Pakistan Reader# 705, 30 December 2023
Rohini Reenum
On 28 December, Dawn reported that Pakistan International Airlines (PIA) is currently operating at half of its capacity. Only 15 of its 29 modern aircraft are in use. This reduction resulted from the airline recently forced to ground 14 of its aircraft after it was unable to purchase necessary spare parts due to longstanding financial challenges. Its operational fleet is composed of six Boeing 777 wide-body twin-engine airplanes, eight Airbus A320 narrow-body jets for short/medium haul routes, and one ATR aircraft. The ATR had proved quite valuable for the national carrier; however, the present crisis has impacted the service it provided to remote destinations. Further, two of its Airbus A320 aircraft have been stranded in Indonesia since 2021 due to leasing disputes, one of which was returned in October following a visit by a high-level PIA delegation and the other is expected to arrive by the end of this month after settling of dues. Moreover, PIA’s operations have been disrupted recently by low visibility and heavy fog impacting flights to and from Lahore, Multan and Sialkot.
Operational capacity
The inability of PIA to maintain its operational capacity has been the direct result of its financial constraints. According to Dawn, this financial crisis is due to the ‘uncontrolled flight of dollars’ and ‘increase in prices of petroleum products’. This has made it difficult for the airline to buy spare parts in the last three years necessitating the grounding of its aircrafts and affected its ability to carry out maintenance requirements. It had also impacted its ability to buy fuel. In October 2023, the Pakistan State Oil (PSO) had refused PIA the supply of fuel over non-payment of dues. This had resulted in cancellation of over 500 flights in a span of two weeks. During this crisis, PIA’s Senior Staff Association General Secretary Safdar Anjum had pinned the blame on the current management for its ineffectiveness in dealing with the crisis.
Incurred losses
According to The Nation, the airline has accumulated a total loss of Rs.742 billion over the past several decades. Dawn had also reported a total incurred loss of Rs. 750 billion. In fact, the airline reported a loss of Rs.80 billion in 2022 alone. This number is expected to rise to Rs.112 billion in the near future. There have been multiple reports of corruption and mismanagement within the organization. Some of the key issues that have plagued the national carrier are pilot licensing scandals, poor quality of aircraft, an overstaffed workforce, stunted restructuring and the inability to attract funding. This has resulted in a limited operational capacity, which has adversely impacted its economic viability and profitability. The circle of problems has turned into a vicious cycle.
Privatization bid
In order to deal with these problems, the Cabinet Committee on Privatization (CCOP) had included the PIA in its active privatization programme in August 2023. Caretaker Prime Minister Anwaarul Haq Kakar had also urged the newly appointed Privatization Minister Fawad Hassan Fawad in September 2023 to expedite the process of Privatization. Privatization has been hailed as a one-stop solution for failing government-owned entities by several economists and policy analysts alike. It is viewed as an effective tool for fixing accountability and countering corruption and mismanagement. The bid to privatize PIA has, however, not been bereft of controversy. PIA’s Senior Staff Association General Secretary Safdar Anjum has argued that privatization is not the solution to PIA’s existing problems. He has urged the government to form an independent board of directors. During the fuel crisis, he had alleged that the airline was being destroyed “under a planned conspiracy” and had blamed the CEO and his team. He had also argued that the deliberate undermining and destruction of the carrier was being done to pave the way for easy privatization.
Whether these claims are true or not, the fact of PIA’s financial and management woes remain. The country is also dealing with an economic and financial crisis and remains cash-strapped, rendering it incapable of infusing capital in the PIA. In any case, this would be a short-term relief and would prove to be a burden on the national exchequer. In this context, the government would also have to take into account its deal with the IMF and fiscal constraints arising thereof. It is not surprising then that the government has taken the privatization route. The swiftness of its implementation and effectiveness in dealing with the ongoing crisis will decide whether PIA’s future will take-off or remain turbulent.
References:
“PIA Turbulence,” The Nation, 29 December 2023
“PIA operating with half its fleet amid financial woes”, Dawn, 28 December 2023
Mohammad Asghar, “PIA cancels over 500 flights in two weeks amid fuel crunch,” Dawn, 28 October 2023
Mohammad Asghar, “‘For-sale’ PIA hit by worst-ever fuel crisis,” Dawn, 23 October 2023
Mohammad Asghar,“Fuel payment dispute disrupts PIA flights,” Dawn, 17 October 2023
Syed Irfan Raza,“PM Kakar seeks to expedite PIA’s sell-off,” Dawn, 15 September 2023
Mohammad Asghar, “PIA grounds 11 aircraft; three deemed beyond repair,” Dawn, 22 August 2023
“Privatization of PIA,” The Nation, 9 August 2023
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