Why the PIA-Turkish Airlines deal is a good idea

Agreement will transform PIA into a “super connector,” to connect growing mass of intercontinental air travellers.

KARACHI: If Pakistan International Airlines (PIA) is able to secure a codeshare agreement with Turkish Airlines (THY), it would be the best thing that has ever happened in the history of Pakistani aviation since the advent of long-haul flights eliminated Karachi’s status as a global stopover city.

The agreement, which has not gone beyond an initial discussion at this point, would transform PIA from a beleaguered, loss-making, state-owned enterprise into one half of a team of airlines that would join a league known as “super connectors,” airlines based out of global hubs that will connect that growing mass of intercontinental air travellers.

The contours of the agreement currently being discussed are as follows: PIA would give up its passenger routes in Europe and North America to Turkish Airlines while reorienting its fleet to expand its coverage of East Asia and Australia, for which Turkish Airlines would then give up its routes and passengers.

The gain for travellers

As may be immediately evident, were this deal to go through, it would be an immediate boon to Pakistani air travellers, offering them a far wider array of options, both in terms of destinations and flexibility of timings. Turkish Airlines offers 523 flights a week to European destinations from Istanbul and 184 flights to destinations in North and South America. PIA offers less than 100 flights a week to all of these regions combined.

Turkish Airlines currently only operates out of Karachi. And while the details have yet to be discussed, it is likely that the company would add its services to Pakistani travellers, both in terms of the frequency of flights – likely to be more than one a day – as well as the number of airports, which will probably include Lahore, Islamabad and Peshawar in addition to existing services from Karachi.

Imagine being able to fly every day from four Pakistani airports to any one of 41 destinations in Europe and 15 destinations in the Americas.

There are other benefits as well. For those of you contemplating Canadian immigration, consider where you would rather have your stopover between Pakistan and Toronto: Istanbul or Dubai?

For those concerned about visas, Pakistani citizens can now get a visa on arrival in Turkey, provided they have a visa to travel to the United States or the European Union. There are no transit visas for short stopovers.

The gain for the airlines

It is not just Pakistani travellers who will benefit from the alliance. The airlines would effectively become one large super-connector, with two hubs in Karachi and Istanbul, located perfectly to take advantage of the growing traffic between Europe and East Asia. In effect, Turkish Airlines would handle the western end of the route-map and PIA would handle the eastern end, by redeploying its long distance aircraft towards East Asia and Australia.

There are currently only a handful of super-connectors, most of them based out of the Middle East. One of the biggest is Emirates Airlines, whose importance to the global travel industry far exceeds the importance of its hub, Dubai, to the world of global commerce. Qatar Airways and Etihad are rapidly expanding their fleets to compete with Emirates.

According to The Economist, “the Gulf is a natural ‘pinch point’. From there, the long-range jets that began to come into service in the late 1990s can reach any city on Earth. It is also within a few hours’ flight of billions of people in Asia and Africa previously neglected by the airline industry.”

Neither Pakistan nor Turkey is in the Gulf, but they are both close enough to be able to create the same effect if they combine forces, which is precisely what Turkish Airlines had in mind when the first proposed the alliance. In short, if both airlines play their cards right, they could be handling significant numbers of travellers who are neither Turkish nor Pakistani and going to neither country as their final destination.

While the numbers are not yet in, it is likely that both airlines would be able to take a significant chunk of the nearly $20 billion in revenues that the three Middle Eastern super connectors currently earn. Turkish Airlines generated $4 billion in revenues in 2009 and PIA generated an even smaller $1.2 billion.

Why the pilots oppose the deal

The commercial logic of the deal, therefore, seems to rest largely on solid foundations. The only people who seem to oppose it are the pilots’ union, who fear a loss of the perks that they have gotten used to when they fly to North America and Europe. They will, of course, keep flying to destinations in East Asia and Australia for which their compensation is likely to be very similar, but apparently they do not seem to like flying there quite as much.

There is a chance, of course, that the deal might still go through. But PIA just lost the most energetic champion of the alliance in the dismissal of managing director Ijaz Haroon. One can only hope that his successor will keep the talks alive and pursue them to completion.

The writer can be contacted at [e-mail]

Published in The Express Tribune, February 28^th, 2011.