PM undecided over Pakistan Airways’ future

Published: March 1, 2016



The newly founded Pakistan Airways has been rendered a ‘shelf company’ with the prime minister undecided over its fate amid staunch opposition within his cabinet.

The federal government registered Pakistan Airways Limited (PAL) on February 19 as an independent firm with an authorised capital of Rs100 billion parallel to the national flag carrier – the Pakistan International Airlines Corporation (PIAC).

Pakistan Airways’ registration clouded in confusion

A meeting on Monday chaired by Prime Minister Nawaz Sharif on the new company’s future ended inconclusively after some federal ministers opposed making the new airline operational.

Officials said Finance Minister Ishaq Dar and Privatisation Commission Chairman Mohammad Zubair opposed the move to make the airline operational as an independent entity. They were of the view this would not help reduce the losses at PIA, as the new airline would take away its business.

These government functionaries instead advocated making Pakistan Airways a subsidiary of the PIA, which would require changing its present structure as the Pakistan Airways has been registered under the Companies Ordinance of 1984 with the Securities and Exchange Commission of Pakistan.

The opponents were of the view that making the airline operational would require far more than three months, as claimed by another group of ministers. They said the new airline would require fleet, landing rights and other infrastructure that cannot be done before at least eight months due to the requirements under the Public Procurement Regulatory Authority.

“The government would require about 10 more days to decide the status of Pakistan Airways,” said Dar while talking to The Express Tribune. He said PAL was a “standalone company” as of now.

Whether it will remain a standalone or is made a subsidiary of PIAC, the decision will be taken soon, said the minister. He added he was clear about making the new airline a subsidiary of the PIAC.

Fully owned by the government through the finance ministry, PAL’s first subscribers are Finance Secretary Dr Waqar Masood, Aviation Division Secretary 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”.

Privatisation status

Speaking at a seminar organised by the Policy Research Institute of Market Economy (PRIME), the Privatisation Commission chairman said PIA’s privatisation is the only option to move forward. The seminar was arranged to discuss the options of restructuring or privatising PIA.

Zubair said the PIA management did not enjoy the freedom of decision-making that the private sector enjoyed and therefore no reforms could turn the entity around without full administrative powers.

Pakistan Airways registered as PIA subsidiary

PIA and the Pakistan Steel Mills, he alleged, have eaten up retirement benefits of its employees, underscoring deep financial troubles at the national organisations with PIA’s total liabilities at Rs330 billion.

He said the exact date of its privatisation would depend on when the parliament passed PIAC Limited Bill, which is currently under consideration of the Senate. The government has moved the bill in the parliament to amend the PIA Act of 1956.

Published in The Express Tribune, March 1st, 2016.

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Reader Comments (1)

  • Saad
    Mar 1, 2016 - 1:50PM

    State-owned businesses will always end in financial disaster. Recommend

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