Maldivian Air Taxi:
A foreign
investment success story

Chances are that a flight on a Maldivian Air Taxi seaplane is
a very different experience than any other flight you have ever taken. To begin with, the 14-
passenger turbo-prop plane flies leisurely at about 3,500 feet—instead of zooming across the sky
at an altitude of 35,000 feet like the big jets. And the de Havilland Twin Otter seaplane has its
wings attached overhead, which gives every passenger an unobstructed birds-eye view out
the window. And in the Maldives, what lies outside that window just happens to be one of
nature’s most exquisite phenomena.

Nearly 2,000 tiny coral islands are set against
multiple shades of azure, jade, turquoise, aquamarine and the dark royal blue that make up the
Indian Ocean—all combining to form an intricate pattern that resembles a fascinating abstract
painting. And since the average flight sector is only about 18 minutes, you have to be ready to
absorb all this natural beauty from the moment of take-off. No sleeping on these flights—there’s
too much to see.

Maldivian Air Taxi’s Managing Director Jesper Hougaard joined the
organization in1995, when the company was a little over a year old. “It took quite a while to get
started,” he explains, “because it was a new thing to the Maldives and people were very
skeptical. So the company spent a lot of time finding out how to do things and how to
convince the authorities that his would be a safe operation.”

Often cited as one of the
most successful examples of foreign investment in the country today, the Maldivian Air Taxi (
MAT) was formed by a group of Danish investors who began operations on November 4, 1993
with its inaugural flight. At that time it had 25 employees and two planes—employees now
number 210 and its fleet consists of 20 aircraft. The company turned profitable four years ago.
“Our turnover is now about $20 million a year,” explains MD Hougaard, “Seen from an
international perspective, we are quite in line with successful international companies around
the world.”

Each seaplane carries a crew of three—a cabin attendant and two pilots.
During the high season (December through April) the company employs about 55 pilots, who
are currently all expatriates from various countries, including Australia, Denmark, Canada and
the US. But two years ago the company began a sponsored pilot-training program for
Maldivians, which has proven to be very successful. Five pilots have already been trained,
says Hougaard, and the airline is very happy with their performance.

MAT’s 30 cabin
attendants are all fully licensed Maldivians who have been through training equivalent to that
of the larger airlines. The company brings in instructors to teach first aid, fire fighting, life-raft
operation and other subjects. After successful completion of the course, the graduates are
licensed by the Civil Aviation Authority.

The company realizes that seaplanes are here
to stay in the Maldives and have consequently invested a lot of money to improve its
engineering and maintenance facilities. A program to train Maldivian aircraft engineers is in the
works—one that would create new career opportunities for the local workforce while making it
possible to do more maintenance in the Maldives.

“The maintenance of seaplanes
operating in the Maldives is about six times higher than anywhere else in the world,” explains
Hougaard. “It’s amazingly corrosive here—high humidity, high temperature and constant salt. We
used to say that even stainless steel stains here.” The company is currently capable of doing
extensive maintenance in its facilities, but every two years it sends the airplanes back to
Canada “where they get torn apart—wings off, wheels off, paint off—everything. Then they are
inspected and repaired. After three months, they are sent back with a huge bill and new paint.”


“In the Maldives, foreign investors don’t pay income tax or corporate tax. We do pay a
royalty fee to the government, but we are given a lot of opportunity here…The foreign
investment policy of the Maldives is…‘if there’s something we cannot do—we will allow foreign
investment.’ It has allowed 100 percent foreign investment on our side and I think there is an
obligation for the foreign investors to make sure that the country will be able to do it [by
themselves] in the future. So that’s what we are trying to pay back by offering these training
programs.”

The company also hopes to develop and sponsor a two-year training center
in association with the Minister of Education where young Maldivians can get an all-around
education in business administration and vocational training that could include studies abroad
in accounting, computer science and other areas.

The airline’s method of operation is
rather unique. They do not offer a scheduled service, but instead contract with various tour
operators and hotels to provide transfers for their clients. So in most cases when you book a
hotel you would automatically have a transfer included. Every evening the next days’ bookings
from its contract partners are received and a schedule for the following day is completed.


“It’s a major puzzle to get all of this going,” says Hougaard, “but we have quite a good
forecasting system that tells us how much capacity we need on certain days. We take all the
cares away from the resorts and tour operators by taking over all the transportation.” The
airline’s clientele are mainly Europeans and Asians—and a “very few” Americans. About 20
percent of the company’s business is local resort staff and islanders—to whom it offers a special
rate.

Reliability and dependability are of prime importance to the company. It receives
guests as they arrive on various airlines throughout the day and guarantees a maximum of a
two-hour wait for a transfer. MAT never says they are full or tells a passenger they missed their
connection because their flight was late. It just puts on another plane.

“This also
means that our load factor is extremely low—less than 40 percent,” says Hougaard. “But that is
the service we have agreed upon with the industry and that is the service we want to provide.
So we just have to figure our costs accordingly.”

Recently the airline began publishing
an in-flight magazine. When asked the reason, Hougaard explained that many people come to
the Maldives and go directly to their resort without really seeing anything else. They don’t even
visit the capital island of Male or learn about the history and culture of the country. So MAT
wanted to create a magazine to familiarize passengers with various aspects of the islands.
Some topics covered have been the dress of women in Islamic society and the royal Sultan
families that once ruled the land. It prints 30,000 copies of each issue for passengers and
distribution at the international trade shows in which it participates, such as the upcoming Las
Vegas Dive Fair early next year.

Last year the airline carried nearly 200,000
passengers. Seaplanes can only be flown during daylight hours, so in order to meet the
increasing market demand and cover late-night arrivals and departures, MAT has just added
two 12-passenger Bell 212 helicopters to its fleet. The craft, which has an excellent safety
record, will supplement the seaplane service and provide 24-hour search and rescue capability
as well. It can also be used for medical evacuation at night. Plans are being made to build
airstrips on some of the larger islands to allow for future expansion of the industry in the more
remote areas.

In addition to its transfer services, Maldivian Air Taxi offers charters,
scenic photo flights and “adventure excursions” to picturesque fishing villages and isolated
inhabited islands for picnics and snorkeling. The airline has a small executive Cessna that can
be leased to TV crews and professional photographers for filming in the area, and MAT has
also been chosen as the official transport for Maldivian President Maumoon Abdul Gayoom
when he travels throughout the country.

Maldivian Air Taxi can be contacted at Tel: (
960) 31-5201
Fax: (960) 31-5203
e-mail: mat@mat.com.mv

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