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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 month.

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 air safety.

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 transportation.

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 by Iraq.

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 air.

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.