Monday, November 24, 2008

Giving a Boost to "Maldivian"

By Dhivehi Dhariyeh

Since the controversial demise of Air Maldives the country has been without a national airline in the international market. The issues surrounding the failure of Air Maldives have not had an independent analysis up to today; we need such an audit to learn lessons from the mistakes of the past.

To compensate for the failure of Air Maldives a new domestic airline was launched as Island Aviation. Through a steady growth strategy the company has expanded its fleet and operations successfully. The company currently has a fleet of 5 aircraft of which 4 are Bombardier Dash 8 family, composing of 2 Dash 8 Q300 (50 seat) and 2 Dash 8 Q200 (37 seat) aircrafts.

The company then took the bold step of venturing into the international market with its turboprop fleet much to the amusement of critics and competitors. With its dedication and effort it has overcome the odds and is successfully expanding its international operations including a rebranding of the airline division as Maldivian. The company's executive management and staff should be acknowledged for this progress and growth which was generated on its internal profitability and resources. The company has announced the next step in its growth by the delivery of a Dash 8 400 (75 seat) aircraft around early 2010. This looks to be a sound decision based on the fact that turboprops are more fuel efficient than jets and the Q400 matches the speed of a jet aircraft which used to be the main weakness of turboprops.

In light of the importance of having a suitable national airline the government needs to work out a solution to give a boost to the efforts of Maldivian. As such mainly two points are of importance now first increasing the capital of the company to speed up its expansion and putting in place an independent and capable strategic management body.

To increase the capital of the company the government should increase its share in the company and allocate a percentage of the company for interested private parties to invest in. For example let 4 private parties invest up to 10% share each, thereby giving a total investment of 40% to private parties while government holds 60% of the company. This seems to be the viable option since attracting an established foreign airline to a JV is slim due to the current economic conditions and the previous assessment of the feasibility by Qatar Airways.

With this increased capital the company should step up its expansion plans and look to acquiring an aircraft of greater capacity and range to allow it to serve feasible routes such as Bangkok, Malaysia and Dubai. An ideal aircraft for the purpose would be an Airbus A319 or similar type. Such an aircraft should be acquired in the short term, preferably somewhere in 2010. To aid this, the physical and human resources of the company should also be developed.

The company should also be appointed a professional and independent Board of Directors and ensure compliance with Corporate Governance Code even though it's not a public company. It should also be looked into the viability of bringing in a foreign CEO who's experienced in international airline operations. The government should reduce its dependence on the company's dividend (as with other SOE's) as a primary source of government revenue and let the company reinvestment a greater portion of its profits into its expansion.

[This article was submitted by Dhivehi Dhariyeh, a visitor to this site.]


Noor said...

An excellent article. I commend the proposed ideas. Hope the new government gives its ear to suggestions like this.

Anonymous said...

"The company then took the bold step of venturing into the international market with its turboprop fleet much to the amusement of critics and competitors."
End Quote.

Could you please quote what the critics are saying. Interested in knowing what they are saying. And who are the critics?

Anonymous said...

nasheed is going to suggest to extend the lease of resorts to 50 years. no wonder all resort owners are backign him. this is a nightmare for all of us. it simply means that the we and our children will be at the mercy of new type of land lords who owns not a plot a but a whole island (city) male' and its landowners would be nothign compared to this.

as commoner i can agree to that if these resorts are willing to sell 50 percent of their shares to public.

NGOs and people like you need to join hands for a strong campaign against it.

Dhivehi Dhariyeh said...

With regard to the comment on what the critics were specifically saying.

I wrote that based on the general criticism that existed within most of us. The thought that how long would they last flying internationally in a 50 seat turboprop plane must have been a question in the minds of more than a few, if im not mistaken.

@ Noor: Thanks for the comment. I also hope that the govt looks into the possibilities such as these.

Dhivehi Dhariyeh said...

@ Noor: Thanks for the comment. I also hope that the govt would work along these lines.

@ the comment regarding critics: When i wrote that i didn't have in mind any specific person or so. I meant in general as the criticism that most of us had in our mind. The question of how long they would last in the international sector using a 50 seat turboprop was a question that i think a lot of people wondered about.

Anonymous said...

Sell Maldivian to the highest bidder,sell MiFco, Sto,MNSL and all the other state enterprises to the private sector. Give the resorts for 50 years(Can we amend the laws so that the resorts also can be sold off?),rent ou Theemuge but before that we must sell off the furniture and raise as much as we can. Our country is sinking.I say, sell off all the other islands too to the highest bidder. The auctioning must be done by a professional international company .What we get from the grand sale should be deposited in the Fund to buy land(I say,Australia)for all of us who want to emigrate now. Dr, Shaheed, would you start the negotiations with the Aussie Govrnment?