Airline start-up bucks trend in Maldives: New York Times

At a time when many airlines are filing for bankruptcy or consolidating routes, George Weinmann is jumping into the industry with a start-up, writes Ron Gluckman for the New York Times.

Mr Weinmann, the chief executive of Mega Maldives Airlines, is going after a growing niche, linking increasingly affluent China with the Maldives, a tiny island nation. The American entrepreneur says he has the right ingredients to make it a success: lucrative landing rights in an expanding market, an international network of contacts and crucial government approvals.

“Over the next 10 years, the Maldives can become the playground in the backyard of India and China, similar to the way the Caribbean is to the U.S.A. and Canada,” Mr Weinmann said.

Still in its second year, the start-up recently added Chongqing to its network of flights between the Maldivian capital of Malé and Beijing, Shanghai and Hong Kong. Selling mainly to group tours organised by travel agents, Mega Maldives has grown to about 180 employees, twice the number when flights started in January 2011.

His start-up is all the more ambitious given that the airline industry is hammered by rising fuel prices and cutthroat competition.

“This is an industry where, even if you make $1 billion one year, you can lose $1 billion another year,” noted Martin Craigs, who spent most of his career in aviation, but now is chief executive of the Pacific Asia Travel Association.

Mega Maldives has faced its own challenges, particularly after street protests in February, when President Mohamed Nasheed of the Maldives stepped down — or was forced out in a coup, as he says. China reacted nervously; many carriers canceled flights.

“We’ll keep flying,” Mr. Weinmann said in February, soon after the unrest hit the islands. “But for how long, it’s hard to say. Right now the planes are still full, but people just aren’t booking” in advance.

Read more


Plane as day: Mega takes off on back of Chinese tourism boom

The Maldives’ newest international airline, Mega Global Maldives, has just completed its maiden international flight between Hong Kong and Gan, delivering over 230 passengers to resorts in the southern atolls.

The charter flight was the first of what Mega intends to become a weekly service, delivering thousands of tourists a month under an arrangement between the airline, participating resorts, and Chinese tour operators.

Minivan News spoke to Mega’s CEO George Weinmann, a former rocket and satellite engineer with aerospace giant Boeing, as he stood on the beach of Herathera resort surrounded by “235 very happy guests about to go sailing – they are already talking about when they’re coming back.”

Weinmann has lived in China for seven years and believes that the potential of the Chinese market in the Maldives is being underestimated by an industry focused on its traditional, European-centric market.

“My first experience of the Maldives was on honeymoon with my wife, who is Chinese,” he said. “At the time I was looking for an investment opportunity and saw a big market that was developing fast – it has since exceeded our expectations.

“The Chinese market is deep and very rich. We believe there are further improvements to how the market is targeted and served.”

In 2010 the number of arrivals from China eclipsed arrivals from all other destinations, for the first time in the Maldives’ history. The influx of Chinese guests at resorts has been credited with partially cushioning the industry from the economic crisis in Europe, particularly during the warmer off-season when many sun-seeking Europeans have the option of travelling to closer countries such as Greece and Spain.

Weinmann believes that many resorts haven’t given the Chinese market the attention it requires to develop, in the mistaken belief that the boom in Chinese visitors is a temporary anomaly – a belief perhaps stemming from the trend among many Chinese guests to stay 2-3 days, while their European counterparts log an average of 10-14 days per visit.

“I don’t agree with that idea at all,” says Weinmann. “It’s a little like going back to the 1950s and saying that while the US is making a resurgence, Europe is still the place to be.”

The Chinese, he said, had become one of the biggest-spending tourism demographics in destinations such as France, with a per-person spend “substantially higher that most other [nationalities] visiting the EU. That was not a fluke – it was developed over five years.”

He noted that a colleague in China “has booked 60,000 airline seats to the EU on the basis of that demand from tour operators, and is booking more because of the demand.”

In the Maldives, Weinmann predicts eventual demand for an additional 20 resorts catering to the Chinese market, open all year round. Unlike the European sector, he explains, the Chinese market “doesn’t drop in volume. The weakest months for China are March and April, but that’s the start of the honeymoon season in Korea.”

Mega was unlikely to see competition from the much larger Chinese and Hong Kong carriers, Weinmann suggests, because they still regarded the Maldives as a niche market.

“There currently no flights from Asia that arrive in the Maldives in day time, which is not convenient for either the resorts or the seaplane operators,” he said. “We are seeing travel agents who are not satisfied with the schedules.”

Mega’s initial focus on charter flights in conjunction with tour operators and resorts not only ensures an early steady steam of income for the fledgling airline, but allows development of the product for Chinese visitors. Weinmann explains: “The benefit for us is that as a Maldivian airline we can start the whole resort experience with clients the moment they step on the plane. Tour operators like that.”

The collaboration with resorts and the early focus on the south of the Maldives, had meant a great deal of early support for the airline from resorts such as Shangri La and Herathera, Weinmann says.

“The southern resorts are very keen to have us, and have put together a very attractive package [for us]. We flew some Chinese guest relations officers with us to Herathera, several of our senior management speak Chinese, and the resorts are hiring some people from Thailand who have experience with the language.”

Eventually the airline hopes to operate a scheduled service, and potentially a domestic connection between Male’ and Gan to connect the Gan-Hong Kong route to more of the Maldives “as the market develops.”

The potential for opening other domestic routes was limited by the 264 seats on the company’s 767, but Weinmann says he sees potential to develop routes between the Maldives, Korea, Thailand and India, the latter for business travel as well as tourism – “the Indian [tourism] market is about two years behind China”, he suggests.

Weinmann says Mega has learned from the experiences of Air Maldives, the national flag carrier that declared bankruptcy in 2000 after ambitious over-expansion into international routes.

“I’m very aware of Air Maldives, and although didn’t experience it myself I have from the point of view of some of our staff who did,” he says. “A new airline has to be careful of its own success – if you get the market right it can be tempting to expand quickly. But each plane is a huge one-time cost, and several planes in a row can quickly deplete your financial resources. Then if you realise you haven’t got the market quite right, your expenses are very high and you have to hope you have very deep pockets. We have been very careful about how quickly we have developed.”

Setting up a new airline is not without obstacles, but Weinmann says Mega has been able to overcome those placed in its way so far. As a local carrier it was, he says, gratifying to see bodies such as the Civil Aviation Authority show “enthusiasm for us to succeed.”

Tourism Minister Dr Mariyam Zulfa said the resort industry was “on the right track” in adapting to rising demand from China, and noted that the Ministry had issued a circular to resorts requesting they provided safely regulations to Chinese guests in Mandarin – tourist fatalities last year were disproportionately Chinese nationals, mostly in snorkeling-related accidents.

There remained, Zulfa said, not enough mid-market beds, which was why the government was pushing for small-to-medium enterprise to develop 3-4 star hotels to compliment the luxury resorts that already existed in the country – a concept Weinmann agrees with: “the Maldives’ geography makes it unique, because the one-resort one-island concept means it can naturally segment the market based on demand.”