Media talk: PIA inducts another aircraft, looks to bolster fleet further

Employees’ salaries not a reason for losses, says PIA chairman.

ISLAMABAD:

Pakistan International Airlines (PIA) has inducted another Airbus 320 jet to its fleet, taking the number of operational aircraft available to the national carrier to 26, Aviation Secretary and PIA Chairman Muhammad Ali Gardezi said on Saturday.

Under an ongoing plan to revamp the national carrier, the management is looking to enhance its operational fleet to 35-36 aircraft by next year.

Gardezi told reporters at Islamabad airport that the airline will add one more plane during the first week of next month on a short-term wet lease — a term used for a leasing arrangement whereby the lessor airline provides the lessee not only the aircraft but covers areas such as complete crew, maintenance and insurance .

One A-320 plane was added on June 29. The fourth one of this series—narrow-bodied and fuel efficient aircraft will be part of the PIA’s fleet in October. These aircraft were being acquired on a dry lease, Gardezi said.

PIA management expects to have 7-10 more aircraft inducted to its fleet by December this year.

“Our aim is the revival of PIA as desired by Prime Minister (PM) Nawaz Sharif and, under the guidance and supervision of Shujaat Azeem, adviser to the PM on aviation, the airline is moving in the right direction,” remarked Gardezi, a civil servant who was given additional charge in August last year.

He said that with the induction of these fuel-efficient aircraft, the airline will be in a position to offer better services to its passengers and, at the same time, cost the carrier a lot less.

Gardezi opined that the main reason for PIA’s losses was fuel cost as it was using guzzlers on short routes. PIA’s losses are estimated at Rs100 million per day.

He contested the common perception that having a huge number of employees was the reason for losses. With over 19,000 employees, PIA has one of the highest employee-to-aircraft ratio in the world that runs to over 700.

He claimed that the portion of employees’ salaries in total expenditure was only 17 percent, while fuel cost was over 50 percent.

Meanwhile, PIA Managing Director Shahnawaz Rehman said that with the induction of new aircraft, PIA would be able to restore flight frequencies and introduce new destinations for the convenience of passengers.

Bolstering the national carrier

The aircraft inductions are part of a plan to bolster domestic and regional flight operations. These aircraft, with 180-seat configuration, have been leased for a period of six years at a time when the country’s aviation sector has been under immense scrutiny following the attack on Karachi airport.

PIA recently returned four A-320s and Boeing 727-800 aircraft, which it had brought in on a much shorter wet lease in December 2013.

An insufficient number of aircraft was also a reason behind PIA booking its worst loss of Rs43.65 billion in 2013 before a minor turnaround – the carrier managed to reduce its losses – was witnessed in the first quarter this year.

The Privatisation Commission has also appointed a financial adviser in a bid to restructure the airline for the eventual sale of 26% of its shares along with management control.

PIA pays billions of rupees every year in interest payments, shrinking its limited margins. The loans also require it to seek government guarantees as banks are reluctant to lend the airline on the basis of its balance sheet alone.

Published in The Express Tribune, July 27^th, 2014.

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