The government has decided to revise and lower the airfares charged to tourists by Island Aviation Services (IAS), the operator of the national carrier, Maldivian.
The President's Office announced the decision in a statement published on its website detailing key cabinet resolutions. While the statement confirmed the cabinet's decision to implement these changes, further details were not provided.
The move to reduce fares for tourists comes amid complaints from the tourism industry. Stakeholders have frequently noted that high domestic airfares deter tourists from visiting certain parts of the Maldives.
While the decision is expected to benefit the tourism sector, it is likely to impact Island Aviation's revenue. The company has previously said that even with current pricing, many of its domestic routes are operated at a loss.
This means the government may need to provide financial assistance or subsidies to sustain these operations. Such a move would, however, contradict the government's pledge to ensure state-owned enterprises manage their expenses through their own revenue.
According to the 2024 audit report of Island Aviation released by the Auditor General’s Office, the company recorded a loss of MVR 2.7 million that year.
Although the company generated MVR 2.2 billion in revenue and achieved an operating profit of MVR 171.2 million after expenses, the entirety of its operating profit was consumed by financing costs.
A significant portion of Island Aviation’s financing costs is attributed to the lease payments for its aircraft fleet.
