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What is wrong with the PIA? Experts, former officers and analysts say there are three fundamental problems
that have brought Pakistans flag carrier to its knees lack of planning, lack of commitment, and lack of
finances. Amidst an emotionally charged debate on whether the governments new plan for the airline will
work, there is one fact everyone agrees on. There are is something fundamentally wrong with how PIA is
being run right now.
There are frequent reports of a flight narrowly avoiding an accident, delays of up to 24 hours, and cancelled
flights leaving the passengers stranded.
Flights get delayed because the crew and the staff arrive late, says Lt Col (r) Akhtar Lateef, a former
general manager at the national airline. Many of their planes are old and need regular repairs, and there is
no backup support at most airports, he says. If a plane needs a spare part, it is often transported from
Karachi. These delays also increased the operating costs.
There are concerns that the airline is overstaffed, and various governments in the past have given out jobs in
the organization for political leverage. The employee-to-aircraft ratio at PIA is 485, almost twice as much as
the standard followed by the worlds profit-making airlines. This figure has to be cut down to bring it to the
international and time-tested figure of 220-250, says Col Akhtar. The salaries, perks, and medical bills of the
extra staff add up to millions of rupees, he adds.
In 2006, when a Fokker plane crashed in Multan, all other Fokker planes were grounded, and the PIA was
forced to arrange replacements. The very next year, the UN banned PIA from flying their B-747s and A-310s
to its member states, restricting the national flag carrier to its newly bought B-777s.
By 2008, global oil prices had risen once again, to almost $150 a barrel, because of the international
financial crisis, Col (r) Akhtar recalls.
When the PPP came to power in 2008, they inherited an airline on the verge of bankruptcy, with millions of
dollars of debt. At a time when airlines across the globe were cutting costs, downsizing, and shedding
aircraft weights, we were battling the unions, he says. PIA posted a loss of Rs 35.88 billion that year. Since
the airline did not opt for local financing, all its loans were in US dollars. As the rupee depreciated, interest
payments increased.
If there are so many factors at play, many beyond the managements control, I asked him how privatization
would help. He told me that the national flag carrier of Sri Lanka was having similar problems when they sold
it to another airline. It is now making a profit. But the most important thing is that Sri Lanka had shown
utmost honesty in assessing the worth of their airlines before they sold it, he says. That should also be
done for PIA.
Yasser Latif Hamdani advises caution. The PIA owns billions in terms of assets abroad, he says. It owns the
Roosevelt Hotel in New York, which has 1,026 rooms and 22 luxury suites for heads of states, the Scribe
Hotel in France, which has 600 rooms, and property in London, Milan and other places. But in a recent
auction, the highest bid received from a close Arab friend of a Pakistani leader was Rs 400 million. The
government should not sell off PIAs assets for peanuts.
Yasser Hamdani cites the privatization of Turkish Airlines as a model. Set up as a state airline in the 1930s, it
faced problems similar to the one being faced by PIA today.
In 2004, it began privatization by offering 25 percent shares to the public. Today, the Turkish government
owns less than 50 percent shares in an airline which has gone from strength to strength and is a proud
symbol of the Republic of Turkey. On the other hand, Air India is a loss-making state-owned enterprise an
example he says we should not follow.
But PIAs losses, even if they are caused by poor hiring practices of successive governments, cannot be
blamed on employees, says another representative of the employees, Obaidullah Khan. The poor decision
making or political interference at the top level cannot be blamed on the middle and lower management, he
says.
Regardless, Yasser Hamdani believes a strike is not justified. The airline should be considered an essential
service, he says, and the Pakistan Essential Services (Maintenance) Act of 1952 (not to be confused with its
provincial version, the 1958 Act) caters to precisely this issue. The law empowers the government to make
any union activity that hampers PIAs services illegal. But a law is only as good as its application. Does the
government have it in it to utilize the act now that it has been implemented? These are political decisions.
The problem with PIA is political and not economic, says Dr Qais Aslam, an economist. The losses are due to
corruption and embezzlement rather than due to market competition, he says. A lack of transparency and
bad governance seem to be the primary problem, not just with the PIA but with all state-owned enterprises.
With more honest management and structural transformation, the PIA can once again become a leading
airline, he believes. But according to him, those who lose from PIA remaining state-owned are supporting
the privatization, and those who gain from it are opposing it.