Shaheen Air cuts fleet by six aircraft as skies become loaded

Development highlights issues faced by aviation sector in Pakistan

KARACHI: As airlines battle competition and high costs, Shaheen Air International (SAI) has decided to reduce its fleet, putting up six of its aircraft on sublease to the Royal Jordanian Airline.

The development highlights issues faced by Pakistan’s domestic carriers that are struggling to match wits with foreign airlines in an open-skies framework.

An official at SAI confirmed that the airline has put its entire fleet of Airbus A319 on sublease, with unconfirmed reports also circulating that layoffs could be in the offing.



“The environment we are currently operating in is not conducive for an airline our size,” Zohaib Hassan, chief marketing officer at SAI, told The Express Tribune. “The current policy of the government looks like its favouring gulf airlines.”

While Hassan declined to comment on the layoffs, he did say that a reduction in fleet called for fewer cabin crew members.

Estimates suggest that jobs of at least a 100 staffers could be uncertain at a time when SAI is reevaluating strategy, reducing destinations and its fleet size.

It is interesting to note that SAI inducted the A319s in its fleet only recently amid much fanfare with the chief marketing officer commenting then that “it was a testament to our commitment to the passengers and the local aviation industry. Fleet expansion allows us to grow internationally by way of new routes while also increasing the frequency of local flights.”

Increasing competition

Industry experts believe Pakistan’s aviation industry is already saturated with several players vying for domestic and international travel space. New entrant, Serene Air, already grabbed 5% share in the domestic space in its first year, eating away at earnings of the troubled Pakistan International Airlines, airblue and SAI.

At the same time, international carriers are also fighting for a place in the domestic market, offering direct flights between major cities in the country.



PIA, airblue, SAI and Serene Air served 7.17 million passengers in fiscal year ending June 30, 2017, a minute 3% when compared with 6.95 million passengers served in the previous year. The growth is far lower then what the International Air Transport Association (IATA) predicted to be, forecasting 9.9% growth through 2020.

“The market was already packed, demand and supply was on equilibrium but three new aircraft of Serene Air disrupted the balance,” said Afsar Malik, a Karachi-based aviation consultant.

While the number of travelers is increasing, Pakistani airlines continue to face issues, with SAI being no exception.

According to statistics published by the Civil Aviation Authority (CAA), domestic travel in Pakistan has not picked up at the pace international travel has.

With travelers preferring foreign airlines for international travel, domestic carriers have suffered.



In such a scenario, without increasing market size, additional aircraft is proving to be a burden, say market experts.

One aircraft costs between $300,000 to $400,000 under the head of rent every month, a huge burden especially when the airline is underbooked. Airline work on razor thin margins already.

SAI’s decision to reduce its fleet also comes on the heels of a tax controversy where it failed to pay the Federal Board of Revenue (FBR) on time. The tax body sealed the airline’s head office before the dues amounting to Rs910 million were paid.

The writer is a staff correspondent

Published in The Express Tribune, July 9^th, 2018.

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