The Maldivian Aviation Industry – How is it progressing?

Air connectivity, both international and domestic, plays a crucial role in linking isolated nations to global markets and supporting their socioeconomic development. According to the International Air Transport Association (IATA), through both direct and indirect contributions, the Maldivian aviation industry generates approximately USD 4.7 billion for the national economy, accounting for nearly 71% of the Gross Domestic Product (GDP) of one of the world’s leading tourist destinations.

While the importance of the aviation sector to the Maldives is unquestionable, it is essential to examine how well the industry is resourced and equipped to meet current and future demands. More importantly, this assessment must consider how prepared the Maldives is to remain competitive amid increasing regional competition.

Taking Velana International Airport (MLE) as the country’s primary international gateway, this article examines the current status of the Maldivian aviation industry from a regulatory perspective, using the determinants of IATA’s Air Transport Regulatory Competitiveness Index (ATRCI). The ATRCI evaluates how effectively a country’s regulatory framework supports the economic benefits of aviation. Widely recognized at the international level, the index assesses regulatory competitiveness through five key determinants related to the ease of doing business.

This article does not cover general aviation movements at Velana International Airport.

IATA’s Air Transport Regulatory Competitiveness Index

Passenger Facilitation

Passenger facilitation encompasses a set of processes, policies, technologies, and services designed to ensure that passengers move smoothly, efficiently, and securely through all stages of air travel—from arrival at the airport to aircraft boarding and beyond. The primary objective of this pillar is to enhance the speed, convenience, safety, and overall quality of the passenger experience while maintaining essential security and regulatory controls.

The newly opened Terminal 1 at Velana International Airport (MLE), which currently serves international operations, has significantly streamlined check-in, security screening, immigration, and boarding processes, resulting in reduced wait times. Compared to the former terminal, passenger processing efficiency has improved considerably. Average departure processing times are now approximately 30 minutes, down from 45–60 minutes previously, while arrival processing times average 35 minutes, compared to 45–90 minutes depending on traffic conditions.

Technologies such as the automated baggage handling system have played a crucial role in improving passenger processing efficiency. The planned introduction of self-service check-in kiosks and automated e-gates is expected to further enhance passenger facilitation and throughput.

Despite these improvements, challenges remain. The floor space allocated to the check-in area, along with signage design and placement, continues to affect processing efficiency, passenger comfort, and accessibility throughout the terminal.

An often-overlooked but highly influential component of passenger facilitation is ground access to and around the passenger terminal. A significant portion of the Maldives’ tourist accommodation catchment area is connected to MLE via sea transport. Additionally, surface transport movements—including taxis, buses, and private vehicles operating between the seaplane terminal and Terminal 1—continue to pose challenges in managing traffic flow and congestion due to spatial constraints. These factors ultimately have a direct impact on overall passenger facilitation at MLE.

From an entry facilitation perspective, the Maldives offers a 30-day free visa on arrival to nationals of all countries except Israeli passport holders. Conversely, Maldivian passport holders enjoy visa-free access to 64 countries and visa-on-arrival access to a total of 94 countries. The Maldivian passport is ranked 56th globally in terms of visa-free and visa-on-arrival access and is widely regarded as one of the strongest passports in South Asia.

Another key factor under this pillar is the extent of liberalization in the Bilateral Air Services Agreements (BASAs) that the Maldives has concluded with partner states. As of July 2025, the Maldives has signed 37 BASAs and entered into 18 Memoranda of Understanding (MOUs), resulting in air services agreements with a total of 55 countries. The most liberal form of such arrangements is the Open Skies agreement, under which few or no restrictions apply. Currently, the Maldives has a full Open Skies agreement only with the United States, despite the absence of direct air services between the two countries.

While not a full Open Skies agreement, the BASA between the Maldives and the United Arab Emirates is highly liberalized. Under this arrangement, certain UAE carriers have been granted the controversial fifth freedom traffic rights, allowing them to operate beyond-point services involving the Maldives.

Cargo Facilitation

The Maldives established its National Air Transport Facilitation Programme (NATFP) in 2015 which addresses both passenger and air cargo facilitation. From air cargo facilitation perspective the NATFP is in alignment with ICAO Annex 9 (Facilitation). The programme is supported by the Maldives Civil Aviation Act No. 2/2001 and the Maldives Civil Aviation Authority Act No. 2/2012. In addition, it is underpinned by international frameworks and conventions, including ICAO Doc 9740 (Montreal Convention), the World Customs Organization’s (WCO) Revised Kyoto Convention, and the World Health Organization’s (WHO) International Health Regulations (IHR).

In 2023, the Maldives processed approximately 41,800 tonnes of air cargo, ranking it as the world’s 78th-largest air cargo market and the 156th-largest trade market, respectively.

As the country’s primary air cargo gateway, Velana International Airport (MLE) has commissioned a new cargo terminal, representing a capacity increase of approximately 140% compared to the previous facility. The three-storey terminal is designed to handle up to 120,000 tonnes of cargo annually and accommodates 55 office spaces for airlines and freight forwarders. The facility is equipped with nine X-ray machines and seven electronic platforms that support efficient cargo processing. In addition, a dedicated sea–air cargo harbor, equipped with four cranes, has been developed to facilitate cargo loading and unloading directly from vessels.

These developments have begun to yield tangible results. Local media reports indicate that sea-to-air cargo operations have led to a 300% increase in transshipment cargo volumes at MLE within less than one year.

In terms of regulatory compliance, MLE adheres to ICAO Annex 9 (Facilitation), Annex 17 (Security), and Annex 19 (Safety Management). The airport also applies IATA standards and recommended practices, including the IATA Cargo Handling Manual (ICHM), Cargo Services Conference Resolutions (CSC), and the Time and Temperature Sensitive Cargo Regulations (TCR).

MLE has maintained IATA’s Safety Audit for Ground Operations (ISAGO) registration since 2016. This reflects compliance with internationally recognized safety and quality standards across key operational areas, including passenger and baggage handling, load control, aircraft handling and loading, cargo and mail handling, and ground movement.

To further strengthen air cargo handling and processing capabilities, MLE could consider adopting additional international best practices and standards. These include IATA’s e-freight and ONE Record standards, ISO certifications (ISO 28000, 9001, 14001, 45001, and 22301), Hazard Analysis and Critical Control Points (HACCP), and IATA’s Dangerous Goods Regulations (DGR). Implementation of these frameworks would further enhance the efficiency, resilience, and global competitiveness of the Maldivian air cargo sector.

Supply Chain Management

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 exclusively to MLE) have risen by approximately 114% for foreign economy-class passengers following the introduction and subsequent revisions of the cabin-class-based charging model. It has significantly increased the cost of international air travel to and from the Maldives, making it less competitive regionally.

The most critical cost factor for airlines operating in the Maldives remains jet fuel, for which the country ranks among the most expensive markets globally. Jet fuel prices in the Maldives are approximately:

• 56% higher than the global average

• 89% higher than in Sri Lanka

• 113% higher than in India

These elevated operating costs pose a significant barrier to both maintaining existing air services and attracting new international routes.

Currently, jet fuel importation and distribution are handled by the State Trading Organization (STO) and Villa Group. However, at MLE, these activities are heavily dominated—effectively exclusively—by STO, resulting in limited competition within the fuel supply chain.

Departure Tax

 Development Fee (ADF) applied to MLE only

With respect to air navigation charges, the Maldives applies a flat-fee structure based on aircraft Maximum Take-Off Weight (MTOW) for en-route services, supplemented by fixed landing and take-off fees. This approach provides simplicity and cost predictability for aircraft operators. In contrast, many other Air Navigation Service Providers (ANSPs)—particularly in Europe and in countries such as India—employ distance-based charging formulas, under which costs vary according to the extent of airspace utilized.

Maldives’ overflight charges are relatively competitive for many operators, especially for flights that transit only briefly through its Flight Information Region (FIR). For very heavy aircraft, the highest-tier overflight charge (USD 360) is not unusually high compared to those in high-cost FIRs; however, it is also not among the lowest globally.

Air Navigation Charges – International flights

Air Navigation Charges – Domestic flights

MLE handled 6.2million passengers in 2024, excluding seaplane traffic, and employs around 3,500 full-time staff. MLE labour efficiency is approximately 1,776 passengers per employee. This is above the global average and within the upper efficiency range for airports of similar traffic category. While this indicates a comparatively efficient staffing model with minimized direct labor costs, such a lean workforce must be carefully balanced against operational risk, particularly during peak traffic periods.

Infrastructure Capacity

The newly developed Code F runway at MLE has a designated throughput capacity of 30 aircraft movements per hour. However, given current limitations in supporting facilities and resource availability, the effective operational throughput averages approximately 20 aircraft movements per hour. To fully realize the runway’s designed capacity, MLE will need further investment in both human capital and ground support equipment.

The newly constructed Passenger Terminal 1 has an estimated annual capacity of 7.5 million passengers. If the current annual passenger growth rate of 5.8% is sustained, Terminal 1 is expected to reach its capacity limit within the next ten years. This projection indicates that strategic planning to address future terminal capacity constraints should begin immediately.

IATA’s Level 3 airports are those where demand significantly exceeds airport capacity, requiring slot allocation by an independent coordinator. MLE is currently classified as an IATA Level 2 airport, meaning that while congestion exists, it does not yet require fully coordinated slot management.

However, due to the mix of international carriers operating at MLE and the geographic nature of their networks, approximately 55% of aircraft movements occur during the morning arrival and departure banks between 7:00 a.m. and 1:00 p.m. This concentration means that the majority of international operations are compressed into roughly 25% of the day, resulting in intense competition among airlines for these highly desirable morning slots.

Sustained air traffic growth is placing increasing pressure on airspace capacity and structure, particularly within MLE’s control zone. In the first half of 2025 alone, aircraft movements at MLE increased by 7% compared to the same period in 2024. Seaplane operations continue to expand at a rapid pace, further complicating airspace flow management.

Additional challenges stem from the rapid development of residential buildings in Hulhumalé and the limited availability of docks at the seaplane aerodrome. As a large proportion of seaplane operations are conducted in uncontrolled airspace, operators face difficulties in complying with MCAR 138 requirements for the certification of seaplane landing and take-off areas. These constraints ultimately affect MLE’s overall capacity to accommodate international movements.

Consequently, there is an urgent need to review and modernize the existing air navigation system and to invest in infrastructure and systems capable of meeting both current and future operational demands.

Seaplane operations continue to expand at a rapid pace, further complicating airspace flow management.

Regulatory Environment

A smart regulatory framework supported by effective implementation and enforcement plays a critical role in maintaining a competitive national air transport industry.

The primary legislation governing civil aviation in the Maldives comprises the Maldives Civil Aviation Act (Act No. 2/2001) and the Maldives Civil Aviation Authority Act (Act No. 2/2012). These Acts provide a long-standing statutory foundation for regulatory oversight. While the Civil Aviation Act is considered outdated, the government has initiated reform through the proposal of a new Civil Aviation Bill, representing a positive step toward modernizing the legislative framework.

In the most recent International Civil Aviation Organization (ICAO) Universal Safety Oversight Audit Programme (USOAP) conducted in mid-2025, following a ten-year gap, the Maldives demonstrated improvements across nearly all audit areas, with the exception of organization and personnel licensing. Effective Implementation (EI) scores exceeded 97% in Aircraft Airworthiness and 89% in Aircraft Operations. Notably, legislation, traditionally a weaker area, improved from 43.48% in the previous audit to 61.90% in 2025.

One of the most significant regulatory developments in 2025 was the establishment of the Maldives Transport Safety Board (MTSB), an independent authority responsible for accident and incident investigations. Supporting legislation to formally empower the MTSB is currently under development.

Several key regulatory reforms were also introduced in 2025, including:

• MCAR-CAT – Commercial Air Transport: Strengthening airline operational requirements

• MCAR-ARO – Authority Requirements: Defining the MCAA oversight framework

• MCAR-SPO – Specialized Operations: Regulating aerial work and non-standard operations

• MCAR-NCO – Non-Commercial Operations: Governing private and general aviation

• MCAR-2 – Rules of the Air: Updating flight rules and airspace procedures

• MCAR-138C – Seaplane Platform Licensing: Standardizing water aerodrome and platform safety

• MCAR-13A – Accident Investigation: Establishing an independent accident investigation authority

Despite these advancements, several challenges remain. While the 2025 USOAP reflected notable progress, the overall EI score declined by 2.01% to 77.84% compared to the previous audit. The most significant decrease occurred in the Civil Aviation Organization category, which dropped from 80% to 63.64%. The simultaneous introduction of multiple regulatory changes likely created temporary structural gaps in effective implementation.

Contributing factors to this decline include rapid industry growth, a shortage of qualified inspectors, limited budgetary resources for the Maldives Civil Aviation Authority (MCAA), documentation and internal coordination challenges, and transitional regulatory gaps during alignment with ICAO Standards and Recommended Practices (SARPs).

Overall, the Maldivian aviation regulatory framework can be characterized as moderately stable, legally well-grounded but undergoing active reform that introduces short-term adjustment challenges. Transparency is also at a moderate level, with regulations publicly accessible but procedural transparency requiring further strengthening. The framework’s “smartness” is gaining momentum through closer alignment with ICAO SARPs and targeted regulatory innovations, although more systematic and integrated smart regulatory processes remain necessary. Finally, the adoption of internationally recognized best practices is progressing steadily, with a clear trajectory toward enhanced governance and regulatory maturity.

Despite historical and current limitations, the Maldivian aviation industry continues to grow and has demonstrated notable resilience. Regulatory developments are progressing in the right direction; however, the Maldives cannot afford to delay their effective implementation and enforcement, particularly as regional competition continues to intensify.