Business

New airline prompts open skies debate

The arrival of a new Dubai-based airline in Pakistan has many asking whether the sky is big enough for competition.

Farhan Zaheer July 05, 2010

The arrival of a new Dubai-based airline in Pakistan has many asking whether the sky is big enough for competition. Established airlines once used to block competitors to protect their market share, but those days are long gone.

After low-cost airline flydubai’s first flight took off from Karachi last month, PIA employees held a protest at Jinnah International Airport to demonstrate against the government’s decision to approve the new entrant. One reason is that flydubai’s one-way fare from Karachi to Dubai is only Rs8,600 which is 25 per cent lower than the rate offered by airlines for the same route.

Despite this initial antipathy, Shahid Khaqan Abbasi, CEO of private airline Airblue, said that new airlines will actually benefit the market as there is huge demand. “You cannot stop anyone,” he said, “Times have changed now and you cannot block anyone, if you do someone will block you from going in their market.”

While Abbasi said he supported the open skies policy, PIA’s managing director said it would be detrimental for the market.

Managing Director of Pakistan International Airlines, Aijaz Haroon has expressed concern that its share of the local market would be threatened by international low-cost airlines. “Unlike Dubai, we cannot afford this policy,” he said “We disapprove open skies policy because Pakistan operates in different circumstance.”

Haroon said flydubai would serve as competition for private airlines in Pakistan rather than PIA that but did accept that the new carrier would hurt PIA to a certain extent.

Another PIA official said that the arrival of flydubai in country meant that the market share of PIA would also be hurt significantly.

As a public sector airline, PIA can not officially oppose the government’s policy of allowing new airlines into the country. “When private airlines are allowed to operate freely, your flag carrier will obviously feel the brunt of it,” the official said. He claimed that governments support their flag carriers but PIA has to compete.

But director general of the Civil Aviation Authority (CAA), Air Commodore (retd) Junaid Amin has supported the government’s move to allow more foreign airlines in Pakistan.

“More airlines mean more competition which is helpful for passengers who get good service at affordable rates. Competition will help all airlines in long run,” he said.

Amin said that in the summer passengers, especially those to Dubai would have to wait for 15-20 days as demand surpassed supply. He said the CAA has facilities to cater more airlines and welcomes more airlines to the country’s airports.

The Competition Commission of Pakistan (CCP) has also supported the government’s move to allow more airlines to start operations in Pakistan. CCP chairman Khalid Mirza said “We supported the idea of coming more airlines into Pakistan. It was not intended to support only flydubai, the support was intended for all airlines.”

He said that the whole idea is to increase competition among local airlines in Pakistan as more airlines foster competition leading to better services.

When airline officials launched flydubai in Karachi last week they said that there was no friction between them and the government as they have been allowed to start operations. The carrier also announced intentions to expand to other cities in Pakistan in the future.

Some aviation industry experts predict that airlines will be facing tougher times in the future as government intends to further liberalise the aviation industry.

Published in The Express Tribune, July 6^th, 2010.

COMMENTS (8)

mehmood | 14 years ago | Reply this is a right move from govt side. as people are tired of the pathtic service PIA has being providing. thier ticket prices are always higher than other airlines and specially for those places where other airline`s aircrafts are not normaly scheduled like Quetta. their soaring prices, bad service, continuous fanancial losses and over burdened manpower necedssitates that new airlines should be introduced for healthy competition and better service.

Mushtaque Ahmed | 14 years ago | Reply How about determination of genuineness of educational degrees within PIA ? It will give PIA legal ground to get rid of unethical employees. Its high time and now the excess baggage must go !

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Aristo | 14 years ago | Reply Karachi Airport gives a look of a haunted airport as compared to the 1980's. European airlines have become allergic to the bureaucratic B* they have to face here. Ultimately its the consumers / passengers who are at the receiving end. We get the worst possible travel services as compared to the rest of the world and that too at a higher cost. Former DG CAA Mr. Farooq Rehmatullah had excellent plans for the promotion of the aviation industry, in particular for Karachi but what happened with him is what usually happens with these kind of visionary people in Pakistan, they get sidelined for thinking bright.

H Saqib | 14 years ago | Reply The reaction of Airblue chairman is professional and business-like. He understands the dynamics of this business. PIA wants to continue thriving on patronization which is possible only at huge costs. "Come fly with us" is the slogan of PIA. It should have been "come fly with us, we are the only one in the skies." Even the dollars at PIA coffers have started saying, "come fly with us". Complete story at link text

Discostu | 14 years ago | Reply All this means is that PIA will have to become more efficient. PIA has long been the holdout of unqualified people appointed by successive governments as political favors. The whole process needs to be streamlined, and the airline needs to come into the 21st century. If this nation wants to compete on what is now a global stage, they have to adapt. Instead of crying foul, we need to change with the times. Our survival, as does PIAs, depends on it.

Talha Ahmed | 14 years ago | Reply It’s high time that PIA should pull up its socks and increase its efficiency otherwise increased competitive pressure would push them off the brink of bankruptcy.

Asim Kaleem | 14 years ago | Reply Liberalization of the aviation policy is the need of the hour .... PIA should also think of introducing budget flights within the country ..... as indeed it will prove to be a big business for them

Meekal Ahmed | 14 years ago | Reply PIA needs to compete. To do so, they must implement drastic cuts in their bloated workforce, give them a fair severance package and let them go. There is no other way to raise productivity and cut costs and prices. The government, the CAA and others who think it can be done otherwise live under a rock.

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