The volume of passenger air traffic is one of the
salient indicators of the health of a national economy because it
reflects the growth, development, domestic tourism and overall
socio-economic realities of a country. Till early 1990s state-owned
national flag carrier Pakistan International Airlines enjoyed the
complete monopoly on the domestic sector and was also assured a piece
of business on the international routes because it was mandatory for
the nationals to fly the airline on overseas route.
The deregulation encouraged induction of private
airlines many of which wounded up their operations years ago primary
due to various reasons including millions of Civil Aviation
Authority's dues. Bhoja, Hajvery and Raji have scrapped operations
while Safe Air, which also went out of operations, has once again been
granted license. Two other private airlines, AirBlue and Royal
Airlines, the second already operating in Karachi-Dubai cargo flights,
will also be commencing passenger operations shortly. It also resulted
in pushing the domestic passenger traffic phenomenally due primary to
low fares, particularly on the major trunk routes of Karachi-Islamabad
and Karachi-Lahore. However, one of the major failure of the private
airlines has been its inability to operate flights of the
less-lucrative sector due mainly to reasons of economy thereby leaving
PIA to serve what it calls "loss-making sectors" as public
service. PIA, however, has also scrapped services to many such sectors
eliciting public criticism.
At present, the commercial air traffic in Pakistan
is shared by three airlines — the state-owned PIA and private
Shaheen Air International and Aero Asia. The bulk of the domestic
commercial traffic is dominated by the PIA a portion of which is also
shared by the two other private airlines, both of which are also
operating international flights on a number of routes in the Gulf.
With the induction of two new private airlines soon, the competition
is going to heat up for the benefit of travelers, or at least that is
The aviation sector was deregulated just 11 years
ago thereby implying that its still in infancy here in Pakistan.
Despite wrapping up of operations by a number of private airlines the
deregulation has helped played a pivotal role to the growth aviation
in Pakistan lead primary by competitive air fares which at times were
only affordably more than that the highest-priced fares by the
The competition for passenger air traffic is going
to heat up once again shortly. Once again because four private
airlines — Bhoja, Hajvery, Safe and Raji — wrapped up their
operations years ago leaving the market open to the remaining
operators — the national flag carrier Pakistan International
Airlines (PIA) and private Shaheen Air International and Aero Asia.
The closure of the four private airlines, which
many say helped equalize the sharp decline in passenger air traffic
within Pakistan like elsewhere across the globe, highlights the
failure of the deregulation of the Pakistani aviation industry 11
years ago. It did not only deprive the CAA millions in dues owned by
the private carriers which in fact was also cited as a primary reasons
for their closures. The closures also resulted in gradual increase in
domestic fares that could not had been possible if the private
airlines were still operative today.
Three private airlines, two new and one old, are
expected to start commercial operations in the coming few months.
AirBlue and Royal Airlines have already got the license that allow
them to operate commercial passenger flights while Safe Air has been
granted license for the second time. The private investment in the
aviation sector not only underlines the optimism of the new operators
about air travel in Pakistan but also proves that the growing demand
offers an untapped niche to the new airlines. It also shows that the
slump in the aviation industry is over, or at least nearing its end.
Royal Airlines is part of an international
conglomerate. It was incorporated in Pakistan as a private limited
company in November 1998 and obtained its domestic and international
charter license in early 1999. It is the first air charter company in
Pakistan to operate schedule cargo flights daily to and from Karachi,
Sukkur, Multan, Lahore and Islamabad, continuously since May 2001.
From January last year, it commenced started freight services to Dubai
from Lahore via Karachi.
Royal Airlines (Pvt.) Limited became the first
airline to get the Registered Public Transport license under the new
aviation policy in October 2002 and since been operating chartered
flights on domestic and on Dubai sectors since May 2001. It has plans
to start passenger flights on the domestic routes but prefers to keep
its plans low-key.
The passenger operations would be an extension of
the freight operations of the Royal Airlines which acquired the
scheduled chartered license about 3 years ago and been successfully
operating on domestic routes — Karachi, Lahore, Sukkur, Multan and
Islamabad- as well as to Dubai for over two-and-half years. Presently,
Royal Airlines' fleet comprises 4 Russian aircraft — 2 AN-12 each
with a cargo capacity of 18 ton and 2 AN-26 each with a cargo capacity
of 5 ton.
Royal Airlines has many firsts- the first to get
the Registered Public Transport License (RPTL) under the new aviation
policy and the only airline, operating dedicated freight services
within the country. It has fulfilled all the prerequisites for the
license including the minimum paid-up requirement of Rs 100 million
plus bank and cash guarantee of Rs 10 million each. It has played a
vital role to promote exports indirectly carrying not only captive
cargoes for almost every single courier service but also such
shipments as fresh fruits & vegetables, seafood, etc., to Dubai.
Royal Airlines would be commencing passenger operations on the
domestic sector soon, the exact timing of which is guarded by the
management as a close-kept secret.
AirBlue, the second airline to get the RPT license
under the new aviation policy, is in the final phases of starting
domestic operations which may commence by as early as next month. PAGE
has learnt that AirBlue has acquired 3 new generation Airbus A-320
aircraft on dry lease each of it has 20 Business Class seats and 126
Economy class seats. Sources told PAGE that AirBlue would help
generate over 2,400 jobs — 400 direct and 2,000 indirect — for an
all Pakistan crew. AirBlue which has already hired 25 cockpit crew
which are getting hands-on training in Europe while it has also hired
50 cabin crew which is also undergoing training overseas.
AirBlue aims to focus passenger comfort at prices
that offer value for money and that explains its decision to have
leather-upholstered seats in the Business class and offering in-flight
entertainment not offered by any other airline, including the PIA, on
the domestic sector. The airline has also made arrangements with
quality caterer outside to serve what it calls "exquisite
cuisine" to the travelers. Initially, it will operate 3 flights
on the Karachi-Lahore sector and similar number of flights on the
Karachi-Islamabad sector daily.
AirBlue will introduce the concept of total
e-ticketing for the convenience of passenger which would also help it
to eradicate the back-dating system associated with manual ticketing
that costs airlines, including its competitors, millions in losses
every year. The absence of manual ticketing and the introduction of
computerised check-ins by hand-held computers would help AirBlue offer
quality-conscious travelers value for their money by offering quality
product and consistent scheduling.
AirBlue which has a paid-up capital of Rs 500
million is a public limited company and plans to offer Initial Public
Offering at the Karachi Stock Exchange in May.
In addition to 3 daily flights each on the
Karachi-Lahore and Karachi-Islamabad sectors AirBlue also has plans to
operate one circular Karachi-Sukkur-Multan-Karachi flight daily. The
total frequency of which adds up to 15 flights a day. The AirBlue is
aiming to provide world-class service on new generation aircraft which
are comparatively newer than those used by the other private airlines,
AirBlue's aircraft are just about 5-year-old, without compromising on
quality, service or fare.
It aims to focus on quality and service primarily
at fares competitive with the national flag carrier PIA. It also has
plans to offer heavy discounts for the senior citizens and students as
well as operating night coach at discounted fares. The AirBlue, thus,
is looking forward to soon become the fourth airline serving the
domestic sector in a market, the bulk of which is served by the PIA
and a portion is enjoyed by Shaheen Air International and Aero Asia
which promotes itself as the country's first lowfare airline.
As mentioned earlier, Safe Air has once again be
granted the license to commence commercial operations on the domestic
sector. The airline commenced operations in 1999 which lasted for two
years due primarily to problems with the Civil Aviation Authority
regarding unpaid dues. The CAA has reissued the license to the Safe
Air which is reportedly back with an investment of 12 million euro by
a foreign group and is expected to start commercial operations soon.
About a couple of years ago, Safe Air appeared on
the horizon of airlines in the private sector in Pakistan, it had some
dispute with CAA of Pakistan, which appeared to have been resolved but
the airline disappeared from the scene.
The opening of air transport industry for the
second time around would help meet increasing demand for both the
passenger and cargo traffic. It would also instill competition to
encourage air travel by offering choices to people in more ways than
one particularly in a market where the closure of many private
airlines in the near past resulted in pushing the airfares.
At present, the PIA dominates not only the major
portion of the domestic passenger traffic but also the small volume of
cargo traffic on the domestic sector. It heavily dominates the
passenger traffic on the international sector. The airline embarked on
an ambitious $ 2 billion fleet replacement plan last year to induct 10
aircraft in the fleet by 2011 and the thawing of ice between Pakistan
and India resulting in re-opening of Indian air corridors would help
it not only regain lost business but also to operate flights on the
Far East sectors closed in the aftermath of the Indian ban.
PIA announced to resume flights to India with an
expanded schedule last December with 12 direct weekly flights to New
Delhi and Mumbai. The airline, which has since resumed its operations
to India, can now fly with bigger aircraft type as its expanded
operation is no more restricted type of equipment, additional capacity
or size of aircraft. The expanded operation allows PIA to fly to
Colombo, Dhaka and Kathmandu directly and resumption of operations to
Bangkok and Hong Kong.
PIA also signed an accord for the purchase of 8
E777 aircraft worth $ 1.2 billion from the Boeing company at the total
cost of $ 1.2 billion December last year. The signing-in ceremony will
be held at the US Export-Import Bank in Washington. PIA chairman Ahmed
Saeed will represent the national airlines at the ceremony. Last year,
the Ex-Imp Bank agreed to provide $125 million to Pakistan to help it
buy passenger aircraft from the Boeing. The deal was underwritten by
US Export Import Bank, the first such deal underwritten by the Bank
between Pakistan and a private US firm.
The decision to replace the fleet was necessary
because the average age of PIA's current fleet was 23 years. The
airlines has 40 aircraft and over 22,000 employees. PIA has already
received its first Boeing 777 aircraft and has since resumed
operations on the sectors affected by the Indian ban. It resumed twice
weekly service to Kathmandu in Nepal from January 4 this year 2004. It
also introduced weekly Quetta-Sharajah-Quetta flight around the same
time and while PIA already operates a weekly flight to Dubai from
Quetta, it is operating a third international flight from Quetta to
Mashad despite a small load.
PIA also announced a 50 percent reduction in fare
on the Quetta-Karachi sector for people travelling to Almaty, Central
Asia, and introduced Lahore-Sharjah flight from January 1 this year.
The closure of air corridors by India and the
termination of flights to a number of sectors in the Far East and
Kathmandu deprived the PIA of substantial losses in revenue which runs
into as much as $ 50 million. The opening of the Indian air corridors
and the resumption of operations on the Far Eastern sectors plus the
introduction of international flights mentioned above would help the
airline to make up the losses through expanded operations to India.
PIA plans to start flights to Glasgow, Scotland
from April this year and to Houston two months later. It has already
resumed its flights to Tashkent, Uzbekistan and Almaty, Kazahkstan in
Central Asia once a week from Karachi via Islamabad from December.
On the 11th of this month Pakistan and China signed
a historic agreement to expand air services between the two friendly
neighbours. The agreement would enable the Civil Aviation Authority of
China (CAAC) and the state-owned national flag carrier Pakistan
International Airlines to increase operations on Karachi-Islamabad,
Beijing, Urumqi and Shanghai sectors with immediate effect.
The agreement would help PIA to increase the
maximum number of passenger and cargo flights to China from 4 per week
to 14 per week. PIA would also be able to operate flights to Shanghai
in addition to Beijing and Urumqi. The Chinese Airline would be able
to fly to Lahore in addition to Islamabad and Karachi. The two
airlines would also be allowed to book passengers on each other's
flights on a reciprocal basis. The two countries have also agreed to
start a bilteral code-sharing operation — the first time ever the
PIA has entered into such a sharing system with any foreign airline.
The agreement would also allow PIA to operate flights of its Los
Angeles sector through China in addition to the Japan route already
PIA has also decided to reschedule four Boeing
flights to Lahore weekly on the demand by the business community of
Multan and the surrounding areas.
The air transport sector of Pakistan would also get
a boost from newly developed Port of Gwadar in the Balochistan
province. The development of the Gwadar Port, the third deep sea port
of the country and the first of Balochistan, would serve as a link
with the Central Asian States. The government decided to upgrade the
Gwadar International Airport at a cost of 480 million rupees last
year. Once upgraded, the airport will be able to handle wide-body
aircraft such as Airbus and Boeing 747 aircraft.
Similarly, the construction for the new runway of
Sialkot International Airport was in full swing in May last year. The
airport expansion would cost Rs 1.57 billion and is spread over 1007
acres and the project is expected to be finished in 27 months. It
would be able to accommodate wide-body aircraft such as Boeing 747 and
777. The BOO project is the first in the country of this magnitude and
once completed would not only help facilitate the export from Sialkot,
dubbed the export city of the country, but also to such important
industrial centres as Gujranwala, Wazirabad, Narowal and Gujrat.
The new Lahore Airport, the Allama Iqbal
International, & its terminal building was opened for domestic and
international traffic on 17 March last year. The 10.3 billion rupee
project can now handle 6.5 million passengers a year to accommodate
the growing passenger traffic until 2015.
The Pakistani aviation industry has been able to
shake off the dust of 9/11 better than many of its counterparts in the
world. As was, the events of that fateful day hit the two industries
most prominenetly than others — the insurance and aviation. It
resulted in closures of tens of smaller airlines and massive lay-offs
at many big national flag carriers across the world. It also inflicted
a blow to the Pakistani aviation industry in term of reduced flying
frequency, closure of operations by over a dozen foreign airlines,
closures of operations by PIA to India and destinations in the Far
East due to the closure of air space.
Things, however, have started to pick up: Two new
commercial air lines would be starting domestic operations soon, the
PIA has started operation to India and Far East, and the foreign
carriers who closed their Pakistan operations are back.
The domestic travel has reverted back to pre-9/11
levels and the international traveling is also picking up. Expansion
works have been completed at the major airports across the country
while on many others it is underway.
The competition is about to heat up once again for
the domestic market with the start of operations of three additional
airlines — two new and one old. At present there are three airlines-
PIA, Saheen and Aero Asia — are sharing the domestic market among
themselves but soon there would be six carriers operating on the
The ensuing competition would offer choice to
domestic air travelers in more ways than one by introducing the needed
competition. We have to wait and see just what kinds of benefits it
would offer to the travelers.