Air space wars: Three new airlines to fly domestic routes
The sharp rise in air passengers in recent years has prompted at least three business groups to start their engines and try and capture part of the local aviation industry, officials told The Express Tribune on Friday.
Indus Air, Bhoja Air and Pearl Air are all set to launch flights in 2012 on domestic routes, according to a senior official of the Civil Aviation Authority (CAA). The new entrants will go head-to-head with national carrier Pakistan International Airlines (PIA), Air Blue and Shaheen Air to get a foot-hold in the domestic aviation industry.
Indus Air, a fresh entrant, was recently awarded a licence to fly while Bhoja Air is re-launching its operations after a gap of 12 years.
Meanwhile, Pearl Air was among the airlines, which were issued licences in the 1990s when Pakistan adopted the open-sky policy. Pearl Air’s sponsors have finally begun efforts to start their aircraft business.
“We need at least two more carriers,” said a senior CAA official. “Passengers are being subject to longer and longer wait times at airports and flight cancellation has become a norm. Existing airlines operating with a limited number of aircraft are having a hard time dealing with passenger flow.”
Despite an increase in fares, the number of air travellers within the country jumped to 3.6 million in fiscal 2011 compared with 3.5 million in fiscal 2010.
“The dilapidated state of Pakistan railways has forced passengers opt for the aerial route and has added to the pressure on airlines,” official said.
The three airlines will work under stricter controls considering the setbacks small Pakistani carriers faced in the past and the embarrassment suffered by the regulator CAA.
Except for sponsors of Bhoja Air, the people behind Pearl Air and Indus Air have no previous experience in the aviation industry.
Indus Air has also been a subject of various rumours recently, suggesting that the owners had connections with the government. The fact that it managed to get a licence in a very short time added fuel to these rumours. But a senior CAA official who was close to the process said there was no proof to suggest connections between the sponsors and top government functionaries.
The man behind Karakoram Motors, Abdul Wahab, is the lead investor of Indus Air. “He has been wooed into the business by former PIA officials who are on the board of directors of the carrier,” the CAA official said. Wahab was not available for comments.
A general manager at Karakoram Motors’ office said nothing has been finalised as yet. The model of aircraft is still being considered, the official added.
However, according to CAA, the airline has contracted four Boeing 737-300 aircraft from a company in Bulgaria. Aircraft inspectors will shortly fly to the country to review the condition of the aircraft, official said.
Bhoja Air’s Chairman Farooq Omar Bhoja said he cannot say when the airline starts flying. “It’s too early to say anything.” Without sharing details, he said that Bhoja was grounded by CAA in October 2000.
After former Prime Minister Nawaz Sharif opened country’s airspace in 1993, Bhoja leased B 737-200s. It was grounded after it started losing money and failed to clear CAA dues.
Bhoja Air has appointed Arshad Jalil as its managing director. Jalil was CEO of Shaheen Air for a longtime and owns an aircraft maintenance company.
Pearl Air was among the airlines, which were issued licences in the 1990s but it never actually flew. However, its sponsors have renewed efforts to get aircraft and restart operations.
When Pakistan adopted the open sky policy, more than 20 airline licenses were issued to different business groups, however, none of them except Shaheen survived.
The last airline to declare bankruptcy was Aero Asia. “We have learnt our lessons,” said the CAA official. “None of the new airlines or the ones renewing operations will be allowed to fly on foreign routes for at least a year.”
Published in The Express Tribune, December 10th, 2011.
COMMENTS (24)
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Pakistan's domestic traffic is about 7 million passengers per annum and our international traffic is also the same as domestic. India on the other hand has about 110 million domestic passengers and about 40 million international passengers (2010-11). Indian passenger traffic is growing @ 15% per annum whereas Pakistan has being having negative growth in domestic passenger traffic for last 3-4 years. Our international traffic, however, has been growing @ 4% per annum. it is correct that in India all Indian private as well as government owned airlines have suffered heavey losses due to cut throat competition and excessive taxes on fuel. Only one Indian low cost airline GoAir is in profit.
In Pakistan PIA has had loin's share in domestic traffic that is about 73% of the total. Airblue and Shaheen Air put together barely get 27% of the traffic. What appears to be surge in domestic traffic is due to large scale cancellations and excessive delays of PIA flights on domestic as well as international sectors. It hardly reflects any significant growth in domestic passenger traffic.
So what are the prospects of new entrants in airline market? Will market be able to absorb them, if PIA manages to recover from its current wave of gross mismanagement of its scheduled operations? In my opinion market will not be able absorb more than one additional airline of the size of Airblue or Shaheen if PIA manages to survive for a couple of years in the market. Without PIA, of course, three to four airlines of the size of Airblue or Shaheen Air could become viable in the domestic market provided they have sound finacial backing, required skills and experience of running an airline.
Airline business is cash intensive and its inventory is highly perishable. It is one of the riskiest businesses in the world. Its seats come in bulk but its passenges come in ones and twos. To fill the aircraft upto about 80% at the desired price is the real challange. when the aircraft doors close its empty seats perish. An empty seat costs almost as much as a revenue seat. The cost of operating a 125 seater aircraft on Karachi-Islamabad-Karachi sector is about Rs 1.25 million. Imagin if you were to fly a total of 5 flights daily to Lahore(2), Islamabad(2) & Peshawar (1). you could spend Rs 6 million a day without any guarantee that the size of the revenue will be the same or far less than what you expected. Airline business is done by the people with deep pockets and large hearts. you could easily lose a hurndred million just in the very first month of your business. Start up airlines with little or no staying power in the market would be driven out of the market by the competitors within couple of months.
@Aamer Khawaja:
No, I do not reside in the 11th century.
All those aspiring entrants MUST be well-palced and well-heeled. Or they would not get a license to operate a private airline. They must have money and connections.
There was an ad in the papers recently where Ms Talpur said she had nothing to do with Indus Air (or Air Indus) and that the allegations were false.
Maybe true, maybe not.
My point was to rubbish the naive idea that she was sitting there, remote control in hand, causing PIA operational problems.
THAT is thinking in the 11th century.
If a reporter sees a PIA plane in the maintenance hangar, they assume it is "grounded". If there is a bird-strike, it's surely the end of PIA when this is a hazard common around the world. With our open garbage dumps in major cities, I am relieved that the problem is not worse than it is in Pakistan.
PIA, despite it's staggering losses, is a valuable asset in terms of fleet and routes.
Personally, I am glad that new airlines are emerging whoever they belong to. I am a great beliver in open competition.
Finally, hopefully i might get my dream job now..fingers crossed..
surely they can do better than buying 737's they are so old fashioned they need to get 21st century aircraft's. It will be nice to see pakistani airlines with airbus a330'S or the a350XWB'S. lets hope PIA can sort it self out and become the glorius PIA it once was back in the day and start competing with other big airlines and getting passengers back to flying with PIA.
@jane: "so who said pakistan is getting less rich ?"
3.6 million passengers for a country of Pakistan's size is not a big number by any stretch of imagination. Just for comparison, around 110 million passengers fly domestically in India annually. And we know that India is not a rich country by any stretch. Since India's population is 6.5 times that of Pakistan, if India had comparable traffic, it would be flying 20 million passengers annually.
Good to see new airlines coming in the industry .
Convincing evidence that your National Airlines is inefficient, corrupt and undeserving of taxpayers funding.
@Meekal Ahmed: "So the sister of Zardari is causing PIA to fail? She must be a super-woman with magical powers."
Looks like someone is still in the 11th Century. Think about your own statement, I won't dignify that with an answer
The CAA has learned nothing. It is heart warming to know that in these sad economic times Pakistan still has investors willing to hire dozens or hundreds of Pakistanis. Whereas foreign airlines take away all our foreign exchange and maintain a bare minimum staff. The US president is scrambling round he world for American jobs but we here could not care less.
We need to encourage growth of local aviation where Pakistanis are hired. We need to give our airlines a fighting chance against middle east behemoths with deep pockets. Middle east countries have populations less than Karachi but these sheikhs steal our foreign exchange. I know local airlines need to improve but it's not about service it's also about creating jobs.
Pearl Air belongs to the Hashoo Group. This is a very positive sight since the would be creation of jobs and a charm in aviation industry.
IndusAir website; http://www.airindus.com.pk/
http://www.defence.pk/forums/economy-development/140846-faryal-talpur-owned-indus-air-replace-pia.html
Let there be more airlines so that citizen's benefit
why couldnt any of these ppl have invested in the railways and made life easier for the ppl less fortunate :/
@Shafaq:
So the sister of Zardari is causing PIA to fail? She must be a super-woman with magical powers.
What lesson has the CAA learnt? Have they ever published a single air accident report from which lessons could have been learnt?
If the Air Blue report is published, the credit goes to the judges that have ordered it. The CAA and more specifically the Ministry of Defense could still decline publication based on the slippery concept of "national interest" but then they would be in contempt of the court's orders.
Indus air is registered in the Bahamas....hmmmmmmmmmmm
@alia agha: Good one indeed, as long as they are creating jobs and a competitive market I dont give a damn who is the owner. Yup Zardari's have their own wealth too but no one is willing to accept that and how easily we forgot about the corruption we had during Musharraf's regime?
So the CAA has learned it's lessons. How about sharing those lessons with us your readers ET? What were the factors that lead to the bankruptcy of so many Pakistani carriers in the past?
Nowadays a lot of airlines around the world are facing problems. Dare I say it even in neighbouring India domestic carriers are running at a loss despite operating in a much larger market. So this isn't exactly the best time to start a new airline.
Like vultures circling over a carcass
@QB: Yes... The main investor in Indus Air is Faryal Talpur (sister of Zardari). On her recommendation, Pia has been facing huge losses.....
If someone irrespective who she or he is, is creating market competition which in return creates better pricing and consumer purchasing power, then whats the harm, just cause she is Asif Zardaris sister, its a crime to own a private airline. Why does this media instigate the public towards one side and want the public to believe such nonsence, the zardaris have their own wealth as well. I cant wait for the airline to be airborn.
Good, but at the cast of PIA,it has ruined by all its top to bottom employees .
fishy..
http://www.pkcolumns.com/2011/11/11/zardari%E2%80%99s-sister-faryal-talpur-owned-indus-air-to-replace-pia/
Does any one know if any of the above private airlines belong to our elites, especially Zardari family? ---- That would explain the decline of PIA to open up space for the new comers!
This is good news if it means more competition and hence lower fares.
The market seems to be there.
However, I have very little faith in the CAA. Let us PRAY that they have done a good job in accepting these applicants but, more importantly, will monitor their operations to ensure, above all, the SAFETY of the flying public.
so who said pakistan is getting less rich ?