GMR Male Airport Private Limited - Case A

Abstract

This case discusses the risks of doing business in emerging markets with changing political landscapes, as witnessed by GMR Male International Airport Private Limited (GMIAL) in Maldives. In June 2010, after a competitive bidding overseen by a World Bank arm, GMIAL won the contract to operate and expand the Male airport for a period of 25 years. This process was supported by the ruling party, with the opposition being against it. GMIAL’s announcement of a levy of USD 25 for every international departing passenger as Airport Development Charges, as provided for in the Concession Agreement, drew stiff resistance from the opposition. GMIAL’s problems started compounding when the President of the ruling party was dethroned in a coup. The new government termed the contract as ‘void ab initio’ and threatened to terminate GMIAL’s operations at MIA. The GMR group had to decide on their course of action.