Aviation industry hopes for the best from new govt

Published: May 14, 2013

PIA posted a loss of Rs32.4 billion in 2012, up 28% over the previous year, as the airline continued to struggle to contain rising costs while operating an aging fleet of aircraft. CREATIVE COMMONS


It has always been a love-hate affair between Nawaz Sharif and the aviation industry. To his credit, that country’s skies were first opened to foreign and private carriers during his government in 1993. But the more pressing question now is what he intends to do with Pakistan International Airlines (PIA), the cash-strapped national flag carrier.

“I am dead sure that Nawaz Sharif will take particular interest in the aviation industry,” said Farooq Omar Bhoja, who worked closely with the former prime minister in the 90s. “And PIA has to be the priority. They need to plug fiscal leakages. “

PIA posted a loss of Rs32.4 billion in 2012, up 28% over the previous year, as the airline continued to struggle to contain rising costs while operating an aging fleet of aircraft. The airline’s problems have compounded since then. In the past week, it could use only 17 of its 39 aircraft because the rest were grounded for want of repairs and funds to buy spare parts.

The Civil Aviation Authority (CAA) is currently pursuing a liberal aviation policy, allocating more flights to foreign carriers. This has particularly upset PIA: many past and present executives blame the ‘open skies’ policy for the downfall of the airline.

“We need a level playing field. Gulf-based airlines are backed by their governments, they have resources on their side. How can we compete with them?” a senior PIA official asked.

The strong ties between the Sharif family and rulers in Arab states have also made stakeholders more sceptical. Over the past few months, some Arab carriers have started flights to Sialkot, Multan and Faisalabad. The number of flights operated by foreign airlines has also increased. Emirates alone flies 13 flights from Karachi every day.

“There was demand on these routes and our airlines were not able to fill the gap. PIA can moan all it wants, but the reality remains that the airline has more internal challenges instead of external ones,” a CAA director said.

Revamping the airline will be a challenge. Over the years, the government appointed successful corporate bosses like Tariq Kirmani and Zafar A Khan, but that did not help much. Even Aijaz Haroon, the airline’s powerful managing director and a close aide to President Asif Ali Zardari, had to succumb to relentless union protests although he came from within the organisation.

“The only way to turnaround PIA is to put in place professional management, which is fully backed by the government,” said a former managing director of the airline. “There has to be zero political interference in managerial affairs.”

“A lot of times the management is helpless in taking important decisions, as directions come from the Ministry of Defence. Nawaz Sharif seems to be a politician who can stand up to the bureaucratic pressure of the ministry,” he said.

Private airlines

At the moment, four airlines – Indus Air, Rayyan Air, Vision Air and Fly Pakistan Air are vying to start operations. Half a dozen private airlines launched since 1993 have either gone bankrupt or shut down. The open skies policy might have given passengers options to travel in more foreign airlines, but has not spurred any substantial growth on the domestic front.

“You need deep pockets to run an airline,” said Farooq Bhoja, who was among the prospective sky-preneurs. “People don’t realise that. This business needs a lot of money and offers slim margins. Why would a big business group invest in an airline when it can make better profits elsewhere?”

Yet, he insists that offering incentives or protection will not help domestic carriers.

Published in The Express Tribune, May 14th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

The Most Popular News of the day in your Inbox daily.

More in Business