Deadlock over Maldives $25 Airport Development Charge

Less than a year into its concession agreement with the government of Maldives, India's infrastructure giant GMR Infrastructure is running into fierce opposition particularly from law makers, the Courts and the traveling public over its introduction of the $25 Airport Development Charge that went into force last month.

The giant Infrastructure firm  won a tender from the Mauritius government in 2010 to build, operate, modernise and expand the Mahe's Ibrahim Nasir International Airport Airport for a period of 25 years, during which the firm is supposed to pay the Maldivian government an estimated $520 million.

Mahe's Ibrahim Nasir International Airport Airport
 The company planned to collect the $25 from the one million passengers departing on international flights from Mahe INIA International Airport for a period of 25 years to raise $625 million for the development of the nation's airport infratructure but a Civil Court in Maldives blocked the fee on the grounds that it is essentially the same as a pre-existing Airport Services Charge (ASC) of US$18 for foreigners and US$12 for locals above two years of age. The decision was appealed by the government in the High Court to honour its Contractual obligations with GMR.

The airport infrastructure company has raised a debt of $358million from the Singaporean branch of Axis Bank to construct a $400 million airport in Mauritius, touted as the single largest FDI in the idyllic Island to date.

Many Maldivians are wary of the new bosses at the airport over the $25 ADC that will be paid locally, separate from the ticket fee, before boarding the airplane. GMR introduced the separate ADC charges after IATA disallowed the inclusion of the fee in the ticket prices.

Privatization of airports is something many African governments are likely to confront in the near future. Airports were spared in the spate of privatizations that swept through Africa in the 1990s and early 21st Century and almost all African governments still retain full control of their airports. But given the state of management of some airports in Africa, privatization is definitely inevitable, and expect it to be more messy than this unless the public oversight bodies are more vigilant.

GMR also built and is currently operating the Istanbul Airport in Turkey. The company is also bidding for airport development and modernization projects in Brazil, Croatia. The company also operates India's Hyderabadand New Delhi Airport.

For Maldivians traveling abroad and tourists flying out of the country,getting from the sunny side of life just got costlier.

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