Standing firm: PIA boss defends Turkish Airlines deal

Haroon dispels impression that PIA is off limits in US and deal made under political pressure.

KARACHI: The arrangement with Turkish Airlines will benefit Pakistan International Airlines (PIA) and also hugely facilitate Pakistani passengers, the flagship carrier’s Managing Director Aijaz Haroon has said in an interview with The Express Tribune.

Haroon was defending his decision to sign an arrangement with Turkish Airlines because of which, the PIA will end up losing at least seven destinations, including five in Europe and two in the US.

The MD has recently come under heavy criticism from within his own organisation. Unions, including the PIA Senior Staff Association, Pakistan Airline Pilots Association, Flight Engineers National Association, Society of Aircraft Engineers of Pakistan and Aircraft Technology Association of Pakistan, say that the deal spells ‘disaster’ for PIA. The Air League of the PIA Employees also held a rally outside the Karachi Press Club on Thursday.

A Civil Aviation Authority (CAA) official said that, under pressure from dissenting voices, the defence ministry has gotten involved and instructed the CAA to review and submit a report into the deal. In its report, the CAA has opposed the PIA-Turkish Airlines deal, saying that they were not consulted before the deal was signed.

Giving details of the agreement, he said that a ‘record of discussion’, not a memorandum of understanding, has been signed between the two airlines. “When it is implemented, passengers from any three destinations (Karachi, Lahore and Islamabad) in Pakistan will have access to daily flights to 130 destinations in Europe, US, South America and Africa with only one stop in Istanbul,” he said.

Currently, PIA offers only 40 international destinations, which is miniscule compared to Turkish Airlines’ more than 130 spots. Without the new arrangement, a passenger flying to New York from Islamabad would first have to take a domestic flight to Lahore and reach his destination via Manchester.

“PIA will continue to maintain those 40 destinations. But I have also gained 130 destinations (of Turkish Airlines) against selling only seven destinations,” he said. According to the arrangement, the PIA will hand over to Turkish Airlines its passengers from Pakistan to Frankfurt, Amsterdam, Milan, Barcelona, New York and Chicago after a stopover in Istanbul.

Haroon said that by offering seven destinations, he had given away only five per cent of PIA’s market share out of the 5.5 million passengers that the airline caters to annually. “Now, I am going to share destinations with an airline whose market in that area is 25 million people. So they are five times my size in that area which is now available to me. So, even if I take five per cent from that share, it’ll be a tremendous amount,” he argued.

PIA will continue operating flights to UK, France, Norway, Denmark and other European stations directly. “After this agreement the whole world will be open to you. Nothing will reduce. In fact, PIA will expand massively,” he said.

It is interesting to note that Turkish Airlines would discontinue its flights to Dhaka, Colombo and Kathmandu and transfer its passengers for eastern destinations to PIA. “This is a great advantage. For example, a lot of people from Western Europe, especially Germany and Switzerland go to Kathmandu, but they never come on PIA.  But now these passengers will be coming on board our airlines from Karachi,” he said.

The Air Service Agreement (ASA) has not yet been signed. Haroon said operations would begin on a temporary operating permit basis. The commencement of flights under the code sharing agreement would begin on March 28 and a month-long campaign by the PIA would begin mid-February.

Both airlines will earn 15 per cent on a reciprocal basis. “Suppose Turkish Airlines sells a ticket from Karachi to Berlin. So from Karachi to Istanbul, PIA will fly and on that Turkish Airlines will get 15 per cent and Istanbul-Berlin would be Turkish Airlines’ complete share. But if PIA sells the ticket, then Karachi to Istanbul will be our complete share, while from the Istanbul-Berlin trip, we’ll get 15 per cent,” he said.

He said that Turkish Airlines was competing with Emirates and other airlines but Turkey suited PIA more since it would earn more through the six-hour-long trip to Istanbul compared with just two hours to Dubai.

He dismissed as baseless rumours the allegation that PIA was forced to go along with an arrangement with Turkish Airlines in the interest of promoting closer relations with Turkey whose president is known to be close to President Asif Ali Zardari. “There was no pressure as such on PIA to go into this agreement. There are 21 flights, PIA is going to do 14, Turkish Airlines is going to do seven. So had there been pressure, it would have been the other way,” he said.

Haroon said that the agreement did not restrict PIA from operating direct flights anywhere in the world. He clarified that PIA was not banned from flying to the US as some people were claiming. “We knew that when we’ll say that PIA would no longer be operating in New York and Chicago (its only destinations in the US), people will start saying that PIA has been made out of bounds from the US,” he said, adding that because of this reason the airline was looking into the option of flying to Houston. “We’re evaluating whether it is worth flying there. But this doesn’t change the fact that there is no restriction on flying to the US,” he said. Turkish Airlines offers four destinations in the US: Los Angeles, Washington, Chicago and New York.

When asked why people within his organisation, especially pilots, are opposing the alliance, he said they were just unhappy because their extra allowances will be cut. “When a pilot flies to New York, he gets 600 dollars over and above all other allowances because it’s a long-range flight. So he knows that the 1,200 dollars he would get for flying two flights to New York per month would now be no longer coming into his pocket,” he said.

Also, he said, they won’t be able to go to New York for free anymore along with their families to visit their child who studies there. “They are selfish. They are just looking at how their allowances would be reduced. But I, on the other hand, am looking at the larger interest of the airline and its passengers,” Haroon claimed.

He rejected the assertion that there would be widespread downsizing in PIA at its international centres because of this arrangement. “There will be no retrenchment or downsizing of any sort,” he said, adding that PIA might have to open up new offices, for example in Berlin, to tell passengers that if you want to go to Pakistan from there, you can go through PIA. Also, he stressed, the Chicago and New York offices will not be shut down. “On the sector that PIA is not going to operate, I will get paid if I sell a ticket and I get net 15 per cent just by booking a flight. So what do you think I’ll do? Will I reduce my sales team or will I enhance it?” he asked.

Haroon suspects that the lobby of Gulf Airlines is also behind the chorus against the alliance between PIA and Turkish Airlines. “You know what killed PIA? It was these six carriers that came into Pakistan,” he said referring to the Gulf Airlines, Emirates, Qatar Airways, Etihad, Gulf Air and Air Arabia. He said the stiff competition given by these airlines would hurt most when the new arrangement takes effect. “I wouldn’t be surprised if it is found out that this lobby is also greasing the palms of some of our union leaders,” he said.

Haroon said he wasn’t worried about reports that the defence ministry is evaluating the agreement. “They have to evaluate because it is their decision, not mine,” he said, adding that once the two airlines informed their respective governments that they’ve agreed on a commercial agreement, it is left to the governments to decide if they should proceed or not.

About reports that PIA was incurring losses, he said the fact was that “for the first time in PIA’s history, we crossed the Rs100-billion mark in revenue figures last year. In 2007, it was around 70 (billion),” Haroon, who joined PIA in 2008, said. His deputies say the unofficial figure stands at Rs108 billion.

When asked whether Turkish Airlines would be able to cater to the comfort of passengers, many of whom complain that it isn’t the best when it comes to that department, Haroon said: “we’ve put a restriction on Turkish Airlines that on certain routes they will use only the 777, A340 or C40 aircraft.”

More importantly, he says, visa will be on arrival in Istanbul. “For tourist visa, it’ll be airline sponsored just like one gets through Thai Airlines when you go to Thailand. We’ll have our cabin crew on these flights; there will be Pakistani food on the menu; there is an engineering alliance also and we have also asked for in-flight entertainment like Pakistani dramas, and PIA transit facility and lounge facilities in Istanbul,” he said.

Published in The Express Tribune, January 15^th, 2011.