The Maldives government repossessed the country's main airport from an Indian firm Friday and agreed on a three-week transition period after a dispute that sparked a diplomatic crisis with its neighbour.
The administration of President Mohamed Waheed last week decided to revoke a 25-year lease of the airport in the capital Male, asking infrastructure company GMR to quit by midnight Friday (1900 GMT), two years after it took over.
"The GMR group has cooperated with us and agreed to a three-week transition from today," Waheed's spokesman Imad Masood told AFP.
"We are in possession of the airport now and Mr. G. M. Rao (owner of GMR group) called on the President today and had a cordial meeting," Masood said.
The opposition Maldivian Democratic Party of former president Mohamed Nasheed, who initiated the privatisation with GMR in 2010, staged a peaceful protest against the move, witnesses said.
Nasheed had warned that abrogating the deal would jeopardise foreign investment prospects in the popular honeymoon destination and also hurt ties with neighbouring India.
However, Masood said there was "no animosity, only regret" and that the termination was not a move against India.
He said the new managers of the airport, the state-run Maldivian Airport Company Limited, agreed to retain all staff on the same terms as before and promised to employ Indian nationals hired by GMR.
Officials have also sought to reassure travellers and international airlines that they will be unaffected.
There was little comment from GMR which Thursday lost a legal battle in Singapore, where the Supreme Court ruled the Maldivian government had the right to take back the airport.
"At the moment things are calm," GMR spokesman Arun Bhagat told AFP.
The privatisation of the airport in 2010 has been targeted by Waheed over alleged corruption and for patriotic reasons, with his government objecting to such a prominent national asset being run by foreigners.
There has been fury behind closed doors in India at the abrupt nationalisation move which also raised concerns for foreign investors.
However, Indian Foreign Minister Salman Khurshid played down the controversy.
"If they (the Maldives) have to take a decision in the interest of their society and country and if that decision is taken properly as per laws there, what objections can anyone have there?" he told reporters.
The Male airport deal was expected to see GMR and its partner, Malaysia Airports Holdings, pour more than $500 million into the Indian Ocean archipelago, in what would have been the biggest ever foreign investment.
New Delhi warned its tiny south-western neighbour this week that it may freeze aid and was ready to "take all necessary measures to ensure the safety and security of its interests and its nationals".
The row has caused a reassessment in the Indian foreign ministry of Waheed, who took power in controversial circumstances last February when Nasheed was forced out by protests and a mutiny by police officers.
Nasheed, the first freely elected Maldivian leader and an ally of India, claimed his then vice-president Waheed was part of a "coup", but New Delhi declined to intervene.
Underpinning India's concerns are claims by the Maldivian opposition that the country is tilting towards China, which set up an embassy in Male last year and is carrying out construction projects in the archipelago.
Waheed's office denies any suggestion of Chinese influence.
"The airport is our gateway to the world. It is a matter of national pride and ego and we want to manage it ourselves," Masood said.