Pakistan Airways’ registration clouded in confusion

ISLAMABAD: In what appears to be a dubious move, the government last week registered Pakistan Airways Limited (PAL) as a new company with an authorised capital of Rs100 billion and without taking all key stakeholders on board.

The situation is so uncertain that three divisions of the federal government are unaware of PAL’s purpose when the Senate is discussing the Pakistan International Airlines Corporation (PIAC) Amendment Bill, insiders told The Express Tribune.

Pakistan Airways registered as PIA subsidiary

Interestingly, two of the divisions were involved in PAL’s registration while the third, which was supposed to be taken into confidence on the issue, was left out.

“PIA’s premium service subsidiary was registered by the name of Pakistan Airways to improve the service standard and image of the national airline,” PIA spokesperson Danyal Gilani announced Saturday night. However, Gilani was contradicted by the spokesperson for the Securities & Exchange Commission of Pakistan (SECP), who said PAL was not a subsidiary of the PIAC. The company has been incorporated as a new entity under the Companies Ordinance of 1984.

The financial adviser hired for PIA’s privatisation and the ministerial Law Review Committee are also of the opinion that without amending the PIA Act of 1956, neither a subsidiary could be formed nor could the airline be privatised, said the sources. The government has moved the bill in parliament to amend the law because of this reason.

The administration’s latest move has raised more questions about its intentions regarding privatisation of the national flag-carrier, a commitment for which it has made with the International Monetary Fund.

The Pakistan Peoples Party submitted on Monday a calling attention notice in the National Assembly, seeking the government’s explanation regarding the new company.

“Launch of the new public airline is a source of grave concern,” reads the notice, “and this move is highly condemnable as parliament and the people have deliberately been kept in complete darkness about this action.”

So far it is unclear if PAL will be the new national airline or if the PIAC’s international routes will be shared with the new company, said a finance ministry official.

Aviation Division spokesperson Sher Ali said PAL was a PIA subject and no comment could be offered at this stage about the new company’s status.

Under the privatisation ordinance, administrative and policy decisions about an entity that is on the privatisation list have to be taken by the Privatisation Commission. However, the government completely ignored the body in PAL’s case, claimed the insiders.

Three days after forming the company, they added, the finance ministry contacted the Privatisation Commission on Monday, asking it how PAL could be used for selling the PIAC’s stakes.

What is PAL?

PAL was established on February 19 and is owned by the government through the finance ministry, according to the SECP. Its first subscribers are Finance Secretary Dr Waqar Masood, Aviation Division Secretary Muhammad Irfan Ilahi and Finance Ministry’s Additional Secretary (Corporate) Noor Ahmad.

The objectives of setting up the company have been stated as “to carry on business as an airline and air transport undertaking and to provide air transport services and services allied thereto and to carry out all other forms of aerial work, whether on charter terms or otherwise”.



The second objective is “to carry on and operate air transport service or any flight by aircraft for transport of passengers’ goods of all kinds and cargo for commercial or other purposes and to carry out all forms of aerial work”.

Thirdly, “to buy, own, maintain, run, sell, exchange aircraft for the transportation of passengers and cargo” and, lastly, to establish, manage and operate airline, air transportation or such business for any other country, state or agency.


Published in The Express Tribune, February 23^rd, 2016.