The HSBC bank group has unveiled the identity of its new Chief Executive Officer (CEO) who will oversee the company’s business interests in Sri Lanka and the Maldives from later this year, according to media reports.
Patrick Gallagher, present CEO for the multinational banking giant’s operations in Bahrain, will take up the same role for the company within the Indian Ocean nations from April 30, 2013, the Sri Lanka-based Daily Mirror newspaper has reported.
If the appointment receives regulatory approval, Gallagher will be replacing Nick Nocolau as the CEO of HSBC Sri Lanka and Maldives.
Gallager has headed up HSBC’s operation in Bahrain since November 2009.
Indian infrastructure giant GMR has said it “categorically refutes” claims made by the government to international media today that it had agreed to vacate Ibrahim Nasir International Airport (INIA).
The government yesterday dismissed an injunction on GMR’s seven day eviction notice granted by the High Court of Singapore, and vowed that the airport would be run by the state-owned Maldives Airport Company Limited (MACL) by December 7.
A Finance Ministry official said on condition of anonymity that GMR had agreed to vacate following “informal communication.”
“It’s unofficial. They are even selling off their items at a cheaper price. They have given 40-60 percent discounts. They are selling off whatever they can sell off from here including iron bars, concrete, and cement. So I think there won’t be any confrontation or any such nature. All the department heads and senior staff will start working for the Maldives Airports Company Limited MACL from December 7,” the official claimed. “Even though they maintain in public they are not going to vacate, they are going to vacate.”
President’s Office Spokesperson Masood Imad meanwhile told reporters that “Whatever the financial implications on their investments, we have already filed a case in Singapore court for arbitration. We will pay the compensation, what we have to pay.”
However CEO of GMR Male International Airport Limited (GMIAL), Andrew Harrison, said that while GMR had met with a delegation from the government at 11:45am this morning, “we did not agree nor state our willingness to hand over Male’ airport.”
Harrison told Minivan News that he had been advised by a Maldives National Defence Force (MNDF) Colonel at 11:03am that Defence Minister and Acting Transport Minister Mohamed Nazim wished to meet him personally.
“The meeting was attended by the Acting Transport Minister, the Chairman of the Maldives Civil Aviation Authority, our lawyer in the Maldives and three members of the MNDF,” Harrison said, in an emailed account of the meeting.
“The meeting was cordial and the Acting Transport Minister outlined the following: that MACL would be operating the airport from Saturday morning in line with the Government of Maldives communication to GMR-MAHB; that the Minister would like a smooth transition as the airport operations should not be affected or suffer in any way; that passengers should not be inconvenienced and therefore all activities including Duty Free would be allowed to continue as is.”
According to Harrison, Nazim informed GMR that “According to their legal advisors the injunction issued by Singapore High Court does not prevent them from taking over the airport and the injunction cannot be applied to a sovereign state.”
Nazim had furthermore proposed offering “100 percent employment in MACL to all staff currently working for GMIAL and an announcement to that effect made tomorrow by the MACL Board .The offer includes both local and foreign staff at their existing terms and conditions including salary,” Harrison stated.
“Our position, which I communicated to them, remains crystal clear. The Singapore High Court has issued an injunction which clearly prevents MACL or the Government of Maldives or any of its agents from taking any action that interferes with GMIAL operating the airport. The injunction clearly prevents them from taking the action outlined in their notice issued to us stating that the airport would be taken over at the end of the seven day period. We remain resolute in our position and there is no question of an offer being made and certainly no question of any alleged offer being accepted as we will simply not agree to our rights nor the injunction being undermined in any way.”
GMR’s lawyer had advised that the injunction was to be was to be honoured “as their representatives and the Attorney General [Azima Shukoor] were party to those proceedings and were present during the proceedings in the Singapore High Court.”
“Further to this we have issued a communication to their lawyers to confirm that their client (MACL/GoM) will not ignore the injunction and outlining the consequences as well as the disturbing media reports that they will ignore the injunction and take over the airport as planned,” Harrison stated.
Nazim had explained that “as he was not a legal person” he would arrange for a legal team to meet GMR’s representatives tomorrow, and pledged to “maintain dialogue”, Harrison said.
“We will always maintain dialogue but our legal position is very clear and we will not compromise on our legal position which is clearly supported by the injunction.”
Moreover, “any version of the meeting being described any differently to my response is categorically untrue and we maintain that we have been granted the right to continue operating the airport in line with the injunction. There is and has never been any change in our position.”
Harrison added that Nazim had also said that “no force used to take over the airport” and that “media reports that the MNDF would take over the airport are untrue.”
Claims that the company was discounting were true – “in the duty free shop”.
“We have a 40 percent sale in duty free because we are trying to minimise our stock holding,” said Harrison. “It is delighting passengers. But I can categorically state we have no intention of going anywhere.”
Indian industry groups back GMR
The 400,000-member Associated Chambers of Commerce and Industry of India (ASSOCHAM) has meanwhile issued a statement today in support of GMR, warning that “the attitude of Male’ Government, despite the rulings of Singapore High Court, will shake the confidence of the investors and will jeopardise the spirit behind the cooperation of the SAARC nations.”
The industry group appealed to the government to respecting the Singapore judgement, and said it “conveys its displeasure against any unilateral termination of economic agreements, that will be determent to the growth of the nations and might even sow seeds of suspicion amongst the potential investors in all times to come.”
A second industry group, the Confederation of Indian Industry (CII), also issued a statement in support of GMR.
“It is extremely important for all the concerned parties to respect the sanctity of the concession agreement and abide by the provisions provided therein to resolve any dispute within the stipulated legal framework”, said the CII’s Director General, Chandrajit Banerjee.
Indian infrastructure giant GMR and Malaysia Airports Holdings Berhad (MAHB) have formally taken over the reins of Male’ International Airport, the beginning of an expansion project that includes the construction of a new airport terminal by 2014 and the refurbishment of the existing terminal in just 180 days.
Minivan News speaks to the CEO of GMR Male’ International Airport, Andrew Harrison, the man now in charge of making it happen.
JJ Robinson: What stage does the airport currently stand at following the official handover on November 25?
Andrew Harrison: The focus so far has been on engagement with employees, and bringing together various stakeholders. An airport is like a community, with customs, immigration, Maldives National Defence Force (MNDF), ground handling and all the other services involved. We want to ensure people work together as a community and recognise that each depends on the other to make sure the experience for the passenger best it can be.
The development aspect involves hard construction, but it is very important to look at development of the people – the greatest asset we have. If we develop our people they will look after our business.
JJ: How is the situation different now compared with when GMR first arrived?
AH: An initial challenge was that we had a ground handling company, MACL, and another company that did cleaning and inflight catering. We were not taking the catering but we were taking the cleaning. So you have three different companies with three different organisational cultures that now need to merge into one, and add the culture of GMR Airports.
People ask what apprehensions I had – I wondered how we were going to merge these organisational cultures together. That was the real challenge. Having said that, people responded very well. There were lots of issues where there were differences between those companies, so we had to work to iron out those differences,
JJ: What were an example of some of those differences?
AH: The amount of leave people received in the three companies was different, so we standardise that so one isn’t perceived as having more than another. There are obviously differences in pay scales as well, but that has to be addressed over a longer period of time.employees. to integrate and look at aspects skills, performance and reviews of 1513 employees takes a period of time.
JJ: You had a high success rate retaining employees to the new airport company?
AH: It was 100 percent. [Initially] we had a few people overseas on training and it took a bit longer to get the documentation to them. We had a process with the government of the Maldives and MACL. In the conditions for handover we had to demonstrate the implementation and success of the plan, and we had a daily report on how many people on the list passed to us accepted our offer and conditions. I’m pleased to say it was 100 percent.
In terms of people development we are now looking at training programmes. We are just about to send 25 fire and rescue staff to Malaysia for three and a half months of training.
I was interested in that training being not just an assignment, but something people will value and recognise and help to advance themselves. So I said we will invite the parents by surprise to go to the passing out parade of the two best students – best improvement and best overall student – so they can watch their sons be recognised for the distinction they have demonstrated in their learning. I think that is a way we are showing that we are going the extra mile.
In terms of development, the new terminal will be completed in late summer of 2014, and will be really designed to reflect the beauty of Maldives. The terminal will have large glass facades, and natural materials people are used to seeing in resorts, skylights to allow natural light in, and natural water bodies and water features surrounding terminal so you always have that feeling of being close to water. That’s one of the reasons people come to the Maldives.
As for the refurbishment of the existing terminal, we [have launched] a 180 day terminal improvement programme. In the concession agreement we are given one year to complete it, but we have decided to do it in six months.
In those six months we will look at improvements in processing capacity, such as baggage reclaim, capacity of the check-in counters, and centralised security screening – there are two at the moment. This will give passengers greater time in retail area and reduce queuing.
JJ: The GMR bid was particularly generous on the fuel revenue sharing with the government (27 percent from 2015), and less so with the sharing of airport revenue (10 percent from 2015). How will GMR justify such a low margin on fuel?
AH: Today in global airport development there is a balance between aeronautical revenue and non-aeronautical revenue. Aeronautical revenue includes typical revenue from aircraft landing and parking, direct charges to airlines and passenger fees.
But in these challenging times there is continuing pressure to reduce the burden of aeronautical charges. The development of the last few years has been an emphasis on non-aeronautical revenue, as the burden of fuel costs, and engineering costs has increased significantly.
We look at the non-aeronautical development as being part of the commercial arrangement, including the the utilisation adjacent land, conference facilities, hotels, things that actually compliment our services. Our strategy in the long term is a greater focus on these.
At same time, we will focus on the development of the economy as a whole. Because the airport is literally a gateway, an economic engine. It facilitates trade, travel and employment. Generations of Maldivians have worked at this airport and we see this as continuing.
We see ourselves as having a much wider remit – for example, today there is the resurgence of Sri Lanka. 10-12 years ago people booked a 14-day holiday, with 10 days in Sri Lanka, four days in Maldives. They would spend five days in Sri Lanka, come over to the Maldives for four days and go back for five.
When the Liberation Tigers of Tamil Eelam (LTTE) problems arose in Sri Lanka, people came to the Maldives because of the perception of increased security and reduced risk.
Now Sri Lanka has put the LTTE difficulties behind them, we now have the difficulty of the resurgence of Sri Lanka. Now we run the risk people going back to Sri Lanka because it cheaper – and you can do many things there that you can do in the Maldives. In my opinion it’s not as beautiful, and it’s not as exclusive, but not everyone wants to pay that [higher] price in the Maldives.
We are also looking at developing much better traffic between the Maldives and the United States. Today it is the most under-represented nationality in terms of visitors to the Maldives. We have airlines like Qatar Airways and Emirates so we know we have flight connectivity which will allow seamless transfer.
JJ: How do you convince a country like the US to fly to the Maldives instead of closer and more developed destinations such as the Caribbean and Bahamas?
AH: They will be other destinations the Maldives competes with – Hawaii for the US and the Canary Islands for the UK. Fiji to a much lesser extent, which serves Australia and New Zealand.
There is competition with Mauritius to far lower extent, because even though it is a far bigger island it doesn’t attract the number of visitors that the Maldives does.
Curiously, one of the reasons I discovered for this is because the temperature of the water is cooler so divers have to spend less time diving compared to here where our average water temperature is 26 degrees.
JJ: The fuel trade has historically been a key component of the airport’s income, will that continue?
AH: With the fuel trade today we have means of procuring and supplying fuel to the airlines. The airlines also have some of their own arrangements, because they take advantage of global purchasing deals, and companies that supply them in other countries also supply them here.
What we are doing is looking at the existing contracts, and simply reviewing how we can enhance consumer gets. Some airlines like greater term of credit, other airlines a term of time – we have to match various needs and at the same time remain a competitor in the region.
JJ: There have been concerns that such a high fuel share with will compress your own fuel revenue, which could involve passing on the cost and potentially make it more expensive for the airline.
AH: No, I think the strategy we recognise is that we have experience introducing efficiencies. MAHB has 39 airports, GMR has three airports. Between two of us we can leverage what we know and bring that advantage here, and that will make us more efficient.
Because what drives the price of fuel is the cost. If we become more efficient providing fuel we can manage the implications going forward. We have studied that very carefully so that it represents a very good deal for the people of the Maldives and us as business, and also the consumer, be they a passenger or airline.
JJ: How big a part of the airport’s revenue do you expect the fuel trade to be?
AH: It’s not an issue for us, to be honest. We have so many advantages through being able to help the government to influence amount traffic coming in, and in the airport. That doesn’t just mean duty free but food and beverage, transfer services – there are so many needs passengers have here because of the uniqueness of the way people arrive and depart from the Maldives.
The seaplane operation, for example, is an example of how we collaborate. In our original design for the terminal the arrivals section sat on top of the seaplane operation. We are now adjusting that because we recognise how important the seaplane operation is to the Maldives – 60 percent of arrivals are transferring to seaplanes.
What I’d like is that once you come out of arrivals after clearing customs, you have three choices: seaplane transfer, boat transfers to resorts, and passenger transfer to Male’. It is very straightforward and more importantly it is very efficient.
We see many opportunities with the non-aeronautical developments once we complete the terminal development. We have proposals in terms of developing the land area [around the airport],and that is where we see the opportunities.
JJ: What is your own background, and what do you bring to the operation?
AH: I have worked for GMR for five years and before that the TBI group in the UK, which ran 26 airports.I have worked 13 airports around the world.
I guess what I bring is an understanding of how an airport can be developed efficiently within a stakeholder environment, looking at needs of a country as a whole, where we are a facilitator of the economy while ensuring the development of leadership qualities in people so they can take over managing the airport.
In a period of five years, we would like this airport to be managed entirely by Maldivians. And some of those Maldivians will move onto our other projects. My real role is to mentor and lead our team here and develop them to go onto bigger and better things.
JJ: An airport is a complex operation – has it been hard to find skills such as qualified engineers?
AH: It has not been a challenge because Maldivians are very talent and very dynamic. They are very self-sufficient. I have guys here in engineering who are able to do virtually anything. It’s amazing, it’s a new skill, and I think to myself, ‘Wow, if we’d had people like this working in India those projects could have been done in half the time.’
We have a lot to learn from Maldivians here, but at the same time we have a lot to share with them.
We recognise that a lot of people have gained their skills through time spent in that department – that doesn’t mean they are in touch with current trends, products and processes that have changed over time to make things more efficient. We are also going to send people to other airports in our group, to give them exposure.
It’s not a matter of finding technological capacity – what we recognise is that we can enhance skills greatly with training and exposure to other airports.
JJ: What have been some of the key challenges here?
AH: There have been a few. I think one of the challenges has been perhaps the misunderstanding people have had – and that’s really changed – about what we are here to do.
There was an earlier misconception that we were going to put a thousand Indians on a boat and set sail for the Maldives and replace everybody here with Indians because it was cheaper labour and would be our preference. But clearly it is not. We are not doing that. Our manage structure at the leadership level is a combination of Maldivians and non-Maldivians. We will learn from them, and share what we have learned. Our challenge is to transfer knowledge to them and harness what they have learned so we can use them in our other airports.
Then the next time we bid for an island airport I’ll know exactly who to call on to take leadership roles in that airport, because I know guys who run a great island airport here.
The second misconception has been that we have come in here to increase all the rates.
JJ: Former Deputy Leader of the opposition Umar Naseer famously stated that the airport deal “will allow Israeli flights to stop over after bombing Arab countries.” How do you respond to such rhetoric?
AH: We look at it, and the information in the media at moment. I find here that people are intelligent and forward thinking, and they able to determine what is fact and fiction. We have full confidence in general public’s ability to discern that.
I think a challenge we faced was the notion that we were coming in and increasing charges. The CEO of the International Air Transport Association (IATA) has said their members prepared to pay increased charges, provided they see improvement in the airport in terms level or service and the development of airport. Clearly they will see that [in the Maldives].
Our mandate is to review the cost of providing services, determine what every stakeholder wants, and determine at what cost we can provide that.
We have airlines who have come to us and told us that the lounge is not what they expect, and that they would like to build their own lounge – three airlines have come forward to build their own lounge – but cant have everyone building their own lounge because we don’t have enough space for that. But what we can say is, ‘What do you require?’
For instance, only one airline currently has a first class service into Male’. All the rest have a business class and economy service, and sometimes premium economy. But the airlines are telling us that some of the passengers arriving on business class are in fact first class passengers, who have flown from London to their hub in first class, but then in business as a downgrade. To all intents they are a first class passenger with first class expectations, and as a result of that the kind of lounge the expect is not the kind they get.
We are working to determine that. But the person on the street may decide ‘You’ve come in here and built a new lounge and now you’re charging more money for it.’ But what they don’t see is the airlines requirement to actually have that facility, because the facility that is there does not meet the standards they expect it to.
These are some of the areas there are misconceptions that are not clear to the public and may be misconstrued.
JJ: On the subject of fact and fiction, I’m sure you’re following Maldivian politics with great interest – one of the current issues involves bribery allegations concerning GMR, denied by the Speaker of Parliament Abdulla Shahid and Leader of the Opposition Ahmed Thasmeen Ali, involving them travelling to Delhi on tickets purchased by GMR. Once and for all – has GMR had any contact with the Speaker of Parliament or the Leader of the Opposition?
AH: I think for the interests of clarity, we are extremely privileged to have this opportunity to manage the airport, and the GMR Group will at all times want to confine itself to that responsibility – and nothing else. Because that’s what we’re good at – we are no good at politics. And so we try to stay away from issues such as those.
What I can tell you is that any of the meetings and discussions that we have with anyone in government today have been open, well-known and available to the public. We go to public meetings, and we have other stakeholders present in these meetings. So for us, there is no question of anything occurring that would be shrouded in secrecy, or not known to the public.
Certainly I can tell you I have no knowledge of anything like that taking place. This seems to be something going on between people outside of GMR, although somehow we have appeared in the frame.
Those parties allegedly involved will be able to determine between themselves what is fact and what is fiction.
JJ: Former Deputy Opposition Leader Umar Naseer has claimed he has a letter from Sri Lankan Airlines confirming the authenticity of tickets purchased by a travel bookings company used by GMR, FCM Travel Solutions [shows ticket]. Has GMR flown these two individuals to Delhi?
AH: We don’t have a travel company, we use different travel service providers – we don’t use a defined company. I can’t comment on what Sri Lankan is saying because that information is privy to the airline that made the booking. Certainly anything we do is in the public domain. So if that were the case, it would be something publicly known and something people would be aware of.
This is something between the parties, the airline, and those who allegedly have been involved in purchasing whatever, and who are making the allegations. We honestly wouldn’t be able to comment on that. Because we have no knowledge of this, to be quite honest.
JJ: Have GMR made any efforts to determine the the source of the opposition to the airport, or the concerns of the coalition of parties opposed to it?
AH: No, because we have decided very clearly that our remit is to manage the airport, and we feel it is important to confine ourselves to this remit.
Otherwise it becomes very easy to confuse our mandate here and what people may perceive we are here to do. All of our attention is focused on the airport and demonstrating that we are an airport operator that will be responsible and respectful of the society and culture, and the laws of the Maldives.
As a result of that, I don’t think you would find us doing anything that goes beyond the boundaries of this airport, other than the relationships with those involved who have anything to do with the development of the airport.
JJ: This opposition coalition group have previously said they may take back the airport if elected, suggesting this could potentially become a campaign issue. Are you worried that a change of government could precede nationalisation spree?
AH: No, it’s not really a concern for us. Because quite frankly we are very pleased with the transparent process in which the bid was managed and assessed and awarded, and supervised by an independent body.
I think once people see the new airport, nobody is going to want to undo what has happened to it. We have staff who are motivated and engaged and telling us that this is an environment very different to the one in which they were working before, and they are very excited by these changes. And we have stakeholders who have welcomed the changes we have made until today.
Passengers coming through this airport haven’t been telling us that there is something they don’t like about how the airport is being managed. So our job is to manage the expectations of consumers and stakeholders to transform the airport into a much better experience. I think by doing that, we will address any concerns people outside the airport community have about us being suitable people to run the airport.
I would like to say that this airport belongs to the people of the Maldives, and nothing is going to change that. We may have financial responsibility for the airport, but physical ownership of the airport will always remain with the people of the Maldives.
What we are doing is continuing the evolution of the development off this airport from the volunteers who in the 1960s came to build it through sweat and toil into what it is today. This evolution continue, as will growth in tourism and trade. We are simply a guardian, a custodian of this national economic asset.
JJ: No concerns about sea level rise?
AH: No. When we became involved in the bid process we engaged three leading companies who are at the forefront of analysing geophysical activity, climate change and the impact rising sea levels.
What we can tell you today is that the risk of rising sea levels coming above the land is so low that it’s not even considered in the insurance premiums for the Maldives.
Insurers are notorious for considering even unimaginable risks, so I can tell you that if no insurance company considers this in any of their policies for the Maldives, we think that the risk is pretty low.
We are the largest single investor now in the history of the Maldives, and to make this kind of investment we would have had to had confidence that this investment would survive not just the term, but leave a lasting legacy. Beyond 25 years we want people to remember what happened while GMR was here. So it is not in our interest to invest in something that may not be here for the full term – and that term goes beyond the concession period.