The thawing of ice in Pakistan-India
relations and decision to re-establish diplomatic and trade contacts and
communications links severed 17 months ago on January 1 last year would
benefit the aviation industry like many other sectors of the economy.
India slapped a ban on state-owned
national flag carrier PIA, the Pakistan International Airlines, to use
its airspace on January 1, 2002. Pakistan's reciprocated the Indian move
by slapping a similar ban. The ban resulted in suspension of 12 weekly
flights to India, 6 each to Bombay and Delhi, and forced it initially to
find alternate routes, and later suspend flights, to 13 destinations in
the Far East by rendering them uneconomical.
While PIA lost millions of revenues
every month due to closure of operations in India and other destinations
in the Far East the ban hurt the Civil Aviation Authority (CAA)
indirectly. CAA was losing around $ 3 million a month, the biggest
portion of about 1-1.5 million of which came from loss of route
navigation charges or fee paid by foreign airlines for using the
national commercial air corridors. It also lost between 0.5-0.75 million
dollars a month in landing and parking fee and another 0.2-0.25 million
dollars a month in embarkation fee.
Though the competitive prices of jet
fuel in Pakistan, claimed to be the lowest in the region by the
authorities, helped CAA to offset the losses by attracting increased
technical flights or stopovers for re-fuelling the lifting of the ban
would help CAA to enhance its revenues.
It must be mentioned here that the ban
boomeranged on India and actually hurt it far more than it hurt
Pakistan. First of all, the Far East was not the most profitable sector
served by the PIA and thus it was easier for it to cushion the loss than
its Indian counterparts Air India and Indian Airlines. The later had to
find alternate routes to international sectors resulting in increased
travel time, fuel costs and additional fee to use space over new air
corridors. The tit-for-tat measure by Pakistan also affected operations
of domestic Indian Airlines which used Pakistani air space to ensure
most economic routes.
Air India was using the Pakistani air
space for some 200 flights a month while Indian Airlines, a domestic
carrier, was using it for 90 flights a month compared to. The ban also
forced Air India, the national flag carrier, to find alternative routes
for 11 flights pushing operational costs, flying time and fuel charges.
However, the re-establishment of the
air link and lifting of the ban on the use of respective national air
space would benefit not only the PIA but also Civil Aviation Authority (CAA)
which lost substantial business due to the ban. The decision has come at
a time when PIA is in a much better position in terms of finance and
fleet than it was year and a half ago.
PIA is in a much better position to
resume services to India and in the Far East to substantiate its income.
It is in the process of replacing its aging fleet and this month signed
a $ 150 million loan agreement with Citi Islamic Investment Bank of
Bahrain. The $150 million proceed would be used for pre-delivery
payments towards the purchase of 3 Boeing 777 aircrafts. The Bank, a
member of Citigroup, along with Jeddah-based Islamic Development Bank
and Pakistan's United Bank is one of the joint arrangers for the
three-year Islamic loan facility.
Under the ambitious fleet replacement
plan the PIA would spend $ 1.5 billion to acquire 8 new Boeing 777
aircrafts and the payment for the first 3 of these aircraft above is the
first phase of the deal. The first batch are scheduled for delivery in
the first half next year.
PIA has also reverted back into black.
It earned an operating profit of Rs 1.5 billion in the first quarter
this year which depicted a 37 per cent increase over the comparative
period last year. It has inducted additional aircraft and is expected to
resume operations to India anytime now. According to reports the
suspension of operations and closure of Indian air space cost Pakistan
around quarter of a billion rupees while India has suffered five-fold
India has offered Pakistan to open its
air space for Pakistani commercial air traffic a few months ago but PIA
did not resumed operations to India and to Far East because the
government did not reciprocated the Indian move. The national flag
carrier, however, is busy in rescheduling its operations to destinations
severed by the ban on the routes in the Far East. These destinations
include Dhaka, Colombo, Tokyo, Jakarta, Kathmandu, Kuala Lumpur, Hong
Kong and Bangkok.
The re-establishment of air links
would not only help PIA and CAA to regain the business lost due to the
ban initiated by India but would also help rebuild confidence necessary
for conducting bilateral trade, commerce and most of all — the social
contact necessary for instilling public trust and goodwill between the
two people which collectively represent almost one-fifth of the