Launching a new airline

How can one think of launching an airline in public sector when we could not save an already existing one from failing

How can one even think of launching an airline in the public sector when one could not save an already existing one from failing with the full sovereign authority at one’s command? This is what appears to be happening, with the prime minister being given a detailed briefing on March 24 on how the new airline, which the authorities recently registered with an authorised capital of Rs100 billion, will be made operational. The government, at the same time, is attempting to sell off strategic minority shares in PIA to a private party, while offering the buyer even before the deal is done with competition — in the form of the new airline — supported by sovereign guarantees. Only a private party that is totally devoid of rudimentary business acumen would even think of bidding for shares in such a company, even if its total liabilities (Rs330 billion) are written off by the government. It would be an oxymoronic situation to have a wholly public-owned airline competing with one similar but being run by a private management.

While it is still not clear whether the new airline would be a stand-alone one or a subsidiary of PIA, the latest announcement in this regard, talks of creating an airline reflecting the past image of the national flag carrier; the crew and staff trained by the best institutions and, ensuring state-of-the-art service for passengers. Except for core businesses, the rest of the services of the new airline are to be outsourced; a lean management structure is envisaged for optimising its efficiency as well as an emoluments structure, commensurate with the quality of human resource. This is a mission statement, not a business plan. A business plan would consist of details about fleet strength, landing rights and other infrastructure. These cannot be reflected in a mission statement, which does not even say how a government, which has failed to turn around an already existing public-sector airline, would make the new one a profitable enterprise. Indeed, this very mission statement could have been used for restructuring PIA instead of hurtling it into the unknown. Instead, we have a new airline being launched by a government, which has been known to subscribe to the mantra that governments have no business to be in business.

Published in The Express Tribune, March 27^th, 2016.

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