AGP report on PIA shows gross discrepancies, mismanagement

PIA faces deep crisis amid calls for reform or privatization, as audit reveals years of financial mismanagement

LAHORE:

Pakistan International Airlines (PIA), once a training ground for renowned airlines like Emirates and Saudi Airlines, now faces an unrelenting financial crisis. Calls for privatisation grow louder, but many believe targeted reforms and competent management could still save the national carrier.

Following a Supreme Court directive, the Auditor General of Pakistan (AGP) conducted a comprehensive audit of PIA from 2007 to 2017. The findings painted a grim picture, revealing widespread financial mismanagement and fraud. According to the AGP report, ticketing fraud alone accounted for Rs44.5 billion in losses, while equipment purchases were grossly inflated for instance, a piece of equipment listed at $24,000 was billed at $240,000. Despite these irregularities, no action was taken against those responsible, and the report criticised previous audit firms for failing to report the discrepancies due to alleged collusion with PIA officials.

Other alarming findings include the selection of an expensive new ticketing software provider, who charged $1.50 per ticket when the previous contractor had provided the same service for 46 cents. Such practices, left unchecked by the government, compounded PIA's financial troubles.

Poor leadership decisions also contributed to the airline's decline. Numerous unqualified officials were appointed to pivotal roles, with many lacking even a basic understanding of aviation. Additionally, only 14 out of PIA's 35 aircraft are currently operational, leaving assets underutilised and deepening the airline's losses.

PIA has sought bailouts as early as 2011, requesting Rs50-55 billion to stabilise operations. Since then, its deficit has doubled, reaching Rs800 billion. The AGP report highlights the incompetence of PIA's engineering department, which failed to repair grounded aircraft despite contracts with major manufacturers like Airbus and Boeing. Furthermore, a partnership with World Aviation, a French firm, reportedly worsened the airline's financial woes.

Despite these setbacks, PIA's London and Frankfurt routes alone generate significant revenue, estimated at $350-400 million, and the airline operates 350 other profitable routes. Industry insiders argue that with strategic restructuring and appointment of skilled professionals, PIA could regain its footing within a few years. Regarding privatisation, the interest in the airline came from a real estate developer, rather than an aviation company. This sparked reluctance among PIA employees, the general public, and overseas Pakistanis.