By Varun Gupta
Around 35% of all tourists to the Maldives use a seaplane to reach their resort. Meanwhile, numerous resorts rely almost entirely on seaplanes to pick their guests up and drop them off at Velana International Airport. On busy days, the airport handles three times as many seaplane flights than normal flights. For the Maldivian tourism industry, the seaplane terminal is almost as important as the international airport itself.
It is therefore good news that the international airport, which is currently woefully overcrowded, is being upgraded, and as part of this upgrade a brand new seaplane terminal will soon be finished, and ready to open in the coming months. Such critical infrastructure is necessary to allow tourism to expand, and the nation’s economy to grow.
However, running a successful seaplane terminal is not as easy as it might sound. Yes, it is a piece of infrastructure, but importantly, it is often the first experience a tourist has of Maldivian hospitality. A seaplane terminal is integral to the overall success of a seaplane operation, as it allows operators to customise the experience to ensure passenger satisfaction.
People expect a holiday with a difference when they land in the Maldives and the seaplane terminal strives to provide that. At the moment, TMA — the world’s most successful seaplane operator — runs an extensive seaplane operation that includes both existing terminal buildings and lounges, as well as a complex, on-demand flight operation. To ensure high quality service, resorts are treated as equal partners in this operation. TMA provides what the resorts demand, to ensure passenger experience isn’t compromised.
There has been much recent speculation in the Maldivian media about how much money the airport company (MACL) could make from running the new seaplane terminal themselves. Much of the speculation has come from a leaked report from the Auditor General’s Office, which claims MACL could earn $47m per year if it manages the new terminal itself. But the figures mentioned in the AG’s report don’t appear plausible to anyone with a reasonable knowledge of seaplane operations.
Firstly, the entire cost of building the new terminal is around $47m — including the building work. The size of the loan the Government of Maldives took from the China Development Bank to build the terminal was, in fact, $47.2 million. The idea that this money could be recouped by MACL in just 12 months of operations seems way off. There are almost no legitimate businesses that produce a 100% annual return.
More worrying is the AG’s Office report’s implied cost to the passengers — over $100 dollars per passenger, each time they use a seaplane lounge in the new terminal before boarding a flight. This is way off the mark from what passengers currently pay, which is much, much lower. A successful seaplane operator would not charge such a huge amount from passengers to use its facilities.
The price of using a lounge must be kept low to give real and perceived value to the traveler. The average wait time for most travelers is less than an hour. Charging passengers over $100 per hour, is more expensive than staying in some of the luxurious resorts of Maldives.
Now imagine if a family of four had just a 15 minute wait before boarding a seaplane flight. That family would have paid over $400 for just 15 minutes in a lounge! The cost cannot be ‘averaged-out’ between travellers. It must be kept low enough that even the quickest departing traveller doesn’t feel like they got a raw deal.
The $100+ lounge fee suggested by the Auditor General would create a terrible first experience for passengers, many of whom save up for years for a ‘holiday of a lifetime’ to the Maldives – a holiday that is already expensive compared to rival destinations.
Tourism is the lifeblood of the Maldivian economy. And the airport infrastructure in Male’ is the beating heart that pumps the tourists around the country. As the Maldives upgrades this critical piece of infrastructure, it must proceed with caution, charge tourists sensible prices, and ensure that no harm is done.
About the author: Varun Gupta was the former Head of Strategy at TMA. He brings in an Insider’s perspective to the operations though he has no financial or similar relationship with the company since his exit from the company in July 2015. While he is currently the founder of MeTripping, a global award-winning Intelligent Travel Tech startup, he was earlier the founder of Zuna Capital Partners, and has worked with Vedanta Group and KPMG. He is a qualified Chartered Accountant and has an MBA from Harvard University.