FOREIGN AIRLINES OPERATING IN PAKISTAN

SERVING THE NICHES ADDS TO REVENUES

SHABBIR H. KAZMI
(feedback@pgeconomist.com)
June 21 - 27, 20
10

The open sky policy being followed by the government of Pakistan allows easy entry for foreign airlines in to Pakistan. While the policy poses serious challenges for the national carrier, the growing competition allows the passengers to strike better deals.

The travel industry on the whole is confident that 2010 will be a better year for the sector. The first three months of the year have already proved that. Cathay Pacific ended 2009 on a positive note and made a small operating profit in spite of the financial crisis that has adversely affected the airline industry. Despite the various destinations that Cathay flies to-over 100 destinations worldwide-Hong Kong, Thailand, Singapore and Australia remain popular among Pakistani travellers. People find it surprising that Cathay Pacific does not offer any standard 'special packages', something which many airlines across the country, both national and international, regularly offer. The reason being it specialises in tailor-made packages that really depend on clients' requirements.

With special focus on Australia, New Zealand, US, Far East and even Canada, the airline believes in providing its clients custom-made packages because every client has different needs. Most of these requirements are due to budgetary constraints. Thus, instead of quoting an 'X' amount for a particular package which may exceed the budget of the client, the airline designs packages keeping in mind how much the client is willing to spend.

It is perhaps for this reason that the airline remains a popular mode of travel for many people from Pakistan. It carries around 700 passengers every week. Out of this, about 20 per cent travel via the prestigious business class. Adding new destinations is a tricky business in Pakistan. Lahore and Islamabad are currently under evaluation but unfortunately convincing the head office to expand operations at this stage seems difficult. Cathay Pacific Pakistan currently has its offices in Karachi, Lahore and Islamabad offering reservation, ticketing and baggage services.

Emirates first-ever flight took off on October 25, 1985 from Dubai on two leased aircraft, one of which was leased by Pakistan International Airlines (PIA). The airline posted a profit within the first nine months of its operations and started adding new destinations in 1986. Currently, it operates about 2,200 passenger flights per week from Dubai International Airport's Terminal 3, flying to 60 countries in six continents

Given the rising cost of air travel, many potential travelers prefer to fly via budget airlines. In spite of that, Emirates has posted a profit for 2009, according to a recent report published by the International Air Transport Authority (IATA). With facilities like onboard spas and showers for first-class passengers, the airline has definitely added much greater returns for passengers in terms of premium services. In 2009 alone, Emirates Pakistan has served more than 500,000 passengers out of which a large chunk comprised of business class passengers.

Most of the people travelling by Emirates from Pakistan usually to London, New York, Houston, Manchester and Toronto, making these some of the most popular destinations that Emirates Pakistan flies to. Since passengers travelling via Emirates make a stopover in Dubai, the airline operates more and more flights to Dubai. While there are more daily flights from Karachi to Dubai, the frequency for other cities of Pakistan is much lower. Increasing frequency to a particular destination is a matter between two countries and not just the prerogative of the airline. Thus, any expansion depends on government permissions.

The newly launched flight to Tokyo is one of the most exciting developments for Emirates, making this 102nd international destination. The response to this non-stop, 10-hour flight from Dubai to Tokyo has been pretty successful. The airline plans to offer five flights a week and operates Boeing 777-300ER on this route. There are eight Private Suites in first class; 42 flat-bed seats in business class and 304 economy class seats. These flights will further boost trade relations between Pakistan and Japan since Pakistani immigrants comprise the third-largest Muslim community in Japan.

The story of Sharjah-based budget airline Air Arabia is of some interest for the air travellers. Launched in 2003, the airline broke even in its first year and has been rapidly expanding ever since. In fact the airline has made a profit every year since its inception, which is remarkable to say the least. With a network of 46 destinations, the airline is growing steadily.

One of the reasons for the success of the airline is a large part of the revenue coming from the subcontinent. Around 35 per cent of the four million Air Arabia passengers come from the subcontinent. This is probably because budget travel was a fairly new concept in the region.

Given the dearth of local airlines in Pakistan, most people think that traveling means spending half your savings on tickets. The airlines hardly ever advertised their fares. Their focus is on brand and pricing isn't a part of it. Air Arabia brought one major change adding frequency. Now passengers don't have to wait or travel in the middle of the night.

Air Arabia changed the way people from Pakistan travel. Previously, only the wealthy could afford to travel. Now, people belonging to low-income groups can also travel. Around 50 per cent of the carrier's customers are leisure passengers while 30 per cent travel on business (particularly freelance workers and those who have to travel for a day to make purchases/attend meetings). The remaining 20 per cent belong to the labour market that travel back home during holidays and other occasions. A lot of students use Air Arabia for weekend travel if they want to go home. Air Arabia has change the perception from air travel an exclusive right of the elites to a service for the masses. Besides, keeping air travel simple and affordable, Air Arabia has also been able to contain cost by making sure that almost all of its flights are no longer than five hours, which saves fuel costs tremendously.