Maldives Air Connectivity Strategy: Diversifying Beyond Gulf Hubs to Drive Tourism Growth and Aviation Resilience - Part 3

The Critical Role of a Home Carrier in Enhancing Maldives Air Connectivity 

In many small island states, a home-based carrier, whether government or privately-owned and operated, plays a pivotal role in developing air connectivity and maximizing the use of airport capacity and available traffic rights. In countries where aviation has flourished, a home carrier supported by the government often serves as a cornerstone of international connectivity.

Unlike foreign airlines, which typically base their route development on commercial viability, a home-based carrier can operate routes (obviously with the government support)  that align with broader national interests, extending beyond purely commercial objectives.

Geographically, the Maldives occupies a strategically advantageous position, equidistant from major markets in the East, North and West, making it an ideal location for attracting international air services. Approximately 36% of the world’s population (around 3 billion people) are located within an eight-hour flight radius of Malé (Velana International Airport). However, without appropriate regulatory and operational reforms, only a home carrier can fully capitalize on this advantage.

The national carrier, Maldivian, has traditionally followed a charter-based model for its international operations. Be0nd, the other international airline based in the Maldives, also operates under a similar model but targets a different market segment. Historically, several now-defunct carriers adopted the same charter approach. It is therefore imperative that the Maldives develops the capability to operate scheduled international air services through its home carriers if the government intends to fully utilize its multibillion-dollar airport infrastructure and underutilized air traffic rights.

Given the Maldives’ relatively small domestic market size, sustaining international airline operations based on a point-to-point scheduled route network model presents significant economic challenges. However, these challenges could be mitigated by developing the country’s international airports under a strategic hub concept.

Despite its advantageous geographic position and recent infrastructure investments, the absence of essential facilities for connecting and transit traffic especially at Velana International Airport (MLE) highlights the shortcomings in the government’s broader vision for developing the Maldivian aviation industry. As a result, the country is missing a golden opportunity to establish MLE as a regional hub airport, leveraging a hub-and-spoke network model operated by its home carriers.

The Strategic Role of Airports, Visit Maldives, and the Maldives Civil Aviation Authority

Airports, tourism authorities, and airlines alone cannot sustainably expand international air  connectivity without broader government support. Air connectivity is fundamentally a national economic issue that directly impacts tourism, trade, employment, foreign investment, regional development, and national resilience. Therefore, supportive government policies, regulatory flexibility, competitive taxation, coordinated destination marketing, route development incentives, and long-term aviation planning are all essential to attracting and retaining international airlines in an increasingly competitive global aviation market.

In the Maldives, Maldives Airports Company Limited (MACL), through Velana International Airport (MLE), plays a central role in attracting airlines through infrastructure readiness, operational efficiency, competitive airport charges, route incentives, and marketing support. Equally important is ensuring that airports are adequately resourced and capable of maintaining the highest international standards in safety, security, operational efficiency, passenger facilitation, and service quality. In an increasingly competitive aviation environment, airlines evaluate not only airport infrastructure and commercial incentives but also regulatory compliance, operational reliability, and adherence to global best practices.

While MLE has introduced incentive schemes to support airline expansion and route development, the results over the past decade suggest that these efforts have not been sufficiently aggressive or strategic to attract and retain a broader portfolio of international carriers. The Maldives has lost several airlines and routes in recent years, including Korean Air, Cathay Pacific, China Southern Airlines, Go First, Vistara, and most recently Wizz Air Abu Dhabi. Yet there has been little visible evidence of a coordinated and proactive route recovery strategy to replace this lost capacity. While airport expansion projects have received considerable attention and investment, route development, airline engagement, and market stimulation appear to have received far less focus. Infrastructure alone does not create connectivity; airlines do.

As the Maldives continues to invest billions of dollars in airport infrastructure, equal emphasis must be placed on developing the institutional capacity, technical expertise, commercial capabilities, and international partnerships necessary to compete with leading aviation hubs in the region. World-class facilities must be matched by world-class route development, safety oversight, security standards, and operational performance if the Maldives is to maximize the economic returns from its aviation sector and strengthen its position as a globally connected tourism destination.

At the same time, Visit Maldives plays a critical role in supporting air connectivity through destination marketing, joint airline promotions, trade partnerships, and market stimulation campaigns. Airlines often assess not only airport economics but also the strength of destination marketing support before launching new routes. The successful seasonal operations by Iberia between Madrid and Malé demonstrated how coordinated marketing efforts can stimulate demand and improve route performance. Over the years, Visit Maldives has supported tourism growth through international trade fairs, roadshows, airline partnerships, and joint marketing campaigns in key source markets.

However, destination marketing should be more closely aligned with aviation development objectives. Beyond promoting the Maldives as a tourism destination, Visit Maldives should actively support route development by working with airlines, airports, and tour operators to stimulate demand in emerging markets such as Spain, Japan, Australia, Scandinavia, South Africa, and Taiwan. Participation in route development forums, co-funded airline marketing campaigns, and market-specific promotional strategies could help reduce commercial risk for airlines and accelerate the diversification of the Maldives’ international air connectivity.

In recent years, Visit Maldives has partnered with major global travel platforms and online travel agencies and other digital travel marketplaces, to increase destination visibility and drive bookings. While such partnerships can significantly expand market reach, there should be a robust mechanism to measure and evaluate their effectiveness. Performance indicators such as visitor arrivals, booking conversions, average visitor spending, length of stay, market share growth, and airline seat demand should be monitored to assess the return on investment of these campaigns. A more data-driven approach would enable Visit Maldives to better align destination marketing expenditure with route development objectives and ensure that marketing partnerships contribute directly to sustainable tourism growth and improved air connectivity.

Meanwhile, the Maldives Civil Aviation Authority (CAA) plays a crucial role in negotiating Air Service Agreements (ASAs), facilitating market access, ensuring safety oversight, allocating traffic rights, and creating a policy environment that encourages international airline participation and long-term aviation growth. Beyond its regulatory responsibilities, the CAA should seek to strengthen the Maldives' negotiating leverage by pursuing more liberal, flexible, and commercially attractive ASAs that maximize economic value for the country. Rather than focusing solely on increasing the number of agreements signed, priority should be given to markets with strong tourism, trade, cargo, and connectivity potential.

The CAA should also adopt a more proactive approach to bilateral air services negotiations. Historically, ASAs have often been pursued only when a foreign airline expresses interest in serving the Maldives or when a Maldivian carrier requires traffic rights for network expansion. Instead, the Maldives should actively identify and secure agreements with strategically important markets well in advance of demand. Establishing strong and commercially meaningful ASAs before they are needed would position the country to respond more quickly to emerging opportunities, strengthen its negotiating position, and create a ready framework for attracting new airlines, expanding trade links, and supporting future tourism growth. A forward-looking air services strategy would ensure that regulatory readiness does not become a barrier to connectivity development.

The CAA should also adopt a more pragmatic approach to air traffic rights, recognizing that the primary objective of aviation policy should be to maximise national economic benefits rather than simply protect home carriers from competition. Where clear economic value can be demonstrated, the Maldives should be prepared to offer more liberal market access, including expanded traffic rights and selective Fifth Freedom opportunities. Such policies can attract additional airlines, improve connectivity, stimulate tourism and trade, increase cargo capacity, and strengthen the Maldives' position as an international destination.

More importantly, the CAA must urgently lead the development of a National Aviation Policy and Air Connectivity Strategy for the Maldives. The absence of a comprehensive framework linking aviation, tourism, trade, transport, and economic development has resulted in missed opportunities, fragmented decision-making, and underutilization of the country’s air service potential. Immediate action is required to establish clear regulatory, commercial, and market access policies that support route development, attract investment, encourage competition, and maximize the economic value of air connectivity. As aviation remains the backbone of the Maldivian economy, such reforms can no longer be viewed as optional, they are an economic necessity.

A Fractured Aviation Supply Chain 

Maldives have among the highest passenger taxes and airport charges in Asia and are significantly above those imposed by most competing island tourism destinations and regional aviation hubs. From an aviation competitiveness perspective, the combined Departure Tax and Airport Development Fee (ADF) effectively doubles the charge burden on departing passengers.

Airport taxes and fees in the Maldives have increased significantly over the past decade. The International Air Passenger Departure Tax and the Airport Development Fee (applied only at MLE) have risen by 114% for a foreign economy-class passenger since the adoption and revision to traveler’s cabin class based model. 

Comparison of Economy Class Passenger Charges

Premium Cabin Comparison

The premium cabin charges are particularly unusual. Few tourism-dependent destinations impose such large differentials between travel classes. While premium travelers may be less price-sensitive, airlines often consider total passenger costs when assessing route competitiveness.

While the Maldives seeks to attract new airlines and diversify air connectivity, policymakers should also examine whether the current structure of departure taxes and airport development fees remains competitive against regional tourism destinations. As route development becomes increasingly competitive, a balance must be struck between generating government revenue and maintaining the affordability and attractiveness of the Maldives as a global tourism destination. Strategic reductions, exemptions for new routes, or targeted incentives could potentially deliver greater long-term economic returns through increased visitor arrivals, airline activity, and tourism receipts than the short-term revenue generated through high passenger charges.

Jet Fuel Cost Competitiveness: A Major Barrier to Air Connectivity Growth

Fuel is one of the largest cost components for airlines, typically accounting for 25%–35% of total operating costs. Compared with neighboring countries and competing tourism destinations, the Maldives remains one of the most expensive locations in the region for jet fuel uplift.

While the Maldives seeks to diversify air connectivity and attract new airlines, jet fuel pricing remains one of the most significant structural barriers to growth. With fuel prices positioned significantly above global and regional markets, policymakers should review fuel pricing policies alongside route development initiatives. Improving fuel cost competitiveness could generate greater long-term connectivity benefits than many short-term incentive programmes and significantly enhance the Maldives’ attractiveness to international airlines.

The Need for a National Route Development Fund

The Maldives Fifth Tourism Master Plan highlights the importance of financial incentives in stimulating international air connectivity. MLE airport may offer marketing support and fee waivers, but to ensure long-term success, the government should develop a sustainable national route development strategy that moves beyond short-term incentives and focuses on market development, airline partnerships, coordinated destination marketing, regulatory support, and measurable economic outcomes. Such an approach would help create enduring connectivity rather than temporary airline dependence on subsidies and reacting to short-term market fluctuations.  

A national Route Development Fund (RDF) would therefore provide a more coordinated and sustainable solution.

Key Components of a Route Development Fund

Key Stakeholders

Potential Benefits of a Route Development Fund

Case Study: Cape Town Air Access – A Model for a Maldives Route Development Fund

The success of the Cape Town Air Access (CTAA) initiative provides a compelling case study for the Maldives as it considers establishing a National Route Development Fund (RDF) to diversify air connectivity, stimulate tourism growth, and strengthen economic resilience.

Profile

• Launched in 2015 as a partnership between government agencies, tourism authorities, airports, and the private sector.

• Developed as a dedicated route development programme to attract new airlines and increase international connectivity.

• Focused on aligning aviation development with tourism, trade, investment, and economic growth objectives.

• Adopted a collaborative funding and governance model rather than relying solely on airport incentives.

Key Achievements

• Secured 15 new international routes.

• Facilitated 20 route expansions by existing airlines.

• Attracted 7 new airlines since 2022.

• Cape Town Airport’s first 3 North American and first South American connections were established in October 2023. 

• Added more than 1 million international seats into Cape Town.

• Significantly improved direct connectivity to Europe, North America, Africa, and the Middle East.

• Cape Town Airport’s African Seat Capacity has grown by a CAGR of 10%, per year, between 2015 and 2023. 

Economic Impact

• Approximately 605,000 additional international passengers generated through the programme.

• Contributed approximately R24.3 billion (US$1.3 billion) to the Western Cape economy.

• Supported more than 10,600 jobs.

• Increased tourism receipts, foreign investment, business travel, and trade opportunities.

• Expanded air cargo capacity and improved export competitiveness.

Aviation’s Importance to the Maldives Economy

Air connectivity, both international and domestic, remains essential for the Maldives’ economic survival and social integration. As a geographically isolated island nation, aviation serves as the country’s primary gateway to global markets, tourism, healthcare, trade, and investment.

According to the International Air Transport Association (IATA), the Maldivian aviation industry contributes approximately $4.7 billion to the national economy through direct, indirect, induced, and tourism-related impacts. This represents nearly 71% of the Maldives’ GDP, underlining the aviation sector’s immense strategic importance.

While the value of aviation to the Maldives is unquestionable, the more pressing issue is whether the country is adequately prepared and sufficiently resourced to meet future connectivity demands amid rising regional competition. As neighboring destinations aggressively expand airport infrastructure, airline partnerships, and tourism incentives, the Maldives must adopt a more coordinated national aviation strategy to remain competitive in the years ahead.

The tourism impact alone could be substantial. Emerging markets such as Spain, Japan, Australia, and Scandinavia are already recording strong visitor growth despite limited or non-existent direct air services. Spain, for example, recorded 55,489 tourist arrivals in 2025, growing by 16%, while Australia grew by 17.5% to over 42,000 visitors despite the absence of direct flights or formal Air Service Agreements (ASAs). Japan also recorded over 34,000 arrivals with double-digit growth despite lacking direct connectivity. If direct competitive services were introduced from these markets, the Maldives could reasonably expect an additional 150,000 to 250,000 annual visitors within five to seven years through a combination of new market stimulation, improved accessibility, and stronger airline-led destination promotion.

Based on current tourism spending patterns, these additional arrivals could generate between $400 million and $700 million in additional annual tourism receipts, particularly if focused on higher-yield long-haul markets such as Japan, Australia, France, Spain, and Northern Europe. European tourists continue to represent the highest-spending segment for the Maldives, while Japanese and Australian travelers are globally recognized for high average expenditure, premium travel preferences, and longer stays.

The benefits would extend beyond passenger tourism into air cargo and trade development. Increased long-haul connectivity typically generates significant additional belly cargo capacity, especially on widebody aircraft operating direct services. With new routes from Europe, North Asia, and Oceania, the Maldives could potentially increase annual international air cargo throughput by an estimated 8,000 to 15,000 tonnes within the medium term, representing roughly a 20% to 35% increase over current cargo volumes. This additional capacity would strengthen seafood exports, improve high-value perishables logistics, reduce freight costs for tourism imports, and support the growing demand for e-commerce, pharmaceuticals, and express cargo services. Direct connectivity to premium markets such as Japan, Australia, and Europe could also create opportunities for faster and higher-value fish export supply chains, particularly for fresh tuna products where transit time is commercially critical.

Improved air connectivity would also help reduce one of the Maldives’ biggest structural tourism weaknesses: seasonality. At present, nearly 25% of airlines operating to the Maldives are winter-oriented, while approximately 77% of direct European services operate only during the winter season. New connectivity from Australia, Africa and parts of Asia-Pacific could help offset this imbalance by generating inbound demand during the northern hemisphere’s summer months. This would improve year-round resort occupancy, stabilize airline seat demand, strengthen cargo consistency, and reduce seasonal volatility across the wider tourism and trade supply chain.

Some facts of air connectivity contribution to economic development

• Every scheduled long-haul service supports on average 3,000 jobs.

• 10% passenger growth leads to approximately 2% regional growth.

• 10% increase in air connectivity, relative to a country’s GDP:

a- Will boost labor productivity levels by 0.07% (Global)

b- Boosts total factor productivity by 0.9% (EU Economies)

c- Can increase long-run GDP by 1.1% (EU Economies)

Source: IATA (2020)

Bottom Line

The central argument is that the Maldives should treat air connectivity as a national economic development strategy rather than simply an aviation function. The country's future tourism competitiveness, economic resilience, and global connectivity will depend on how effectively it diversifies beyond Gulf transit hubs or any other concentrated hub cluster, utilizes its existing aviation agreements, develops new airline partnerships, and adopts a coordinated long-term aviation strategy.