PIA accepts bids to acquire four A320s

Decides against 10 narrow-body jets initially planned.


Saad Hasan July 15, 2014

KARACHI:


Pakistan International Airlines (PIA) has accepted bids to hire four Airbus 320 aircraft against 10 narrow-body jets initially planned to be inducted in the fleet on dry lease.


The national carrier has accepted bids from the Dublin-based lessor AWAS for three aircraft while Aircastle, which operates out of the US, has offered one jet, according to the bid evaluation report on the airline’s website.

The jets will cost approximately Rs4.294 billion over the six-year lease period and help the airline meet demand on domestic and regional routes and in some cases even regain lost market share, officials said.

Two other bidders – a private airline and Aercap Holdings which together offered 19 planes – were rejected because they provided incomplete information on the type of aircraft or the planes were old, the evaluation report said.

PIA posts the evaluation report of the accepted bids on its website as a mandatory requirement under the Public Procurement Rules, allowing public a chance to give its feedback.

Out of the four planes, three A320s with construction numbers 3060, 3097 and 3031 are presently being operated by Czech Airlines, according to Planespotters.net, a website which keeps track of jets across the globe. It doesn’t mention AWAS being the lessor.

“Aircraft leasing business works in a funny way. There are companies which lease the jets themselves from other lessors. But for PIA, the important thing is the cost of that lease,” said a former head at the PIA’s Corporate Planning Department that decides aircraft-related matters.

“Airline officials normally give most weightage to the financially viable deal.”

There was a time when PIA used to lease planes directly from other airlines or aircraft manufacturers but now it has become difficult to get any sort of discount under direct deals, he said.

The aircraft offered by Aircastle is currently being flown by Sri Lankan Airlines, according to planespotters.net.

A PIA spokesman said that the national flag carrier has also called bids to lease four narrow body planes on wet lease.

“We want these wet lease planes to be delivered to us from September onwards. This is being done to ensure we have sufficient planes and that we get a good deal,” he said.

Airlines normally avoid hiring planes on a wet lease, which is expensive than a dry lease and is mostly used to meet pressing needs. Civil Aviation Authority of Pakistan also discourages wet lease.

PIA has a fleet of 28 planes including nine B777s, nine A310s, six ATRs, three B747s and one A320.

Airlines normally avoid hiring planes on a wet lease, which is expensive than a dry lease and is mostly used to meet pressing needs. Civil Aviation Authority of Pakistan also discourages wet lease.

Published in The Express Tribune, July 16th, 2014.

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COMMENTS (4)

Mohammad Syed Husain | 6 years ago | Reply

Buying and leasing have their own characteristics which sometimes for a non-financial person may create a mystery. Today, even a new aircraft will be considered old in six or seven years. Of course if you have the money or good credit standing, then why not. The Airbus A 310 initially absorbed in PIA came new in the early nineties.

When a decision is made to lease a used aircraft or even buy, a lot o homework has to be done. How many landings that particular aircraft has gone through (will indicate how much life is left in the structure), the type and make of engines, hours since last overall of engines (known as C/D checks in maintenance parlance)--and the cost of the looming overhaul as a result has to be catered in the decision. What is the overhaul cycle, at how many hours? What equipment in the cockpit it is carrying to meet the current regulations and how much expense in that field if any upgrading would be required. How expensive are the parts? The cabin interior, how it is set seat wise and modifications to be done as a result. Every operator uses an aircraft suited to its requirements, how many economy, how many first, business class seats etc. Even the painting is a huge expense. With all this investment what the future would be in terms of the lease, would it pay through with the utilization, and for a new aircraft its value at the end of five or six years has to be thought of. You just don't go to the shop and pick up even a used car.

Bilal | 6 years ago | Reply

Excellent proofreading job ET, as always.

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