Jumhoree Party (JP) Deputy Leader Abdulla Jabir has criticised attempts to “politicise” the dispute between the government and India-based GMR over an agreement to develop Ibrahim Nasir International Airport (INIA) – fearing a negative impact on foreign investment.
The claims were made as the government-aligned Adhaalath Party (AP), which promotes religiously conservative values in the country, has continued to call on fellow coalition partners including the JP to take part in a series of “events” in the capital to protest against GMR’s development of the airport.
Speaking to Minivan News, Jabir, who is also a serving MP, highlighted the importance of maintaining an “investor friendly” atmosphere in the Maldives despite calls by some of the JP’s government coalition partners to re-nationalise the airport.
The MP said he instead advocated for sitting down and trying to find a compromise between the government and GMR, which is contracted to develop and run the airport for 25 years.
The dispute has centred, in part, over concerns like a disputed US$25 Airport Development Charge (ADC) that was to be levied on each passenger travelling through the site. GMR has maintained the the charge was contractually agreed, but later offered to exclude Maldivian nationals from paying it after the matter was contested in the country’s courts.
With the dispute unresolved, Jabir said he had sent a request to the Public Accounts Committee of the People’s Majlis for a review of the contract signed between GMR and the government of former President Mohamed Nasheed to “better understand” the agreement.
Several former opposition parties now serving in the government of President Dr Mohamed Waheed Hassan have continued to raise allegations of possible corruption behind GMR’s bid to develop INIA – allegations refuted by the company and the former government.
Jabir maintained that discussion and analysis, rather than politicised rhetoric in the media and at public events, would be required to move forward with the issue in a manner that did not damage future investment opportunities.
“We need an investor friendly environment here. Politicians should be here to resolve issues not complicate them further,” he said. “Any allegations of misconduct should be investigated, but we should be able to sit down and discuss a resolution. Yet many people do not know about or even understand the deal that has been signed.”
Jabir claimed that the GMR contract should therefore be viewed as a business issue rather than a political problem, something that he claimed would require greater parliamentary understanding of the agreement signed by the former government.
Under the terms of the agreement – a US$511 million deal that represents the largest ever case of foreign investment in the Maldives – GMR agreed to a 25 year concession agreement to develop and manage the site, as well as to overhaul the existing terminal by the end of this year.
The document was overseen by the International Finance Corporation (IFC), a member of the World Bank group and the largest global institution focused on private sector projects in developing countries.
However, the Maldives government earlier this month accused the IFC of negligence during the bidding process for INIA – allegations there were rejected by the organisation.
Both the government and GMR are presently involved in an arbitration case in Singapore over the airport development.
The coalition parties making up the government of President Dr Mohamed Waheed Hassan have at times appeared divided over how to proceed in regards to GMR the contract. Some parties like the Adhaalath Party have advocated to gather in Male’ as part of a rally next month calling for the airport to be “returned” to the Maldivian people.
Speaking to local media earlier this month, Adhaalath Party President Sheikh Imran Abdulla said that a ‘mass national gathering’ would be held at Male’s artificial beach area on November 3 at 4:00pm to coincide with Victory Day. Victory Day is held in remembrance of a failed coup attempt that was thwarted in 1988.
Sheikh Imran told the Sun Online news service that the gathering was devised as part of ongoing attempts to try and “reclaim” the airport from GMR. Imran was not responding to calls from Minivans News at the time of press.
Minivan News was also awaiting a response from Abdulla Ameen, Secretary General of the government-aligned Dhivehi Qaumee Party (DQP) at the time of press concerning its response to the proposed gathering. The DQP had previously published a 24-page book claiming that the former government’s lease of INIA to GMR was a threat to local industry that would serve to “enslave the nation and its economy”.
Meanwhile, the Dhivehi Rayyithunge Party (DRP) claimed last month that while it held issues with the overall benefit to the Maldives from the GMR deal, “due process” had to be followed through proper legal channels in order to establish if any wrong doing had occurred with the airport contract.
JP Deputy Leader Jabir himself this week criticised certain high-profile political figures in the country over their response to the GMR contract. He accused some of these figures of not “knowing what they are talking about” in regards to the deal, highlighting the need for a review of the agreement within the Public Accounts Committee.
Jabir was particularly critical of the Adhaalath Party’s response towards the GMR issue, which he claimed had complicated finding a resolution.
“Sometimes they are religious experts, sometimes they are financial experts. But everyone loves Islam here. Right now, foreign investors are finding it difficult to understand the climate here. This is not a perfect time for this issue to be happening with GMR,” he said. “I think these protests [against GMR] are unrealistic.”
Jabir claimed that from his experience as both a parliamentarian and business owner in the country, there was “no such thing” as a deal that cannot be renegotiated.
“However, if there is no talking then the country is only losing money whilst people take to the streets,” he added.
Earlier this month, INIA CEO Andrew Harrison told Indian media that the company had received no official word from the Maldivian government concerning a resolution to the dispute.
Yet despite MP Jabir’s concerns about the potential impacts the ongoing dispute over the airport development might have on future foreign investment, one national trade body recently played down fears that GMR’s case was proving to be economically detrimental to the Maldives.
The Maldives National Chamber of Commerce and Industries (MNCCI) claimed last month that legal wrangling between the government and GMR over the multi-million dollar airport development was not adversely harming confidence in the country’s “challenging” investment climate.
MNCCI Vice President Ishmael Asif contended that ongoing legal disputes linked to both the GMR agreement and another high-profile contract to manage a border control system with Malaysia-based Nexbis were not among concerns foreign investors had raised with the chamber.
“GMR has nothing to do with the investment climate here, at the end of the day it is a personal concern for the company and more a matter of local politics,” he claimed.
The CEO of Male’ International Airport, which is currently operated by Indian infrastructure group GMR, has said that although the company had made certain mistakes in terms of its finance policy of late, management was confident of learning from them to deliver significant changes to the site over the next three months.
Andrew Harrison, who took the CEO position at Male’ international Airport when GMR took control of the site in November, told media today that despite significant work already underway on overhauling behind-the-scenes operations, he was still learning how to deal with stakeholders like airlines and exporters at the site.
The week has threatened to be potentially difficult for GMR, with reports emerging in the press of the company’s alleged plans to increase land lease rent at the airport by 50 percent – the first such price change enacted in a decade. News of the announcement had led some local airlines and a number of import companies raising concerns at the reported increases and the possible impacts on their operations.
Harrison nonetheless claimed that he hoped the public, as well companies working with the airport operator, would soon see more of the changes resulting from its investment in the form of operational and aesthetic improvements at the existing terminal.
“People are expecting to see a lot of change immediately, the change does take a little time, but actually there is a lot of work going on behind the scenes. What we will now see over the next three months is rapid progress where the changes will be more visible to the public,” he said.
“We had, through our concession agreement, been given a mandate to improve levels of service in the existing terminal areas, so this was focused on baggage processing time and baggage delivery time and the checking of passengers. What we are recognising is that people have much greater expectations, so we are spending more money than we are required to in terms of the concession agreement to actually make [the terminal] a much nicer environment.”
The pledge comes as newspaper Haveeru this week reported that airlines such as Island Aviation and seaplane group Trans Maldivian Airlines were concerned at how the implementation of future rent raises could impact on their operations.
Some importers working for the tourist trade have also told Minivan News that they have faced a sudden “100 percent increase” in charges for containers that they need to hire at the airport for their stock.
One importer and supplier of alcohol to a number of tourist properties in the Maldives, who wished to remain anonymous, told Minivan News that a number of the company’s business peers had looked to form a committee over concerns at rate hikes they claim have been deemed “non-negotiable” by GMR.
According to the supplier, the airport operator had acted “unprofessionally” in suddenly announcing that the monthly rates for 70 feet containers at the site were being doubled, meaning certain companies potentially face an additional bill of up to US$45,000 a year to work from the site.
Although the supplier said that they were being given a month to rewrite terms and conditions within new contracts that they were unhappy with, the container rent was seen as a “non-negotiable issue.”
In today addressing the issue of lease rent specifically for local airlines, Harrison denied that any official price had been set, adding that negotiations were now being held with key lease holders like Island Aviation and the company’s sea plane operators over cost amendments that he said remained fully open to negotiation.
Amidst press reports about certain concerns by some lease holders over the potential rise in airport rent and the possible impacts on their operations, Harrison stressed that in future, the company would aim to learn lessons and consult stakeholders “much in advance of any envisaged changes”.
However, the Male’ International Airport CEO claimed the company would still aim to push ahead with adjusted charges in areas such as land lease rent to ensure changes could continue to be funded at the airport. Harrison claimed that this rate increment would remain one of a “few” financial changes expected to be needed at the airport at present.
Though he did not confirm when the decision to potentially amend rent rates had been decided, Harrison claimed that GMR was working from a long-term development and cost plan set out in its original concession agreement.
“I want the airport to be profitable, but I want it to be responsibly profitable, because with those profits we are able to do many things including the development of the airport ongoing. [By] November 15 2011, most of this work will be done, but actually we will continue, it won’t end. There will continuous improvements all the time,” he added. “These improvements have a cost to them, so we need to have a business model that is responsibly profitable and trying to be responsibly profitable means that when you have different ways of doing things, you must engage your stakeholders in dialogue. We didn’t fix a [rent] price.”
According to Harrison, the potential increase in land rates from US$6 per square metre to US$9 for the same area were primarily expected to impact the operations of Island Aviation and the airport’s two seaplane operators with discussions already underway with them in addressing the issues.
A spokesperson for island Aviation confirmed to Minivan News that the company was currently in a “dialogue” with GMR though no out come had as yet been reached.
In trying to allay fears of further cost rises for stakeholders, Harrison claimed that he hoped to try and address the airport’s partners and customers like suppliers and service operators differently over future notices of change.
“I think one of the lessons that we are also learning is that people would like to have this dialogue much in advance of any envisaged changes. So what we are saying is that, ‘right, we have done a range of changes, let’s stop there now,’” he said. “Anything we want to do let’s have a discussion well in advance to understand the impact of changes we well make.”
Harrison took the example of requirements for new VIP and other lounges at the airport that had been requested by airlines to bring them up to the standards expected from “premium passengers”. The airport CEO said that he expected about US$500,000 to be spent on the project in total to try and meet the demands of airline companies.
“In this business model, what we’re trying to see is how much has to be spent and how which will be recovered in the time available. Don’t forget, this terminal has a life of about two and a half years before we move over to the new terminal and on the basis of that can we stay within the existing costs,” he said. “On the basis of that, can we stay within the existing costs? If we can’t what will be the difference [in charges]? Let’s discuss this with the airlines first before we announce, publish or indicate anything.”
In future, Harrison claimed that the company would try and change its current system of issuing communication about proposed changes before starting dialogue with the companies involved, claiming he would look for “better ways” to do things.
Alongside the issues of rent, Harrison conceded that he was not entirely happy with the manner that the company had reacted to a decision by the Maldivian government last week to amend an longstanding set US dollar exchange rate of Rf12.85 to within 20 percent above or below the figure to attempt to alleviate shortages of the currency.
“We’re human beings and sometimes we don’t always get it right. One example of where we didn’t get it right was that as soon as the announcement came from the Maldivian Monetary Autjority (MMA) about floating the exchange rate, we issued a communication announcing an exchange rate of Rf15.42 [to the US dollar],” he said. “That was incorrect of us to do so quickly. We didn’t need to do it. We could have waited to find out what financial institutions such as the banks were going to do before we did that. I have issued a further communication indicating that we will take the best available rate made by the three banks here in the Maldives.”
An interview Minivan News conducted with airport CEO Andrew Harrison last month about his experiences in the Maldives and plans for the airport can be read here.
Rising prices for aviation fuel and increased ground handling charges made by GMR, the Indian infrastructure giant that is now managing and developing Male’ International Airport, are in line with international prices, the airport’s CEO Andrew Harrison has told Minivan News.
The price of fuel at the airport has increased 35.39 percent at the airport and 35.67 percent internationally, Harrison said, in an update on progress at the airport during an initial 180 day strategy period following the company taking the reins.
“We are not even passing over the full increase in prices of fuel – we’re sensitive to airline customers and what the price of fuel means to them,” Harrison said. “The escalating price is affecting the whole global economy, and affects airlines directly not just here but at all other locations.”
Harrison sought to head off concerns aired recently that the cost of fuel at Male’ International Airport was impacting airlines’ willingness to fly to the destination.
“No airline has come forward and said they are unhappy with our pricing, but they are concerned about the global price of fuel,” he said. “With all the volatility there are challenges there.”
“We are working on some strategies to reduce the cost of providing fuel to them. We’ve spent the last six weeks meeting airlines – some want credit terms, others a set supply criteria – we are trying to meet the need of the majority.”
“The pricing of fuel is not something we compare one place to another, because there are many variables including the method of delivery and the volume you’re buying. The size of the berth we have limits the size of vessel we can charter, and these factors affect the price we can buy and supply fuel at.”
GMR had signed a US$140 million contract with the State Trading Organisation (STO) to supply fuel, he added, switching the contract over from Dubai-based Galana Petroleum.
“Our sense was it was better to use a company right here with us that would share in the risk and opportunity and try to get us the best possible price – for instance, the STO has its own vessel, and may not need to charter one. They made an extremely competitive bid.”
Many airlines, he explained, used a middleman reseller who bought fuel and sold it by offering components such as credit terms.
“Resellers may be in a better position to do that, as we are not a company in the business of providing credit terms to airlines. But what we are saying is that because the airline is our direct customer we prefer a direct relationship with them.”
This had led, Harrison said, “to a number of airlines leaving intermediaries and coming to us directly. They have a choice – but they are coming to us.”
Ground handling spikes
GMR has significantly increased ground-handling charges to bring the price in line with other international airports, Harrison said.
The ground-handling charge for a B777, used by many airlines flying to Male’, was recently raised from US$1990 to US$2985 ( at daytime) and US$3585 ( at night) – an increase of over 50 percent.
“It’s not necessarily unreasonable or overpriced – it may seem like a jump but there’s been no increase in 12 years, and we are still more competitive than a number of international markets,” he claimed, noting that the comparable cost in an Australian airport was US$4286 and US$4388 in Europe.
Most other services, such as the provision of ground power, were either cheaper than comparable rates in India or included – airports such as Hyderbad charge airlines for services such as the provision of wheelchairs, or use of a scissor-lift for people unable to climb the stairs to the plane.
Free storage of airline baggage containers had actually resulted in the airport being inundated, “but instead of charging we are asking airlines to reduce them to realistic levels.”
Ground-handling charges were less that four percent of an airline’s operating cost, he noted, “but that doesn’t mean we want the issue to escalate.”
Despite persistent allegations from opposition parties that there was corruption in the airport bidding process, including several cases forwarded to the Anti-Corruption Commission which vowed to investigate, “we have not been approached by the ACC,” Harrison said.
“There has been no formal communication [with the ACC], and we are extremely confident of standing up to any scrutiny because of the way the bid was scrutinised by the World Bank’s International Finance Corporation (IFC).
“They been here recently as part of their due-diligence process, meeting members of the public, ministers and stakeholders, and holding a community meeting in Hulhumale’ about the impact of the development. They wouldn’t be here doing that if they felt they were part of something that had not been done properly. We are confident that irrespective of what is being discussed in the media that we followed a legal and due process that was transparent and respected.”
There were, he acknowledged, “people who believe in what we doing, people who feel they haven’t seen sufficient evidence of what we’re doing, and people who will never be convinced no matter what we do.”
The first 180 days, Harrison explained, had been spent merging the cultures of the three organisations now operated under GMR Male’ International Airport – the former Maldives Airport Company Limited (MACL), Island Aviation’s passenger check-in and passenger handing operation, MIC’s interior cleaning, “as well as GMR’s culture.”
The company’s organisational structure had been unveiled with an emphasis on staff training, involvement in decision making and addressing issues such as a noticeable gender imbalance.
“We found a gender imbalance in the workplace – there were not many ladies operating at levels where they had significant levels of responsibility,” Harrison observed. “So we tried to address this – the new Head of IT Operations is a very qualified lady who is very good at her job, but she was many levels below and wasn’t being allowed to operate at a level that matched her potential.”
GMR was making an effort to communicate in both Dhivehi and English, he said, launching Dhivehi language classes for non-Maldivians and producing documents in both languages.
Staff suggestions and involvement had led to the creation of a non-punitive safety system, encouraging reporting rather than punishment, upgrade of the airport’s sea rescue capabilities and the replacement of 350 unbranded assembled computers with a consistent Dell IT infrastructure – and paid software licences.
Glitches in communication emerged as well – GMR took a dim view at the beginning of March when security staff began conducting pat down searches of every passenger trying to enter the terminal.
“A pat-down check is more efficient when people are experienced, but not when you introduce it on a peak morning with queues all the way down to the seaplane check in area, with no notification to the airlines or us,” Harrison said. “As a result of that we had unprecedented delays – nearly every flight that morning was delayed. Security took a line that nothing new was introduced, but after an emergency meeting the pat downs were stopped and the queues disappeared.”
He was, he said, happy to look at industry best practice and whatever technology was required, “but [I] am not prepared to introduce something not in line with international standards. Heathrow and Gatwick search 25 percent of those who don’t set off the alarm. Here we were searching 100 percent.”
Harrison was very conscious of public expectations regarding the airport upgrade – following the release of artist impressions of the airport, GMR has kept a low profile while introducing its organisational structure and attempting to win over staff to its nearly US$400 million vision for the airport.
Managing such expectations had been one of the key challenges, he said: “A lot of people felt there would be changes to the terminal the day we took over – but there have been many considerations, such as impact of work in peak periods, and understanding what work we want to do.”
Many physical improvements were scheduled to begin as the Maldives leaves peak travel season: “We weren’t in a position to remove even a single baggage carousel,” Harrison said.
GMR has a lot of work ahead of it if it plans to meet its target of upgrading the existing terminal by October. The refurbishment is “essentially throw-away” considering it will have less than a three year lifespan until the new terminal is completed in 2014.
During a tour of the present airport terminal Harrison provided a running commentary of planned improvements – including a food court (selling, among other foodstuffs, Turkish kebabs – a Male’ first) and raising the ceiling of the arrivals area so tourists could see the sea from the gate.
Harrison admitted that the scale of investment in the upgrade made it tempting to just bring forward the date of the new terminal, however he acknowledged the local appetite to see quick improvements.
“People will see changes in the coming months. For example, we’re about to start work on the domestic terminal, increasing the space available by 50 percent. This falls outside the concession agreement, which mostly concerns international travellers – but a lot of domestic passengers are Maldivian and deserve to benefit from the improvements as well.”
Other improvements will include redesigned and standardised tourist counters that are branded individually by resorts, a left luggage service, baggage wrapping service (“this is popular for a number of destinations, especially Eastern Europe”), porter service (“people particularly from the Middle East want the services of paid porters”), ‘fast-track’ immigration and customs as well as the potential for a ‘premium’ jetty.
There will also soon be a spa in the departure area offering 20 minute shoulder and foot massages, and possibly a nap and shower facility. Moreover, ‘soft skills’ trainers loaned from Singapore Airlines, “some of the best in the world”, had been invited to help train front-of-house staff at the airport.
Following construction of the new terminal, Harrison said the goal was to turn Male’ into one of the top five airports in the 1-5 million passenger category (the airport presently sees 2.4 million visitors through its gates a year).
“Look at the kind of experience a tourist coming to the Maldives goes through,” he said. “The natural beauty of the resort environment, and then the airport experience they go through at the end – it’s not right, standing in extensive queues, with a level of service so far apart from that of the resorts.”
Economy and marketing
Asked whether GMR had concerns about operating in the Maldives given the state of the country’s economy, Harrison said he believed the improved airport itself was part of the solution.
“An airport is an economic engine for a country,” he explained, “allowing trade, travel – both passenger and cargo – and employment. If the processes are made efficient, it has positive impact on the economy.”
Moreover, GMR’s involvement provided resources and expertise in opening up new tourism markets for the Maldives, Harrison explained, particularly undeveloped markets such as the United States.
“We want to talk to resorts, the Ministry of Tourism and the airlines about possibly marketing the Maldives in the US,” Harrison said.
“The US is the most underrepresented market in terms of direct tourism, however 14 percent – the highest single percentage – of tourists arriving coming into Delhi hold US passports. If they are willing to fly to India it’s only a short hop to the Maldives – I think it’s a matter of awareness and understanding connectivity and flight options, and most importantly, what’s here at end of the journey.”
The Maldives, he said, represented a “more interesting prospect” than traditional nearby island destinations visited by US tourists, such as the Bahamas and the Caribbean, adding that GMR was keen to explore this untapped market.
“We didn’t go to ITB [the recent travel industry trade show held in Berlin] this year because we didn’t think we had anything to say and I didn’t really want it to just be a jolly,” Harrison said. “But next year we’ll have a stand showcasing what we are doing here.”
GMR Male’ International Airport Limited (GMIAL) has announced that the Maldives State Trading Organization (STO) will begin supplying fuel to its operations from the beginning of April under the terms of a one-year contract.
The company has claimed that STO beat off competition from a host of international bidders to win the contract that will commence from 1 April 2011. The contract is expected to amount to a total value of US$140m over its twelve month lifespan – reflecting the supply of about 1.1 million barrels of fuel.
GMIAL said in a statement that the success of STO’s bid was based on both technical and economic factors such as the capability to supply both Jet A-1 fuel and Marine Gas Oil (MGO) as well providing testing facilities and the lowest financial premiums.
Andrew Harrison, CEO of GMIAL, said the decision was a key step in working to try and set the airport up as a world class facility and reduce any interruptions to transport services, while also offering direct economic benefits to the local economy.
“This contract will bring commercial revenue in form of US Dollar receipts to a Maldivian company, which will be a valuable benefit in terms of foreign exchange trading,” he stated.
Security officials at Male’ International Airport have rejected criticism that increased scrutiny during passenger checks was responsible for the delay of a number of flights yesterday morning, claiming there has been no additional or emergency measures put in place.
In a statement issued by infrastructure giant GMR, which is currently managing and renovating the existing airport site ahead of opening an entirely new terminal to open in 2014, the company said that six international flights were “heavily delayed” on 1 March.
The adoption of new security measures yesterday at the airport that it had not been informed of were alleged to be responsible for the delays.
According to the company, six flights scheduled to take off between 9:00am and 10:00am were unable to leave on time due to the congestion of passengers waiting to pass through security checks to catch their planes.
“These delays were the direct results of additional security measures introduced by the Aviation Security Division,” the company stated. “These measures included the physical hand pat‐down of each departing passenger which led to longer processing times extending the queuing time. These additional measures were not communicated by the Aviation Security Command to GMR Male’ International Airport Pvt. Ltd. or the customer airlines.”
GMR claimed that i a physical pat-down of every passenger after passing through metal detectors was believed to have resulted in flights being delayed during the morning by up to one hour and twenty minutes.
The company added that it was common practice at airports all over the world to use hand-held scanning devices instead during security checks.
“The standard queuing time required under the Concession Agreement is 10 minutes until processing at the x‐ray machine,” GMR stated. “This morning processing time for a large number of passengers was in excess of 40 minutes and as a result, flights could not close check‐in at the allocated time which led to the extensive departure delays.”
GMR claimed that although it was focused on trying to ensure improvements to all areas of airport service during its tenure – particularly by working with airlines and regulators – the company said that the “highest standards” must be maintained without severely impacting the experience of passengers.
In responding to the criticisms, Moosa Habib from the airport’s Aviation Security Command said that no new procedures such as pat downs of all passengers had been put in place during the morning before clearing passengers for their flights.
Habib claimed that many other factors outside their control were also responsible for any delays.
“The security measures are the airport and very important and sometimes they can be strict,” he said. “But there are many factors out of our control that can delay flights.”
Habib told Minivan News that there had not been any changes to security procedures during the morning and that he believed “business operated as normal” with pat-down procedures taking between 20 to 30 seconds per passenger.
A spokesperson for the Maldives National Defense Force (MNDF) told Minivan News that it had no real role in providing security at the airport.
The spokesperson added that the MNDF currently did not hold any concerns about security at the site.
Overcoming a lack of space for planes landing at Male’ International Airport continues to remain a long-term problem for the site’s new operators, according to Miadhu.
Citing a “reliable source” at the airport, Miadhu reported that craft flying to Male’ International have been consistently delayed in the air for periods of about an hour over a number of years due to limitations at the site in regards to space and the time required to service flights.
Up to seven aircraft have been reportedly left queuing in the airspace around Male’ at a single time waiting for clearance to land, the paper reported.
President’s Office Press Secretary, Mohamed Zuhair, told Miadhu that he believed the recent privatization agreement signed between the Government and multinational infrastructure group GMR would help to try to speed up the processing time for visitors with additional security outlets and luggage reclaim facilities being made available at the airport.
“Flights that land can be serviced quicker, allowing them to leave on schedule,” the paper quoted Zuhair as saying.
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.
Customs authorities have seized what they are calling a major shipment of hash oil during a routine search of perishable products that arrived at Male’ International Airport yesterday from Trivandrum, India.
Mohamed Ibrahim of the Maldives Customs Service confirmed that 1.07 kg of hash oil was found hidden in false compartments within cardboard boxes of perishable goods, a technique he said has been used by smugglers before to try and get drugs past border controls.
The seizure is the latest in a number of drug seizures made by Maldives customs coming from Trivandrumin southwest India over the last 16 months, which Ibrahim claimed reflected concerns among customs officials in the country about a “high level risk” for smuggling.
“This is a big seizure and we have been collaborating with Indian police following routine searches based on a number of risk management factors,” he said.
“These risk management factors are based on a number of concerns, such of the origin of shipments and sometimes the company involved in sending the goods.”
In collaboration with local and regional police services, Ibrahim added that Customs authorities were continuing investigations into both parties suspected of sending and receiving the seized perishable goods, but could not comment any further at this time.
Just last month, Minivan News reported that two Maldivian nationals have been arrested in Trivandrum Airport for allegedly trying to traffic drugs to the Maldives smuggled into the baggage of a 14 year-old passenger.
In September, police said they had arrested 23 people suspected of having links with the country’s drug trade that lead to 36 separate cases being sent to the Prosecutor General’s office.
These allegations follow a number of high profile drug seizures made by Maldives Customs Services during the last two years from areas such as Trivandrum that saw 12 separate attempts at illegal narcotics transportation – totaling 12.56 kilograms with a street value of Rf 11 million – uncovered during 2009 alone.
After months of political wrangling and counter allegations, as the clock turned one minute past midnight this morning Indian infrastructure giant GMR took the reins of Male’ International Airport as part of an overhaul it claims will help “increase the brand value” of the Maldives.
In a consortium with Malaysia Airports Holdings Berhad (MAHB), GMR says it will kick start a 180 day programme to try and improve service, efficiency and profitability of the site ahead of an US$511m expansion project that includes the construction of a new airport terminal by 2014.
The airport consortium, which saw off competition from a number of rival bids to win a long-standing contract to privatise the running of the country’s central transport hub, made a point of trying to offset concerns about the intention of foreign ownership and its potential impact on Maldivian workers.
“The airport belongs to the people of the Maldives,” said Kiran Kumar Grandhi, Business Chairman of Airports for the GMR Group at a function to commemorate the new management structure. “This consortium hopes to bring the best of technology and architecture and service to the airport.”
A coalition of opposition political parties formed an alliance back in June designed to try and protest against the deal on the grounds of nationalistic interests that included mps from the Dhivehi Qaumee Party (DQP), Dhivehi Rayyithunge Party (DRP), Jumhooree Party (JP) and the People’s Alliance (PA).
However, speaking during today’s handover ceremony on Hulhule’ Island, Mahmood Razee, Minister of Economic Development and a Maldives Democratic Party (MDP) member, claimed that the privatisation of the airport is aimed to directly benefit Maldivians as well as foreign travellers.
“It [the airport] belongs to all of us, to all Maldivians,” he said.
Razee stressed that the government would therefore continue to work with the shareholders of the airport consortium even under “difficult circumstances” such as parliamentary debate and legal wrangling. The Minister of Economic Development added that he views privatisation across the nation’s transport networks and economy as vital for future development.
“We have worked with the private sector,” he added. “We will continue to work with the private sector.”
The comments were echoed by President Mohamed Nasheed who said that the levels of requirement investment required at the airport, which he claimed could be called “the Bucket International Airport”, were substantial.
According to figures given by the president, at least US$300m would have been needed for the development from a government budget that he said was already stretched spending Rf1 billion on existing loans.
As the urgent need to develop the airport was “an undisputed truth” accepted by all, President Nasheed continued, vowing that the government “will not let anyone obstruct the country’s development.”
DRP Leader Ahmed Thasmeen Ali told Minivan News that a coalition of political parties formed in opposition to the GMR airport deal remained committed to a Memorandum of Understanding (MOU) focusing on legal recourse to try and prevent the privatisation agreement.
Despite the handover already having taken place this morning, the opposition leader said that the coalition of political parties hasn’t yet “exhausted legal avenues” related to their opposition of the privatisation.
“We simply believe the deal is not in our national or security interests,” Thasmeen said. “With the privatisation of other [existing or soon to be] international airports in the north and south of the country, the state will not have an airport under its control.”
From a stand-alone DRP position, Thasmeen said his party was not strictly against privatisation, but the party would judge any new business propositions put forward by government on a case-by-case basis.
Debate over the issue of privatisation has raged for many months for and against allowing privatisation since GMR and MAHB were first contracted to oversee the airport expansion project back in June.
Deputy Leader of the DRP, Umar Naseer, told Minivan News on June 28 that ” if [the operators] allowed it, an Israeli flight can come and stop over after bombing Arab countries.”
The government has alleged that opposition to the airport deal stems from the “vested interests” of certain MPs, several of whom it arrested following the resignation of cabinet on June 29 in protest against the “scorched earth politics” of the opposition-majority parliament.
Initial 180-day plan
Beyond possible ongoing political and legal discourse, Andrew Harrison, new CEO of GMR Malé International Airport, pointed to greater efficiency in the day-to-day service of the airport as a key focus for the first 180 days of management.
As part of this programme, Harrison announced that an expansion of capacity at the airport was immediately required to allow for more flights to be handled simultaneously. In addition to customer handling capacity, a number of new x-ray scanners and service counters are also set to be provided over the period to speed up waiting times during check in and departure, he claimed.
Beyond operational commitments, Harrison said that the 180 day programme also aims to make a number of changes to the look of the arrivals and departure plaza.
This cosmetic overhaul is expected to include a number of new eateries and retail outlets to be situated across the site and also alongside the waterfront in a bid to boost the “guest experience” and play up the local environment.