack GMR, the country’s largest foreign investor. Waheed is leading the Maldives down the path to economic ruin,” Nasheed said, following Attorney General Azima Shukoor’s issuing of the ultimatum on Tuesday (November 27) evening.  The ultimatum was made while arbitration proceedings are pending in the Singapore courts.

The government’s party to the 25 year concession agreement – the 100 percent state-owned Maldives Airports Company Limited (MACL) – issued a statement on Wednesday declaring that the company was “now working with stakeholders to take over the operations of Ibrahim Nasir International Airport (INIA) on or before the expiry of the seven days period provided to [GMR] to handover possession of the INIA pursuant to the notice issued by the government of the Maldives and MACL.”

GMR meanwhile yesterday denounced the move as “unilateral and completely irrational”.

“We have no plans to go. We have 23 more years here,” GMR’s Head of Corporate Communications Arun Bhaghat told Minivan News.

CEO of INIA, Andrew Harrison, told Minivan News that the airport’s 1700 staff were “quite concerned” and “not exactly jumping for joy”.

The company had held several meetings with staff following the announcement and called on them to ensure continued smooth operation of the airport while the legal team was working to resolve the issue.

“People who have seen their businesses improve since GMR took over have been calling me up expressing support,” Harrison noted.

The company had received no communication from the government apart from the notice issued yesterday, he added.

The Indian government was quick to back GMR yesterday following the announcement by its Maldivian counterpart, noting that the company was awarded the deal “through a global tender conducted by the International Finance Corporation (IFC), a member of the World Bank.”

“The IFC has stated that it has complied with Maldivian laws and regulations and followed international best practices at each step of the bidding process to ensure the highest degree of competitiveness, transparency and credibility of the process,” said the Ministry of External Affairs.

The Indian government added that it was prepared to take “all necessary measures to ensure the safety and security of its interests and its nationals in the Maldives.”

Surprisingly, GMR’s stock showed an upward trend following the government’s announcement.

Traders on one broker’s website predicted that stock was reacting positively due to the Indian government’s quick defence of the company and the prospect of significant compensation for the infrastructure developer following arbitration proceedings.

“Stock will definitely react in a positive manner as it has now become a matter of national prestige,” predicted one trader on Indian finance portal, Moneycontrol.

The Maldives’ decision was widely derided in the Indian media. Forbes India suggested that “the decision to send the Indian consortium packing has brought into focus the risk of doing business in emerging markets with rapidly changing political landscapes.”

“India Inc has had its share of relatively minor `law and order’ problems in its journey into Africa and a few brushes with shifting goalposts in places like Indonesia and Russia. But being thrown out after signing a 25-year, supposedly iron-clad international contract, is a first,” Forbes observed.

Locally, the Progressive Party of the Maldives (PPM) of 30 year autocrat Maumoon Abdul Gayoom praised the government’s move as “important for protecting the rights of Maldivian citizens”.

“It is PPM’s hope that the government’s decision to terminate the agreement with GMR will not affect the historic friendship between the governments and people of the Maldives and India,” the PPM said in statement.

The largest party in the ruling coalition, the Dhivehi Rayyithunge Party (DRP), was more reserved.

“The government should act responsibly and according to the legal contract,” said DRP MP Dr Abdulla Mausoom. “The consequences of government decisions should not adversely affect the lives of the Maldivians.”

The 2191-member Dhivehi Qaumee Party (DQP), which during the Nasheed administration filed the Civil Court case outlawing the airport development charge (ADC) stipulated in GMR’s concession agreement which deprived MACL of airport revenues and cost the government several million dollars, praised President Waheed as a national hero.

“[The] decision will be noteworthy in the history of this country,” DQP Leader and President Waheed’s Special Advisor, Dr Hassan Saeed, was reported as saying in local media.

“No one would expect such a decision to be made by a country that heavily relies on India. But Waheed has decided what is best for his country,” said Saeed. “President Waheed will be remembered in the years to come.”

Saeed earlier wrote to Indian Prime Minister Manmohan Singh urging him to terminate the Maldives’ airport development contract with GMR, warning of rising fundamentalism and anti-Indian sentiment should he fail to do so.

“I want to warn you now that there is a real danger that the current situation could create the opportunity for these extremist politicians to be elected to prominent positions, including the Presidency and Parliament on an anti-GMR and anti-India platform,” Saeed informed Singh.

“That would not be in the interests of either the Maldives or India. You are well aware of the growing religious extremism in our country,” Saeed warned the PM.

Seven day stand-off

GMR has shown no interest in complying with cabinet’s direction and has expressed confidence in the professionalism of the Maldives National Defence Force (MNDF) and its assignment to protect the airport, raising speculation as to how far the government would be willing to go to enforce its decision to void the concession agreement and reclaim INIA.

President’s Office Media Secretary Masood Imad told Minivan News on Wednesday that the government’s role had “solely been to advise MACL to take control of the site.”

“We are not engineering any handover [of the airport],” he said. “What we have done is just given our opinion after being advised that [terminating the contract] was the proper thing to do.”

GMR has responded that it did not recognise a legal basis for the government’s decision while the arbitration is still ongoing in the Singaporean courts, stating that it would continue to manage and oversee development at the airport for the remaining 23 years of its tender agreement.

Masood claimed that any decision to retake the airport would be “the responsibility” of MACL.

“Well I suppose if MACL decide to terminate the agreement and the company hasn’t moved, procedures are in place for the MACL to address these issues,” he said, forwarding further inquiries to MACL Managing Director Mohamed Ibrahim.

Ibrahim however told Minivan News he was “not willing to disclose anything at this moment.”


Transport Minister backs MACL, orders GMR to pay US$8.2 million

The Transport Ministry has said the government is “fully behind” an order given by the Maldives Airports Company Limited (MACL) to India-based infrastructure giant GMR, that it pay the sum of US$8.2 million deducted from concession fees for the first quarter of 2012.

GMR took over the management of Ibrahim Nasir International Airport (INIA) – then called Male’ International Airport – from the government-owned Maldives Airports Company Limited (MACL) in September 2010.

Speaking to Minivan News today, Minister of Transport Dr Ahmed Shamheed said the government fully backed an MACL order for GMR to return the US$8.2 million it deducted from concession fees for the quarter.

According to a statement released by the MACL earlier this month, the company said it had only received US$525,355 out of an expected US$8.7 million in concession fees for the first quarter of 2012, after GMR deducted the Airport Development Charge (ADC) and insurance surcharge.

The ADC was intended to be a US$25 fee charged to outgoing passengers from January this year, as stipulated in the contract signed with GMR in 2010. The anticipated US$25 million the charge would raise was to go towards the cost of renovating INIA’s infrastructure.

The deductions were made after the Civil Court blocked the India-based company charging an Airport Development Charge (ADC) last year, on the grounds that it was a tax not approved by parliament. As the ADC was stipulated in the contract former President Mohamed Nasheed’s administration had signed with the airport operator, the government at the time agreed that GMR would deduct the charges from the concession fees due the government, pending appeal.

The Civil Court case had been filed against the airport by the former opposition Dhivehi Qaumee Party (DQP) – now part of President Mohamed Waheed Hassan’s coalition government.

Parliament’s Finance Committee has meanwhile revealed that the Maldives is facing a skyrocketing budget deficit of 27 percent for 2012, and a parallel 24 percent  increase in expenditure.

Last week, GMR released a statement proposing a compromise to the government whereby Maldivian nationals would be excluded paying the ADC when departing the airport.

MACL stance

MACL Managing Director Mohamed Ibrahim told local media today that MACL’s agreement with GMR under the previous government to deduct the ADC payment was “null and void”. Ibrahim told reporters that the deal was no longer relevant as it had been agreed by a former MACL chairman, and that charges could therefore no longer be deducted from GMR’s concession payment.

“We had informed that the letter from the former Chairman of MACL was now invalid and hence must not be followed. In addition we had also informed that no deductions can be made from the concession fee,” he told local newspaper Haveeru.

Ibrahim was not responding at time of press.

The MACL order was announced the same day that President Mohamed Waheed reportedly assured Indian Prime Minister Manmohan Singh that the government would uphold its commitments to foreign investors.

“It is only recently that the Maldives began working with large foreign corporations, and hence the Maldives has not much experience in dealing with large companies. That’s why we are currently trying to iron out some of these issues through mutual dialogue,” President Waheed said.

Transport Minister Dr Shamheed however told Minivan News that the President’s pledge would not affect MACL’s decision to order GMR to pay the deducted US$8.2 million.

“As per the concessions agreement, a fee has to be paid to MACL. That is my understanding,” he said.


INIA remains cheapest airport in region “by half”: Transport Minister

GMR will lower fuel charges by US$0.05 a litre on all domestic flights and raise it the same amount for international flights at Male’s Ibrahim Nasir International Airport (INIA).

Several airlines, including Qatar Airways and Sri Lankan Airlines, have meanwhile voiced concerns over the recent hike in set airport fees including landing and ground handling charges.

In response, the Transport Ministry has said that even with price changes INIA remains the cheapest airport in the region “by 60 to 80 percent” – and claims that some airlines have not been paying their dues.

“Doha, Dubai, Tivandrum – while they all charge US$3,000 turn-around fees, Maldives’ INIA was only charging US$1,080,” Transport Minister Adhil Saleem told Minivan News. “Even with a fifty percent increase in fees the total charge of US$1,500 is still half of what is being charged everywhere else in the region.”

Saleem noted that INIA’s rates had not changed since 1994, however in that time salaries had increased four times and development projects had been contracted. He added that the price changes – initiated by Maldives Airlines Companies Limited (MACL) and not GMR – should not have come as a surprise.

“In February 2011 MACL informed all airlines that the rates would increase in November, effectively giving them nine months’ notice. There has been no price change by GMR,” he said.

Yet several carriers including Qatar Airways and Sri Lankan Airlines have expressed concerns over the price changes and suggested they would make changes to their routes, reducing services to the Maldives.

Qatar CEO Akbar Al Bakr last week told Reuters News Agency that the airline was “dismayed” over what it understood to be GMR’s plan to increase the handling fee by 51 percent at some future date, and suggested such a move would “threaten Qatar Airways’ continued presence in the Maldives.”

GMR officials are reportedly meeting with CEOs of airlines serving the Maldives. Two airlines contacted by Minivan News did not wish to comment, including Qatar.

“The issue,” Saleem told Minivan News, “is that some airlines have not paid their dues to GMR in nine months. No airport can go on without payment.”

INIA CEO Andrew Harrison later clarified through GMR’s spokesperson that Qatar has an outstanding debt due to its refusal to pay the higher rates. Minivan News understands that GMR has requested Qatar pay cash for today’s flights, while other airlines are in the process of settling their payments with the airport.

Some have suggested that concerns raised by groups such as Qatar also stem from a drop in demand as the low season approaches. Saleem said that Sri Lankan’s strategy had always been to boost tourism numbers in its own turf.

“We believe the London flights were operated for Sri Lanka to achieve its tourism target. They’ve changed their summer schedule to this effect,” he said, explaining that the airline may cut down on direct flights to Maldives as a result, but that this was rather a matter of scheduling.

Responding to  concern that reductions in carrier services would damage the tourism industry, Saleem pointed out that airline changes are a reflection of the already-changing tourism demographic.

Last year Chinese arrivals trumped all other tourist groups to the Maldives, while the Maldives’ traditional European market continued to slump under the West’s ongoing economic pressures.

“It’s a changing world,” Saleem said, noting that local airline Mega Maldives has expressed interest in expanding east to Japan. “The numbers from the East are rising, so it’s possible that the major Western carriers don’t have the demand to continue the same flight frequency that they did before. Singapore will be doubling its flights by 50 percent to 14 flights a week in March,” he said.

GMR spokesman Amir Ali reinforced that concerns over the price hike are misinformed. “There are concerns, but some people are using it in a political game,” he said.

Late in 2011 GMR’s intention to implement a US$25 (Rf385.5) Airport Development Charge (ADC) was blocked by the Civil Court, while minority opposition Dhivehi Quamee Party (DQP) campaigned against the industrial giant with a booklet titled “Handing the Airport to GMR: The Beginning of Slavery.” The government has since appealed the court’s decision, stating that it is obliged to honor its contractual relationship with GMR.

Maldives Association of Tourism Industry (MATI) Secretary General ‘Sim’ Mohamed Ibrahim agrees that INIA’s rates have been remarkably cheap for the region, but believes that the price hike – and ensuing negotiations with airlines – are a delicate business.

Although GMR “inherited” the current change in prices from MACL, “GMR’s strategy is to make as much money as possible any way they can – that’s business. But if it’s not done right then it’s not going to work. This has been too much, too fast,” Sim claimed.

According to Sim, the two overarching issues are the pace and method of the price hike. Rather than raising set fees dramatically during the high season, Sim suggests introducing the change in phases. He also recommends requesting payment post-service.

“In Singapore people are charged after they’ve seen the development and its benefits. People want to see what they are paying for, and it seems to be working alright,” he observed.

Pointing to the Maldives’ limited economy, Sim said airport development and fees “have to be weighed with the reality that the Maldives is totally dependent on tourism.”

Minister Saleem offered assurances that the Maldives’ appeal would continue to draw customers. “I’m sure there will be other airlines wanting to come in, especially as the demographic shifts,” he said.