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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Dollar shortage threatens to ground local airline sales

Sales agents for some international airlines operating in and out of the Maldives have said that a lack of US dollars circulating within the economy is causing concerns, and in some cases, temporary cessation of their day-to-day operations.

Galaxy Enterprises, which operates as a general sales agent for Sri Lankan Airlines in the country has said that it has temporarily stopped selling airline tickets in the country. The group have forwarded potential customers to the Sri Lankan Airlines official website to process booking requests.

The announcement comes as financial institutions like the Bank of Maldives concede that the high level of imported goods bought into the economy are not being matched by US dollar generating industries inside the Maldives. The bank has said that the disparity had created a “lag” in terms of supply and demand for the currency.

The situation this week led to police – with the assistance of the Madives Monetary Authority (MMA) – trying to crackdown on sales of the country’s US currency beyond the pegged rate of Rf12.75 per dollar at black market rates as high as Rf16.

In the statement issued by Galaxy Enterprises and printed in newspaper Haveeru today, the group said it had been forced to suspend sales of Sri Lankan Airlines flights as it was not receiving sufficient US dollars through the banks to pay the airlines after selling tickets to its customers in rufiyaa. The group said that it will resume selling Sri Lankan Airlines tickets once the dollar shortage was perceived to have “eased”.

Galaxy Enterprises is not alone in witnessing operational difficulties as a result of the state of the nation’s finances.

Tyronne Soza, Maldives Country Manager for Mack Air Services Maldives, which represents the local interests of multinational aviation group John Keells Airlines, said that dollar supply was a major concern for its operations, although it continues to sell tickets.

“We are having some issues with obtaining and paying in dollars right now. As we are part of the John Keells group we have been able to manage the situation though,” Soza said. “It’s illegal to charge customers in dollars and obviously we accept rufiya, but it is difficult.”

John Keells serves as a holding company for aviation groups link Jet Airways and Sri Lanka-based Mihin Lanka.

Not all operators have shared these currency concerns though, with senior management for one of the world’s highest profile airlines, which works through Universal Enterprises in the country, claiming it was “business as usual” despite reports of dollar concerns amidst some competitors.

Last week, Peter Horton, the recently appointed CEO of Bank of Maldives told Minivan News that he believed the country desperately needed new ways of creating a US dollar income to try and overcome the crisis.

“A reality of the economy is that we are importing so very much, and we have so few dollar generating industries. In very simple terms, any downturn in the economy incur losses in the economy when turnover drops below break-even level. That is where we are as an economy – our revenue in dollar terms, in terms of the imports we require, is lagging,” the CEO, a British national, claimed.

“We need to look at ways of keeping dollars in the country as much as possible. [A] number of entitites are taking money out of the country – and are free to do so without exchange control. I think we also need to look at other ways of enhancing dollar revenues through fresh or new industries – and I would include financial services among those industries.”

Horton added that the issue had been compounded by economic uncertainty within international financial markets during the last few years, representing a massive national challenge that needed to be overcome.

However, police attempts to crack down on potential black market dollar sales are claimed by some low-wage expatriate workers to have exacerbated difficulties faced in trying to transfer and provide funds abroad.

Many of the country’s 100,000 foreign workers, particularly a large percentage of labourers from Bangladesh, are paid in Maldivian rufiya by their employers and are forced to change the money on the blackmarket at rates often higher than the government’s pegged rate of Rf12.85, before sending the money to their families.

The set dollar rate in the Maldives is Rf12.75, however during the dollar shortage it has increased to 13, 14, 15 and sometimes even as high as 16 on the black market.

However, banks routinely refuse to change rufiya into dollars, and experts have claimed that the crackdown will do little to address the demand for foreign currency or the budget deficit, which has led to the pegged rate not reflecting the value of the rufiya.