Pakistan International Airlines (PIA)

A Strategic Analysis




Numan Ali
Muhammad Awais
Fahad Imtiaz




1







Table of Contents

Profile ............................................................................................................................................................ 2
Tools .............................................................................................................................................................. 2
PESTEL Analysis ......................................................................................................................................... 3
SWOT Analysis........................................................................................................................................... 4
Lenses ............................................................................................................................................................ 4
Strategy as Ambidexterity ......................................................................................................................... 5
Recommendations ................................................................................................................................ 5
Strategy as Process ................................................................................................................................... 6
Recommendations ................................................................................................................................ 6





2

Profile
Pakistan International Airlines, Pakistans national flagship airline, has been a pioneer since its inception
in 1955. PIA was the first Pakistani airline from a non-communist country to fly into the People republic
of China and, in 1962 PIA set out to break the record for the fastest flight between London and Karachi.
PIA is the oldest airline in Pakistan, therefore grabbing a major portion of market share (about 60%) in
domestic market and 30% in the international market. The carrier performed well until the 1970s, when
corruption and overstaffing negatively
impacted the company. In the 1980s, the
carriers reputation was further hit due to
poor maintenance practices. 1990 signaled
further challenges for PIA with the
liberalization of market. Despite remaining the
largest operator on Pakistan's international
and domestic routes, the carrier is increasingly
losing its share in the global market. Due to
the management's constant negligence and
massive corruption executed under the banner of aircraft replacement, inefficiencies have penetrated
deeply into the entire system of the corporation. It is not a secret that PIA is not going well while being
in a region that offers great chances for commercial aviation companies. In a country where seat factor
ratios have been relatively brisk our national airline has been recording the history of the loss of money,
image & credibility. The company is in a dire situation to salvage itself from further crises. With the
airline brand severely dented, IA lost market share as well as growth in business, which made the
situation still more difficult. Apart from the fuel cost, increases in pay to certain categories of personnel
and depreciation of the rupee vis--vis the dollar also adversely affected the organizational results.
Tools
In our analysis, weve used 2 primary tools to identify different concern regarding PIA. These tools will
assist in identifying key issues in current PIA situation.



3

PESTEL Analysis

Politcal
Politcal uncertainty
Pakistans politcs has always been shaky thus creatng an
unstable ground for PIA
Terrorism
Recent increase in terrorist actvites on airports, PIA has
sufered massively
Privatzaton
The privatzaton of about 30% PIA has created an air of
confusion both inside/outside the organizaton
Personal Favors Politcal fgures have ofen used PIA for their personal luxuries
Government Support
Apparently government has been neglectng all current issues
faced by PIA
Economic
Small Pocket size
Majority of people of Pakistan have a relatve smaller pocket
size which doesnt allow them to travel by air
Price Diference
Rising fuel cost
Contnuous increase in fuel prices have raised the air tcket
fare to a new height that is unafordable by most
Infaton
Poor economic conditon has infated everything thus creatng
problems for the masses
Social
Cultural diferences
PIA focuses on removing cultural diferences by hiring people
from varying backgrounds
Corporate Relatons
PIA does have a strong corporate base for their regular
customers
Flying norms
The fying norms of PIA vs. Rest of the world varies e.g.
Security etc.
Technological
Old feet
PIA stll relies on the planes they earlier acquired and havent
added any new member to their feet
Mobile/Web
Adaptaton
PIA stll lags behind in the race over Web and Mobile presence
compared to rest of the world
Digital Interacton
The use of digital support in PIA is far less than those in
competton
Compettve Edge There is no technological edge for PIA over their counterparts
Environmental
Bird strikes
Actons to avoid bird strikes are not upto the internatonal
benchmark
Weather conditons
Pakistan has a very dynamic weather so PIA has to face a huge
climate challenge
Eco-friendliness
Currently PIA isnt actve on fuel-efcient and environment
friendly engines
Legal
Health & Safety laws PIA stll relies on very ordinary health and safety regulatons
Legal Amendments
Due to frequent politcal shifs, PIA has to amend their
policies more ofen
Foreign Restrictons
The terrorism has let internatonal community to put
restricton on PIA



4

SWOT Analysis

Strengths Weaknesses

Natonal brand
Leading market positon
Subsidized fares
Main hub airport in Karachi
Good employee perks
Booking facility in most cites of Pakistan
E-tcketng facility
Air routes exclusivity
Direct fights to diferent countries
Multlingual staf on board
Halal meat available


Weal leadership
Debt burden
Old feet
Fuel Inefciency
Staf overloading
Technological incompetency
Poor advertsement
Inefcient HR policies
Excess employees
Low inventory turnover
Planning only for today
Ordinary Standards / norms

Threats Opportunites

Politcal uncertainty
Rising oil prices
Terrorism
Increasing competton
Poor economic conditon
Internatonal restrictons
Government regulatons

Low-fare initatves
Increasing populaton hence increasing base
Improved quality can help penetrate
Internatonal market
Explore new routes & destnatons
Tourism associatons
Use of loyalty programs
Growing customer needs
Beter recruitment policies


The key issues Ill be looking into with my selected strategic lenses are:
Technological incompetency
Poor HR policies
Poor Economic conditons
Planning only for today
Increased competton
Lenses
My selected lenses for the strategic analysis are:
Strategy as Ambidexterity


5

Strategy as Processes/Procedures
Further below, Ive explained why these lenses are better in elaborating the current situation and
recommend accordingly.
Strategy as Ambidexterity
In these times of fierce competition, a firm no matter in which industry, can only survive if its doing
what its meant to do with perfection and at the same time be proactive in gauging what will interest
their customers tomorrow. PIA has been very stagnant on this front throughout their track record. They
havent invested much on the technological grounds. E-ticketing solutions came very late compared to
other but nonetheless have been adopted. Theyre not very well equipped with the right tools to cope
with the rising competition. The alarming reason why PIA is lagging behind is because there is no vision
to be a tech-savvy organization. The Mobile, Web and Digital fronts are still open for PIA and there
havent been many developments on these lines. PIA is still relying on the traditional way of dealing with
people but what they dont realize is that theyre not the only player in the market which has an impact
on customer experience. People expectations are getting higher and higher day by day. And while the
traditional way of PIA is still largely utilized by its customers, the need to have an eye on the moving
technological fronts as well. Then PIA has old fleet of planes which are fuel inefficient and have high
operating and maintenance cost. With the rising fuel costs and poor economic conditions, these planes
are a burden instead of a blessing since these add to more expenses then to profits. Apart from
technological front, Pakistan is suffering from economic downturns and PIA needs to have a clear
strategy to deal with a situation worse than this. People do not have a huge pocket size which makes
them look for alternates. There are low fare flights in other parts of the world which are very economical
for short trips and beneficial to both firms and customers. There can be arguments that airline industry
has nothing to do with ambidexterity since the core purpose is to fly. But when you dont focus on
enhancing customer experience by utilizing new and captivating channels, the core purpose will never
by sufficient.
Recommendations
PIA needs to have a grip on the technological front
Old inventory pile ups need to be cleared and new planes with eco-friendly fuel efcient engines
should be brought in
PIA should come out of planning only for today mindset. Being ambidextrous requires executng
todays job with excellence while plan for the tomorrow for even beter results
Hold a frm grip on technological fronts. Improve their positon on mobile and web platorms
Create interactve channels for customers to share their feedback and queries
Build a low fare service with smaller planes to deal with the smaller pocket size problem
Target the sof spots in compettors, use the Pakistan Flag Carrier branding aggressively to atract
a larger base
Reduce the communicaton gap between PIA and their customers



6

Strategy as Process
Processes act as a backbone for organization of sizes as that of PIA. Not having processes for numerous
functions or not following such processes prove to be catastrophic for the organization. PIA has been
facing similar issues when it comes to formulating processes and then following them in the longer run.
Human resource for example, is one of the core competencies of most firms and strong HR policies are
structured to get the best men for the job. Airline industry requires qualified, skilled and experienced
people to do the respective job roles. PIA has been facing an issue of overstaffing. The number of
personnel per plane is way beyond the international standard. Then a highly qualified worker works in
the same role as that of a less qualified worker. These discrepancies create an air of frustration among
the work force. PIA has hired a lot of people over the past decades and many of these were either
brought-in due to some reference or a political influence. Technology has always been a key resource
for PIA but there is not end-of-life for the technological tools acquired by PIA. This includes both tangible
products like planes and intangible solutions like software. The absence of a process determining the
outdated technology in PIA services put the entire firm in shadow. The effects of such negligence results
in even lower ratings which make the customers lose their trust in PIA. PIA currently has no single
procedure to clear out old inventory. There are huge pileups of old equipment, spare parts of planes and
remains different machinery but no procedure to churn them off. The dilemma they are facing is of
cannibalization i.e. preparing the planes for the current journey but have no idea how the next journey
would be carried out. So if one plane is to fly today, they will fix with the parts of other plane and when
the other plane has to fly theyll fix it with the parts of another one. They lack in techniques dealing with
the competition. They do not have any process that helps them build as an economical preference.
These fronts require streamlined processes and enforcing these processes which become the bible for
the employees. In many cases, PIA has processes drawn and written on papers but not followed which
nullifies the worth of effort put it.
Recommendations
Fool proof formulaton of hiring processes which neutrally qualifes a candidate based on the
required educatons, skills and experience for a partcular role
Establish a process to audit the current technological capabilites including the planes, sofware
and digital assistance. The audit should result in replacing outdated assets
Create a process to churn of the old inventory pileups to make room for new ones
PIA is in dire need of a marketng procedure which creates their unique value in the minds of
their customers
Improve internal and external complaint handling procedures to create a positve vibe around
the brand
Make it a process to use eco-friendly solutons for the services PIA ofers thus show casing itself
as friendly symbol
Formulate internal process to deal with the increasing economic downturns by coming up with
new solutons e.g. Low fare, no luxury fights