Tag: INIA

GMR and government to seek “win-win situation”: Razee

Infrastructure company GMR has said it will deduct revenue received from collecting a US$25 (Rf385.5) Airport Development Charge (ADC) from every passenger departing on an international flight from the concession fee to be paid to the government.

GMR informed Maldives Airports Company Limited (MACL) last Thursday of its decision. MACL officials had not responded to inquiries at time of press.

GMR planned to begin collecting the ADC at midnight on January 1 this year as per its contract with the Maldives government. Revenue was expected to amount to US$25 million (Rf385.5 million) in 2012, and would be put towards the ongoing development of Ibrahim Nasir International Airport (INIA).

However, a Civil Court ruling in December blocked the ADC on the grounds that it was identical to an existing Airport Services Charge (ASC) of US$18 (Rf277.56). The company’s shares on the Mumbai stock exchange subsequently fell 7.57 percent, India’s Economic Times reported.

The government subsequently appealed the case to the High Court. Meanwhile, GMR is not collecting the ADC.

Economic Development Minister Mahmoud Razee said that the concession agreement between GMR and the government assured each party a certain level of income.

“Because the ADC was included as revenue, until the matter is resolved any money that was going to be received from the ADC should be deducted from what GMR owes the government,” Razee explained.

Razee said that the Ministry of Finance will work with GMR and the government to resolve the matter, adding however that much of the decision rests on a verdict from the High Court.

He added that the related Amendment of Collection of Airport Tax (international travelers) Act 7/78 Bill is also before the Parliament, which is currently in recess until March.

Razee was optimistic about the outcome, however far in the future.

“The contract between the government and GMR allows for certain changes which are mutually respected and agreed upon by both parties,” Razee observed. “They will reach a win-win situation, even if some revenue is lost.”

GMR previously noted that the payment of a development fee was “a common concept in many airports globally”, particularly as a part of concession agreements where airports are privatised.

“The reason for the inclusion of ADC in many global concession agreements is to address the funding needs to meet the investment model required to upgrade and develop new airport facilities at significant costs,” GMR stated.

The company further claimed that the charge was included in the concession fee proposed between GMR and the government in 2010.

Meanwhile, in April India’s Supreme Court ruled against the charging of airport development fees which are not approved by India’s Airport Economic Regulatory Authority (AERA). However Delhi airport, developed by GMR, continued to charge the fee as GMR had obtained permission to collect the sum in 2010.

Speaking at the groundbreaking ceremony for INIA’s new terminal on December 19, President Nasheed said he wished to assure GMR that the government was “200 percent behind your contract, and every single other contract the government has signed with any other foreign party in this country. Not just contracts signed by our government, but also contracts that any ruler of the Maldives has signed with any party. We will honour it.”

The public response has not been so positive. Following GMR’s closure of duty-free shop Alpha MVKB, company CEO Ibrahim Shafeeq organised a protest under the slogan “Go GMR Go!” The protest was held on the grounds that the company was “demonstrating our opinions and dislike of what GMR has done to us and to get public responses,” Shafeeq told Minivan News at the time.

Kulhudhuffushi-South Independent MP Mohamed Nasheed also proposed an amendment to the Business Registration Bill in a bid to reserve airport shops and services for local ownership and “clip GMR’s wings”.

Likes(0)Dislikes(0)

Independent MP proposes amendment to “defend” local businesses from airport developer

Kulhudhuffushi-South Independent MP Mohamed Nasheed has proposed an amendment to the Business Registration Bill in a bid to reserve airport shops and services for local ownership.

India infrastructure giant GMR currently claims exclusive rights to certain duty free items to be sold at Ibrahim Nasir International Airport (INIA), he said.

“My view is that GMR’s role has shifted from management to ownership,” Nasheed told Minivan News. “This is all about excessive and detrimental penetration into the local economy.”

A parliamentary committee is reviewing the bill and its proposed amendment.

In response to inquiries from Minivan News, GMR issued the following statement: “As part of the concessionaire we follow the terms and conditions of the agreement between the government of the Maldives and us and expect the government too to abide by it.

“The concessionaire agreement grants and specifies entitlement to directly or concession out retail activities at INIA.”

GMR is currently leasing Ibrahim Nasir International Airport (INIA) for a 25-year development project. Upon assuming management of the airport earlier this year, all airport shop contracts were set to expire on December 31, 2011 as per an earlier agreement with Maldives Airline Company Limited (MACL), with the exception of Spice Island.

The Economic Ministry today announced that GMR Male’ Retail has been registered in the Maldives. It is one of two locally-registered businesses under the corporation’s name.

Nasheed said his proposal refers to “duty free, customs clearance, cargo clearance, and the management of bonded warehouses,” industries which he believes can safely be trusted to Maldivian ownership.

“I have always objected to divesting ownership of Maldivian businesses with foreign investors when the business is within the local capacity and competency,” he explained.

“I respect that there are some areas of business and industry in which the Maldives has neither capacity nor competency. But the enterprises covered in my proposal have traditionally been local affairs. There is no reason to exclude them now simply as perks for foreign investors.”

Nasheed pointed out that many Maldivian businesses grew up around and depend on airport operations. Maldivian Island Aviation has allegedly lost business since the transfer of management, while the group running the Commercially Important Persons (CIP) lounge is now defunct.

In November of this year, GMR announced its intention to take control of cargo handling services starting in 2012. The move has allegedly forced Maldivian businesses Freight Forwarding Services and Bonito Group to lay off several employees.

In recent news, the Alpha MVKB duty-free shop at the airport was forcibly vacated by GMR and Customs officials eight months after GMR’s original notice. Rulings from the Civil and High courts upheld GMR’s right to terminate the shop’s contract, however company CEO Ibrahim ‘MVK’ Shafeeq has launched a protest under the slogan ‘Go GMR Go!’

“I understand the contractual obligation on the government’s part, and I respect the bidding process and the business competition that comes with it,” Nasheed reflected. “The airport is a gateway for tourism, but GMR’s excessively favorable terms are excessively disadvantageous to Maldivians.”

The Maldivian government signed a 25-year contract with GMR on 28 June 2010.

Under the contract the Maldivian government receives:

  • A sum of US$78 million as advance payment which is to be deducted from the profit due to government.
  • 1% of the Gross Revenue in the first four years (2010-2014) and 10% of the Gross Revenue from the general business in the remaining years.
  • 15% of the Gross Fuel Sales in the first four years and 27% of the Gross Fuel Sales in the remaining years.
  • GMR is also to invest US$375 million over a period of 25 years in construction of the new terminal.

Nasheed claimed that the government saw the GMR deal as an income generating source to solve income problems at the time. “But the deal wasn’t revised over the years,” and GMR has meanwhile made significant profits from jet fuel sale.

“GMR gets its fuel from State Trading Organisation (STO). STO rates have remained the same over the past year, however GMR’s rates have been raised twice.” He added that landing and airline fees have increased, and voiced concern that the price hike would deter business.

Meanwhile, GMR has recently opened a 30-office Airline Offices Complex, and several airlines including Ethihad and Hainan have lately begun services to Male’.

The Business Registration bill reserves certain areas of business for local owners. Nasheed said his proposal aims to enlarge that domain by two to three commodities.

“I intend to use my role as a parliamentarian to propose this amendment,” he said. “It’s just an initial step for the proposal, and I’m not sure whether it will survive the whole process. But I’m hopeful and I feel good about having done it.”

Likes(0)Dislikes(0)

Burst tire forces emergency landing at airport

An Emirates flight made an emergency landing at Ibrahim Nasir International Airport (INIA) on Friday, December 2 and sustained damages to two tyres. No passengers and crew were injured.

The Emirates flight EK635 was en route from Colombo to Dubai when it landed in Male’ at 10:35 pm on Friday. It had suffered the deflation of two tyres in its left main landing apparatus.

A spokesperson for INIA said pilots are trained for such situations, and the plane was brought to a safe stop on the INIA runway.

An Emirates spokesperson stated that, “All passengers disembarked safely from the Boeing 777-300 aircraft and are currently being looked after by ground staff. Transit and onward passengers will be accommodated in hotels if necessary.”

The airport was closed until 4:20am on Saturday, December 3 while the issue resolved. Only small aircraft with prior approval were allowed to depart during that time.

“The aircraft is currently being assessed by engineers and will be towed from the runway as soon as possible. Emirates apologise for any inconvenience caused. The safety of our passengers and crew is always of paramount importance,” read the statement from Emirates.

The Dubai-based airline launched daily flights between Colombo and Male’ in August this year, raising service to 19 flights per week. It has been flying to the Maldives since 1987.

Along with Sri Lankan airlines, it is one of the most active international carriers in the country.

Likes(0)Dislikes(0)

DQP files case against GMR, MPs critique scheme

Dhivehi Qaumee Party (DQP) today submitted a case to the Civil Court against infrastructure development company GMR Male International Airport Pvt Ltd, 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 fees are to be charged to internationally-bound passengers only. As of 4:00pm on Tuesday the case had not yet been registered.

The government signed a 25-year contract with GMR on 28 June 2010. On 30 September 2010, four opposition parties filed a case against GMR at the Civil Court. The court registrar rejected the claim.

Under the contract the Maldivian government receives:

  • A sum of U$78 million as advance payment which is to be deducted from the profit due to Government.
  • 1% of the Gross Revenue in the first four years (2010-2014) and 10% of the Gross Revenue from the general business in the remaining years.
  • 15% of the Gross Fuel Sales in the first four years and 27% of the Gross Fuel Sales in the remaining years.
  • GMR is also to invest US$375 million over a period of 25 years.

The development fee is considered “standard procedure in most airports“, GMR officials earlier told Minivan News. GMR said it would have included the fee in the ticket price, but until International Air Transport Association (IATA) provided certain codes it would have to charge the fee separately.

DQP claims that GMR’s lease of Ibrahim Nasir International Airport (INIA) was unconstitutional, illegal, and bore trademarks of corruption. It additionally claims that GMR’s contract would not have been approved if passed through official procedures.

DQP Secretary General Abdulla Ameen confirmed the case and directed Minivan News to the party website for further details. The web page’s last registered update was 29 November 2010.

“Article 97 of the Constitution prohibits any form of taxation without legislation,” reads on section. “Levy on departure passengers have always been done through legislation, including amendments thereof. In fact the current levy of USD18 for foreigners and USD14 for locals was introduced by the present government through amendments to the relevant law.

“However, the right to levy a US$25 and a US$2 (a total of US$27) was given to GMR by the Government without the passage of any law.”

DQP further claims that the government bypassed Parliament on the decision to lease INIA, thereby making GMR’s claim that it can collect the development and insurance fees is “null and void.”

State Transport Minister Adil Saleem previously informed Minivan News that the development fee had been approved by the government as part of its contract with GMR.

Immigration and customs authorities are said to support the move.

DQP told Haveeru that GMR had failed to develop INIA as per its agreement with the government, but is trying to charge customers extra fees on the pretext of airport development.

Speaking in Parliament today, Kulhudhuffushi-South MP Mohamed Nasheed said GMR is receiving all funds from airport handling.

GMR recently announced that baggage handling would be transferred from a local company to one chosen by GMR.

Nasheed said the agreement between the government and GMR was not a fair deal, and that losses incurred exceeds income earned.

“I want to highlight the fact that the US$990 charged from a [Boeing] 777 aircraft that lands during the day has been increased to US$2,985 while the fee collected from the aircraft that lands during the night has been raised to US$3,885. This is a 60-80 percent increase in charges but no improvements have been brought to the services provided by the airport,” he said.

“And we cannot accept the US$1.6 million rent charged per month from a small land plot which measures 800 square feet. Questions arise whether GMR is developing the airport by taking money from us Maldivians or whether they are developing the airport on their funds?”

Hoarafushi MP Ahmed Rasheed said, “While we are exaggerating a minor difficulty a small number of people have to bear for the sake of our nation, we don’t have anyone to speak about the development and advantages the people will be able to obtain from the most number of people who use the airport.”

In the past four months GMR has opened two lounges at INIA 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.”

DQP Vice President Imad Solih earlier submitted a separate though similar civil case arguing the illegitimacy of the charge and requesting the court take action against Finance Ministry.

The Civil Court is expected to soon deliver a verdict on the case.

Likes(0)Dislikes(0)

Opening of premium lounge hints at airport’s future

The Plaza Premium lounge was inaugurated today at Ibrahim Nasir International Airport (INIA), a step in GMR’s wide-scale renovation of the airport terminal.

The renovation, which began approximately 10 weeks ago, was designed by Hong Kong-based Premium Port Lounge Management Company Private Ltd. A message from company founder and CEO, Song Hoi See, indicated that the company was eager to design the project and “add more flights to Male.”

The Plaza Premium lounge was opened with a ribbon-cutting ceremony and a reading from the Qur’an. Among the officials who cut the ribbon were Tourism Minister Maryam Zulfa and GMR CEO Andrew Harrison.

“This is a proud moment,” said Zulfa. “It is sad that some of the resorts and institutions in the Maldives do not measure up to the standards of our premium customers. I am happy that GMR is setting an example for the Maldives as it moves forward.”

Zulfa, who arrived today from an international flight, described some fellow passengers who called a baggage delay “typical.”

“I said, ‘No, this is not typical. This is atypical. Because GMR is now taking care of us.’ It was a relief to know that a negative experience was not typical of how our airport works.”

Tourism Minister Maryam Zulfa surveys the Plaza Premium Lounge with GMR CEO Andrew Harrison

Baggage beltways were recently expanded, while eight check-in counters and two security lanes are being added. “We are de-bottlenecking departures, and things are running smoothly,” said GMR Chief Commerical Officer Prasad Gopalan.

Gopalan said the airport had seen an even higher increase in traffic this year than expected. “There is more traffic from Asia, and we are expecting Russian traffic to increase as well.”

Harrison said the renovation process had informed GMR of the higher standards that travelers now hold. He noted that washrooms and check-in counters were being refurbished “to make it a more ‘Maldives’ welcome for travelers,” and added that former staff had been re-trained to meet premium standards.

The lounge is open to first and business class passengers, and to economy class passengers for an undetermined fee. Services include a buffet and a la carte menu, computer and internet access, television, and spa-style foot rubs.

Harrison told Minivan News that “the quality of this lounge is a commitment to the quality of airport that the Maldives and its visitors can expect to see in the future. Even though this lounge is an asset with a short shelf life, it is appropriate that we demonstrate what the new terminal should be like.”

The new terminal at INIA is expected to be completed over the next three years, and will have a capacity of 5 million.

The renovation’s estimated cost is US$1 million. More renovations will be completed before the tourism peak season of November and December.

Likes(0)Dislikes(0)