File photo of a PIA aircraft. PHOTO: REUTERS/FILE
The Economic Coordination Committee has just approved Rs100.5 billion as a bailout package for the Pakistan International Airline (PIA), to allow it to buy more aircraft and also have some fiscal breathing room. Apparently, the bailout was approved along with a provisional business plan. There is a sense of pride in having a national airline along with a sense of reliability that a government-backed service brings, which cannot be expected from private enterprises, which are bound to keep financial interests foremost.
But while it makes sense — and is in the public interest — to keep the airline up and flying, it makes absolutely no sense to keep pumping in money without first ensuring that PIA goes through a process of economic cleansing. In a recent edition of the Financial Times’ global financial indicators, Pakistan managed to make the list because PIA has the highest employee-to-aircraft ratio in the world, at 485. And this figure is not even the full picture of the rot at this institution, which has been on life support for many years now. This does not include contract pilots, flight engineers, aircraft engineers who have been rehired after retirement and other contractual staff; otherwise, the ratio jumps to almost 600 per aircraft. Moreover, this number is based on the total fleet strength of PIA, which is 42, although only 25 planes are serviceable.
PIA also pays a guaranteed tax-free flying allowance of 70 hours to its pilots although their average utilisation is about 40 hours per month. It is surprising that a 45 per cent pay increase has been proposed for PIA staff, across the board. Apparently, the pay increase has not been approved yet, but the very fact that it has been proposed or even considered is a brazen act, considering the fact that the corporation is literally begging for handouts. If this is what the provisional business plan, designed to make PIA financially viable, entails then, why does PIA deserve Rs100 billion of the taxpayers’ money?
Published in The Express Tribune, March 1st, 2013.
COMMENTS (17)
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Most have been from the so called private sector: Tariq Kirmani, Ahmed Saeed, Salim Sayani, Zafar A Khan - The list is long. @Pakistani in US:
PIA became insolvent in 1996. Auditor's notes in annual report of 1999 state liabilities to be greater that assets.
With over half of fleet forcibly grounded for a long while, has the lost revenue been figured out?
PIA folks have only been efficient and loyal to generating odious debts - who pays and why?
@ a khan..... I wish you or someone in power would give me this chance.........you need to talk to me.
Where`s all the revenue from the hotels going?
Hand over to china?!!! Are you serious. You think you can stop corruption like that. It will only move from sub to high level. I bet it would still be there. They are not angels my friend. We have to dig the source of the problem.
Well you see Imran khan says remove the source.. Because thats the problem. Anything we do to any orginization wont work. Gotta fix the source of the problem.
@SAL: Let's be fair to this government. Its not only them that have abused PIA when in power. All parties do it when in power, its just been much worse this time around.
Wow 40 Hrs flying a month! What a luxuries lifestyle with such a handsome paycheck. It is minimum 85 Hrs flying time a month with reputed Airlines of the world. That is why PIA is breathing it's last.
Hand PIA over to Chinese- like Gwadar.
@A. Khan: This formula can only be implemented once this Govt and it's supporters are not in power. Political appointments and nincompoops has no place in PIA. Look what they have done to it's name.
@Nauman: In any other country, I would agree with what you are proposing. However, given the dynamics of a Pakistani state run enterprise, the organization would revert to type sooner than later. I think you fail to appreciate this when you say that professionals can run it. As far as I know, all PIA technical areas ARE with professionals, so why are the service levels failing then ?
Therefore, it is best to bury this white elephant as soon as possible. Otherwise, Pakistan government is throwing good money after money. Well, actually, a fair chunk of the money will be landing in someone's pocket.
Furthermore, an airline caters to an elite segment of population. How many of 182m Pakistanis have flown in an airplane ? You can argue flying in this day and age is a necessity. Fair enough, but its just not the governments job to run an airline. All governments have shown themselves to be incompetent at general governance, let alone running an airline.
Needless to say, what you propose has been said of/tried at Pakistan Steel, Railways etc. Billions upon billions have been sunk into them. But after a brief glimpse of a profitable future, losses mount up and the whole venture becomes a loss making cess pit. Wouldn't it be better to have decent schools/universities and hospitals put up with the same money instead ?
Dear people, No doubt there can be thousands of schools built with the sort of money we (PIA) is getting. But, there are somethings we cant let go off. Pia is a national pride. Just think of it, how many national prides are you left with in pakistan???? & you wanna let go of this baby as well.. I dont think so that will be the right decision. There is definately a way to run Pakistan, & that same way you can run PIA and every other national orginization. If PPP took charge of the country then they should have taken bold decisions and should have taken the right measures for check and balance as far as commision/corruption goes. They still should. When you take charge of a nation you must also bare its losses and have the coutesy to bring in change and be able to produce results. PPP like many others failed miserably. So, a good bizz plan Total funding & not just a few millione A strong hold on corruption Honest people.... Then, consistent monitoring of progress by Govt.
@a khan While PIA is a total mess, your suggestions reflect your complete lack of knowledge of how a business is run. This wipe-the-slate mentality is devoid of reality. There is a way to resurrect this airline......talk to us professionals.....
Privatization is the only solution...
Why is government not hiring a successful manager from private sector to shed extra fat from PIA. Just one capable, honest and non-political person can turn this airline around. Mark my words.
Best job in the world . PIA Pilot!
As I have pointed out, PIA has to be declared bankrupt and shut down completely. All staff should be laid off. No, I have no sympathy for rude and overpaid staff who are ungrateful working for what was once a great airline.
PIA can then be resurrected anew with new planes/staff although I would be wary of rehiring the troublemakers again. It should be a private corporation that is floated to reduce government meddling in its affairs.
The bailout money will end up mostly as commissions in buying/leasing of jets. So expect to see this whole episode repeat itself in an years time.
Just think of how many schools and hospitals can be made for Rs100billion. A national airline is a very expensive luxury one that we can ill afford.