Paying back: Shaheen Air flies out of the red

Airline clears most of CAA dues, say industry officials .

KARACHI:

Shaheen Air International (SAI) has settled most of its dues, which amount to Rs1 billion, owed to the aviation regulator, indicating an improvement in its financial position, industry officials said.

Rumours related to financial mismanagement had surrounded the airline since Khalid M Sehbai passed away last year, leaving the charge to his young sons and a few trusted associates, they said.

“Apparently, it has come out of the red,” said a senior Civil Aviation Authority (CAA) official. “It comfortably cleared most of the CAA’s outstanding dues by the February 15 deadline.”

The Karachi-based private airline had been on a tightrope after aggressively expanding the fleet in anticipation of capturing the market share left by a retreating Pakistan International Airlines (PIA).

While it has cleared most of CAA’s dues, it still has to pay around Rs125 million in surcharges to the aviation regulator. “The airline has also applied for more international routes.”

Shaheen is awaiting permission to start flights to China and Malaysia.

In December last year, Khalid’s sons were introduced to travel agents and media at a ceremony as the airline’s new face.

The 34-year-old Kashif Sehbai, SAI chairman, and younger brother Ehsan Khalid Sehbai, 31, who took over as CEO, vowed to press on with their father’s expansion policy.

“Shaheen has no other intention but to grow,” Kashif said. “We have relocated here [from Canada] to try and consolidate the business.”

Since Khalid M Sehbai bought a majority stake in the private carrier, which was once run by the air force, it has been through a see-saw ride, even coming close to suspending operations.

Following his death in July, the market was ripe with rumours that his family will sell the stake to new investors, possibly the Tabbani Group which used to own Aero Asia.

However, in the last few years, the airline has emerged with a fleet of 18 aircraft and threatens to capture some of the market share from the crisis-hit PIA.

For the first time since starting operations in 1993, Shaheen crossed the million-customer mark in fiscal year 2012-13 as it carried 1.061 million passengers between Pakistani cities and foreign destinations, according to the CAA.

It saw a phenomenal growth in its share. Compared to 2011-12, Shaheen transported 43.8% more international travellers in 2012-13, while there was only a marginal increase of 3% in the overall number of passengers travelling abroad. In 2007-08, Shaheen carried just 280,615 passengers on international routes.

The airline is aiming to expand the fleet to 25 aircraft in the coming months, which would make it the largest ever private carrier in the country.

But the average age of its fleet is 17.4 years, according to planespotters.net, which means any other competitor with fuel-efficient aircraft can give it a tough time.

Time to change

The latest private carrier to enter the market is Air Indus, which started operation last year. It is still too early to comment on its performance.

But the fact that Pakistan issues licences to airlines against a paid-up capital of only Rs100 million has allowed small-time investors to try their luck in the difficult business.

The draft National Aviation Policy, which envisages increasing the paid-up capital to Rs500 million, has been pending with the Ministry of Defence for six years.

When Pakistan adopted an ‘open skies’ policy in the 1990s, more than 20 licences were issued to prospective airliners — none except for SAI survived.

Published in The Express Tribune, March 13^th, 2014.

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