The national carrier of the Maldives has just slashed its domestic air fare by as much as 30 percent in the midst of a governmental effort to improve mobility in the country. In an increasingly competitive market, Maldivian Airways is betting on efficiency and expansion to continue to thrive.
What was behind the decision to cut down the prices of domestic air fares?
This was an important pledge made by the government, and one that we support. In order to promote mobility across the country and give continuity to the push for decentralization, we needed to provide Maldivians with a more affordable way of travelling. It was not possible in recent years, as the spike in the international prices of fuel lowered profit margins across the industry worldwide. However, as prices have consolidated towards the end of 2018, we were finally able to reduce the fares on our domestic flights. We have rolled out a plan to support this reduction while sustaining profitability, albeit lower, but that fits into our mission as the national carrier of the Maldives. This is one of the reason why we fly to all twelve airports in the country and any others that might open. If it wasn’t for Maldivian, these routes would not function, and people wouldn’t be able to fly there, since the rest of the market is purely profit driven.
Can Maldivian balance its social service with its own financial sustainability?
We have been working hard on optimizing our procedures and streamlining operations in order to reduce operational costs, so we can continue to provide a quality service at an affordable rate even in routes that are not that profitable. It is a delicate balance, but one that does not stop us from growing. Today we operate not only domestically, but also internationally, with connections to China, India, Bangladesh, Thailand and other destinations, mostly on a charter basis and depending on the demand from tourist operators. We are planning to open four new routes, including a direct connection to London. We are working on securing a wide-body aircraft to start operating this new long-distance flight, which will be a considerable landmark for the company. At the same time, we also operate in the seaplane sector. As the only airline operating international, domestic and seaplane routes, we have a different profile from the rest of the market, but we also gain flexibility to optimize our operations.
How is Maldivian affected by the apparent decline of Chinese tourists?
It is undeniable that there has been a decline in Chinese tourists and we are the first ones to feel it, since we fly to six different Chinese cities. The political instability of 2018 had an impact on the image of the Maldives in China. Since Chinese tourism flows are mostly based on social perception and word of mouth, the flow of visitors took a quick hit. However, as the country has stabilized and improved its image, we expect that tendency to quickly reverse. We are receiving a lot of demand for charter routes to different cities in China, which leads us to believe that that market will quickly pick up. At the same time, we are looking at other regions that we feel will grow in the short to medium term. South Africa, for instance, is a destination that we believe will see good growth. This diversification will also reduce our exposure risk to any one specific region.
How do you see the growing competition in the domestic market?
We occupy a specific place in the market where we are comfortable, but it is clear for us that the rise in the number of players emerges from our own inability to provide the level of service that was necessary, particularly for the high-end tourism market. In a way, we have created our own competition, but that competition has pushed us to improve and rise to the occasion. It is healthy that the market is opening up to new players. To an extent, these new airlines have also lifted some responsibilities from Maldivian as they cater to specific markets that were not our core. We do not expect to compete at all levels, as we have a social responsibility that is not shared with the rest of the players in the market. We assure connections to a number of destinations where the volume is small, but where the connection is fundamental, which separates us from the rest of the market.