Airline recorded a deficit
of Rs14 billion in the year 2000
May 20 -June 02, 2002
Globally speaking, the aviation industry had to
experience the worst ever business crisis in the aftermath of
September 11 terrorist act, entailing massive lay offs, grounding of
the aircraft and even closure of many a leading carriers especially in
the developed world.
As a result of anti-terrorist campaign launched by
the United States of America and allied forces in Afghanistan, most of
the international airlines suspended their Pakistan operations
obviously a setback to aviation sector in Pakistan.
However, blessing comes in disguise sometimes and
that was true in the case of the national carrier, the Pakistan
International Airlines (PIA) which was relegated from a world class
prestigious airliners to a hopeless air carrier over the years of all
sorts of deterioration mainly in the area of customer service and
excessive politicization within the organization. According to
reports, the accumulated losses till 1999 stood at Rs11 billion and
the airline recorded a deficit of Rs14 billion in the year 2000.
However, in the post September 11 period, PIA
earned a profit of Rs300 million in 6 months with an additional income
of Rs1,230 million in the first quarter of the current year i.e. 2002.
Although the present management claims for the improved financial
conditions of the organization, yet a major part was played by the
competitive international airlines that gave PIA a walk over in the
business by suspending their operations of this part of the world.
While the national airline was still in the process
of recovery, the disturbed border situation with neighbouring India
once again posing threats for smooth sailing of the aviation business.
The International Federation of Airline Pilots
Association (IFALPA) has expressed concern over the denial of the use
of Indian and Pakistan airspace.
The subject of over flying rights vis-a-vis the
suspension of over flying in Indian and Pakistan airspace was
discussed at the annual conference of IFALPA held in Norway early this
A delegation of PALPA had attended the conference,
which discussed various other issues of importance and of vital
interest concerning the airline industry and worldwide aviation.
With regard to over flying rights, IFALPA issued
the following statement.
"The International Federation of Airline
Pilots Association, strongly opposes the government's policies to deny
the usage of its airspace by foreign operators for reasons other than
From a civil aviation perspective, such policies
make certain routes economically not viable and may directly affect
the profitability of an airline. Furthermore, closing airspace to
certain operators is not only discriminatory but also causes
inconvenience to the revenue-paying passengers.
The continued denial of airspace to foreign
operators directly contradicts the basic freedom of safe air
It was the Indian government, which had first
closed its airspace, denying over flying by Pakistan International
Airlines, following deployment of Indian troops along the Pakistan
borders. This had forced the PIA to suspend its Far East operations.
It is well known around the world that the
international oil prices are always registered fluctuations whenever
the supply side is disturbed for one reason or the other. This time
after one month's suspension in oil production by Iraq, the oil prices
registered an increase but it was a temporary phase as the oil prices
have started stabilizing in the international market. It is however
amazing that several international airlines including Emirates, Cathy
Pacific, Air France, KLM and Lufthansa, taking advantage of the
situation have slapped a three rupee per kg fuel surcharge on all
shipments from Pakistan.
In a circular to exporters Emirates Sky Cargo said
that the fuel surcharge of three rupees per kg would be charged on
courier and newspapers shipments from May 1 because of the increase in
world wide fuel price. The KLM has also added a fuel surcharge of
Rs2.65 per kg from May.
Air France and Lufthansa had implemented the fuel
surcharge at the rate of Rs3 per kg from April 22 and April 25
respectively. The national carrier Pakistan International Airlines are
not charging fuel surcharge. The cargo sales department of PIA had
announced recently that it would not charge dual surcharge on mango
export shipments from Pakistan. The exporters have opposed the fuel
surcharge by some foreign airlines and said that the exports from
Pakistan already suffering from recession would be affected.
Leading exporters say that there is no
justification for implementing fuel surcharge at a time when oil
prices have begun to stabilize after the removal of ban on oil exports
Exports from Pakistan feared to undergo double loss
due to hike in freight on account of war risk surcharge on shipments
by sea and secondly due to the latest fuel surcharge on shipments by
The management in the national carrier however
played tactfully and did not levy the fuel surcharge on cargo exports
which is likely to bring fortunes for PIA by lifting the maximum cargo
traffic till the international airlines go for correction in their
hastily made decision to levy the fuel surcharge.