Great people to fly with

Airhelp, world’s largest travel compensation website, ranked PIA as the world’s third worst airline amongst 72 international air carriers. The national carrier received an on-time performance score of 61%, showing that four out of every 10 flights get delayed. But not to mention countless stories of flight delays, staff misbehaviour, minor incidents and system breakdowns, the airline has also been making some sensational headlines in recent months.

The national airline sacked 50 employees, including three pilots, over fake degrees. This was not the first time this has happened. Earlier in 2014, PIA had to fire 300 workers over the same issue. But somehow these fake degree holders keep on reappearing. Similarly, the airline was also found to have scores of ‘ghost employees’, when 200 of them were recently fired. The national carrier’s auditors reportedly refused to validate its financial statements of the last two years due to some missing record.

Moreover, earlier this month, the airline had to discontinue its Tokyo flights. This was just one of the many recent route closures, including Kuwait, Salalah, New York, Barcelona, Mashhad, Kathmandu, Bradford, Hong Kong, Frankfurt and Zahedan. Even more alarmingly, the latest probe report on the Havelian plane crash of 2016 revealed a lapse on the part of the airline, where it failed to change the turbine blades that had run out of life.

If PIA was a private-sector enterprise, many heads would have rolled by now because of such scandals and gross mismanagement. But since taxpayers are footing the bill, apparently our tolerance is way higher in this case. The airline is presently losing Rs3 billion every month and to keep it afloat, the government has so far spent close to Rs400 billion. With the same amount of money, one could buy the entire Air France or Turkish Airlines.

The present government is planning to restructure the ailing air carrier, something that has been repeatedly tried in the past with no success. Interestingly, restructuring the airline is not as complex as it sounds. The problems that PIA is facing are not really rocket science and any skill that the job may require is available in the local or international labour market.

With over 14,000 employees, the employee-to-aircraft ratio is 6 to 7 times more than in the Turkish Airlines. The revenue per passenger is almost 10 times less than other regional airlines like Emirates, Etihad and Qatar. Nate Silver, the famous US statistician, found PIA to have the third-highest accident incidence, based on 30 years of aviation data for 56 airlines. The airline, therefore, needs to shed its excessive unproductive labour force, improve its service quality, upgrade its fleet and augment its safety standards.

Now what’s needed is capital injection in the loss-making airline, inclination to take tough political decisions and putting right persons for the right jobs. If these three aspects are taken care of, PIA can practically be turned around within a short span of time. Air India, which faced a similar challenge, successfully reduced its workforce by more than 60% in just two years and improved its profitability significantly.

But this is easier said than done. Political governments in this country generally have little inclination for unpopular decisions. Fiscal pressures constrain the government’s ability to inject fresh equity, while merit-based recruitments often fall victim to vested interests.

The alternatives are outright privatisation, selling off aviation operations with a clean balance sheet through financial restructuring, public-private partnerships in selected parts of the business or declaring bankruptcy and starting a new airline afresh.

Although the options with greater government involvement are much less likely to succeed, what would be even worse is a delayed decision. The cost of inaction could be another Rs300 billion or even another ‘Air France’ over the next five years. 

Published in The Express Tribune, January 22^nd, 2019.

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