NOSE-DIVING AIRLINE INDUSTRY
Jan 30 - Feb 5, 2012
Despite the affordability and easy accessibility of most modern modes of mass communication like information technology and satellite links, the air travel still proves to be an important and integral requirement of all societies. Commercial airline business is one of the most vital contributors to the economy of any country. It has shrunk the world into a global village. Moreover, the flagship carrier of any country is the ambassador of the country's image around the globe.
The aviation industry in Pakistan began with the merger of Orient Airways with Pakistan International Airlines Corporation (PIAC). The state owned PIAC conducted the domestic as well international operations. It enjoyed the monopoly until the deregulation of aviation industry. Despite being the sole carrier over the years, the industry did not flourish leading to continuous losses. In 1993, Pakistan civil aviation authority (CAA) opened the aviation sector for private sector players in order to boost the healthy competition for better traveling services at low price fares. As a result, many private companies entered the arena but could not penetrate and secure any market share owing to heavy taxes by CAA.
They used old and inefficient equipment, lacked professional managements, and some of them blatantly violated basic aviation standards and laws governing safety standards. As a result, only four airline companies were left operative in the industry namely Pakistan International Airline being the national flagship airline and the other domestic ones being Air Blue, Aero Asia (owned by the private Tabani group) and Shaheen Airlines (owned by the Shaheen Foundation of the PAF).
PIA has been incurring heavy financial losses for last ten years. The accumulative loss has exceeded to Rs100 billion. Historically, the losses have been attributed to the unprecedented hike in oil prices and the devaluation of Pak Rupee against US$.
But, as a matter of fact there exist huge and enormous operational and marketing problems within the corporation. Continuous and perplexing management changes during first decade of this century have added fuel to the fire. The executive positions have been given to nonprofessional.
In an attempt to tap the market, other countries in the region have taken a lions' share from the airline industry. The gulf region, especially Qatar and UAE, have over the years improvised their aviation infrastructure. Etihad, Emirates and Qatar Airways are earning more revenues as compared to PIA in spite of the increasing fuel prices. These airlines have introduced a large number of flights to the USA and have captured the bulk of the market share on long haul routes.
In the past, the EU sanctions on PIA actually augured well for the other airlines as the customers were automatically redirected for other options, which also proved to be better in terms of services and time efficiency. These carriers have built a better image and attracted more customers.
The customer retention has undergone massive decline for PIA. The present situation is even grimmer. Recently, the European Union has once again expressed concern over 'systematic deficiency' in PIA aircraft maintenance. They have termed civil aviation authority regulatory role 'unreliable' and started carefully examining the situation before taking a final decision to ban the airline operations in its region.
Another major problem these days is sudden cancelation of scheduled flights, which has become a routine matter in PIA. The excuses for flight cancellation range from battery problem to maintenance work.
Apart from normal domestic flights that reach several hours late at their destinations, passengers of international flights too are made to wait on airports for hours and in many cases they miss connecting flights and that also means additional burden on the airlines besides inconvenience to passengers.
Aircraft maintenance and airline management at PIA are murky affairs. Malfunctioning of aircrafts is causing so many technical landings at home and abroad. Technical faults in the fleet now seem to be surfacing all too often and abruptly. Planes have had to make unscheduled landings to fix problems that have escaped detection by a ground engineering staff that has apparently not been given enough time to carry out a thorough inspection.
Another miserable condition is exhibited by plight of the airports. None of our airports is worthy of being called world-class. Some are more like crowded bus stations, and little else. Even security-related facilities at these airports are not quite in line with global standards. The plan for Islamabad international airport still needs to be executed.
The construction of Gwadar airport and operationalisation of the WTO regime are long awaited. Moreover, the current aviation policy is also a major impediment in the orderly growth of the aviation industry in Pakistan. It has been reviewed and revised several times in bits and pieces, mostly by unprofessional bureaucrats and people with vested agendas.
In current scenario, private investors are reluctant to land in the local aviation market. Last entrant was Air Blue that came back in 2005.
The worsening security situation in Pakistan has blemished the already poor image of the country. Deteriorating law and order situation has affected the tourism industry. The volatility in political governments and upsurge in inflation has affected all walks of life and the airline industry is no exception.
PIA can only stand on its own feet if issues of overstaffing and corruption/leakages are addressed in a satisfactory manner and that requires induction of visionary management. Presently, PIA has more employees per aircraft than any other airline in the world. Layoffs are inevitable if PIA wants to become profitable but it will require a chairperson and management willing to face the political consequences of such a decision.
A vibrant airline industry plays a pivotal role in generating economic activities. PIA being national flag carrier must be saved from total collapse. There has to be some accountability mechanism in place to arrest the national flag carrier's nosedive.