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Pakistan International Airlines – financial reconsideration time

At present the Pakistan International Airlines Corporation (PIAC) is passing through a dire financial state. However, the present government of Pakistan is very keen to make the corporation self-reliant. Attempts are underway to enhance the financial health of the corporation through reducing its losses through various means and modes. Stringent action is being taken against corruption and mismanagement by the Government of Pakistan.

PIA Performance
Indicators Units Year 2017 Year 2018
PIA FleetNo. of planes3632
RouteKms360,937332,303
Available SeatMillion Kms19,10818,081
Passenger Load Factorin percent73.2077.3
Revenue Flown000 Kms75,20770,089
Revenue Hours FlownHours122,081110,050
Revenue Passengers Carried000 nos.5,3425,203
Revenue PassengersMillion Kms13,98813,975
Revenue TonneMillion Kms1,4691,472
Revenue Load Factorin percent55.258.4
Available TonneMillion Kms2,6592,521

Analysis identified during FY2019 in the economic survey of Pakistan that despite financial constraints and tough and uneven competitive environment, PIAC gave a stable performance during 2018. Analysis also concluded that PIA is in process of acquiring new aircraft for its fleet. Currently, a tender has been floated for four narrow body aircrafts according to PPRA rules. PIA has submitted its business plan to the federal government and now it is under consideration for approval of federal cabinet. To reduce losses, PIA had to take initiatives like route rationalization and suspended its loss making routes. PIA is in the process of its strategic business plan 2019-23 to enhance its performance:

  1. Launching of profitable new routes like Silakot-Sharjah, Lahore-Muscat, Islamabad-Doha and Lahore-Bangkok-Kuala Lumpur. These routes are going very strong and economically viable.
  2. More new routes have been started which include; Sialkot-Paris-Barcelona, Peshawar-Sharjah, Peshawar-Al Ain and Multan-Sharjah.
  3. Increasing frequencies and capacity on profitable routes like Jeddah and Madinah coupled with closure of loss making routes like New York, Salalah (Oman), Kuwait, Mumbai.
  4. Stoppage of all officiating and extra allowances given on additional assignments to officials.
  5. Ban on overtime allowances in all cadres along with monitoring of flights by senior officials.
  6. Increasing regularity and punctuality of flights by assigning target to be achieved 90 percent.
  7. Improvement in flight services, training of crew and regular monitoring.
  8. Introduction of executive economy class on European and Gulf sectors which are attracting more customers.
  9. Rationalization of fares according to market demand thus helping in increase of seat factor.
  10. Delays of flights have been cut down significantly by better planning in engineering, flight operation and ground handling departments.
  11. Special emphasis on cargo business with monitoring of performance, rationalization of cargo fares and more effective liaison with all stakeholders.

 

Privatization

The Government of Pakistan in the late 1990s, considered selling the airline to the private sector because of the persistent losses suffered. The government proclaimed its privatization plans but they were never implemented. Various steps towards outsourcing of non-core business have been initiated. Catering units, ground handling and engineering, are to be gradually carved out of the airline and operated as independent companies.

During 1997, the Government of Pakistan called in a team from International Finance (IFC), the consulting arm of the World Bank, to advice on restructuring and privatization of PIA. However, no agreement was reached. The government has had various plans for the privatization of the state-owned airline. However, no reasonable agreement or solution has been found to this day. On February 18, 2009 the carrier was dropped from the privatization list. In 2013, the government once again aimed to privatize the airline because of increased losses by selling 26 percent of shares & management control to the investor. This plan was dropped because of heavy protest by airline unions and associations in which 2-employee were dead when security forces were tasked to stop the protesters for their movement towards Jinnah International Airport terminal building.

Present government aimed not to privatize the entity and make it a profitable through the change in its top management.

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