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A flight to nowhere

The airline’s shrinking flights, to New York of late, uncertainty in its domestic service and failure to offer competitive fares makes it a poor player

A flight to nowhere

The country’s national carrier, Pakistan International Airlines (PIA), remains the last option for most travellers, flying both within the country and abroad. Apart from having an ailing fleet (and an aging flight crew), uncompetitive ticket prices and mediocre at best in-flight services, the airline’s flights are routinely delayed and cancelled, sometimes on the mere behest of influential individuals.

From a business standpoint, the case for PIA is equally bleak. Severe overhead costs and a bloated workforce have ensured that over the last decade, the national carrier has suffered a cumulative loss of Rs400 billion, with 10 per cent (40bn) in the last year. Of that Rs40 billion loss, around Rs2.25 billion was being incurred from the flight to New York, PIA’s last flight into the United States, which flew for the last time on Oct 29.These figures are from the Prime Minister’s Advisor on Aviation, Sardar Mehtab Ahmad Khan.

However, PIA’s General Manager Public Affairs and Spokesperson, Mashood Tajwar, says the route cancellation is nothing permanent. “It’s not like we’ve closed shop permanently,” he says. “I look at it as a temporary respite till we are in a better condition.”

Sheikh Majeed, who is the advisor to the Skyways Union of PIA Employees, believes that Air Blue, a local competitor to PIA, will be the main beneficiary of the downfall of PIA.

Surprisingly, the spokesperson also puts the losses from the NY route at Rs1.5bn. That’s a difference of Rs750m from the figure quoted by the PM’s advisor on aviation.

Still, he admits, the route incurs the most loss on PIA’s network. This is surprising, considering that PIA also flies thrice a week to Toronto, Canada, a destination farther than New York.

Tajwar claims that on average, the bi-weekly flight was running at 65 per cent of its seating capacity.

Let’s do some mathematics. On a Boeing 777, that’s nearly 250 seats. And with a lower estimate return ticket price of Rs100,000, the yearly income is Rs2.6 billion from the route.

Evidently, that’s not enough to keep it going.

The main reason being put forward for culling the route has been high direct operating costs (DOC). Tajwar breaks it down: “The DOC includes fuel consumed for the flight, ground handling charges, in Karachi, New York and Manchester (where the flight lands en route), navigational charges paid to all those countries who have allowed us to use their airspace for the route, aircraft parking charges which, beyond a certain period are charged on a per hour basis, the cost of food and beverages served on the flight, engineering costs and the salaries of the pilots and cabin crew.”

The strategy, going forward, according to Tajwar, is to utilise the limited fleet available to the airline on shorter, better performing routes. PIA’s busiest routes are to Saudi Arabia and the United Arab Emirates. A local travel agent confirms that for Jeddah, PIA is still not the cheapest option flying out of Pakistan, only difference being that on Emirates, the flight breaks in Dubai.

Previously, PIA flew to numerous destinations in the US, including Chicago and Houston. Slowly, they all stopped, for the same economics as New York. “People need to understand that if PIA is losing money, somebody has to pay,” says Zafar Khan, former Chairman of PIA. “Either it’s the tax payer or the government, or you charge higher fares on other routes to cross subsidise.”

Fingers have also been pointed at Pakistan’s aviation policy of open skies and how it does not give sufficient protection to the national carrier. “Everybody and their brother is flying in, airlines like Qatar and Etihad, and they’re giants,” says Khan. “We can’t compete with them.”

On the flip side however, the consumer gets the luxury of choice. And when it comes to a choice between the PIA and one of the many modern airlines operating across Pakistan, it’s not a difficult decision to make. “I’d never fly PIA,” says Imran, a frequent traveller to the Middle East. “The aircraft is cramped, the in-flight services are non-existent and the cabin crew rude,” he says. “For nearly the same ticket price (sometimes a little more or less), I can choose from among the best airlines in the world.”

Zafar Khan believes that some sort of middle ground could have been achieved if Pakistan had negotiated better returns for the airline. “You try and get some good rights in return for what you’ve given them.”

Sheikh Majeed, who is the advisor to the Skyways Union of PIA Employees, believes that Air Blue, a local competitor to PIA, will be the main beneficiary of the downfall of PIA. He makes an unsubstantiated claim of Air Blue getting new routes into the United States, and that former Prime Minister Nawaz Sharif (who brought in the much criticised Aviation policy in 2015) has vested interests which make him move against state institutions such as PIA and Pakistan Steel Mills.

There is another point of view. With PIA out of the picture for New York, and if one is to believe the grapevine, soon for Barcelona, Milan and Paris as well, foreign carriers operating in the country will be able to hike prices, knowing that the consumer has less choice. “People who’d be complaining about PIA’s prices will soon find out,” says an official who asked not to be named.

However, a local travel agent claims that, on the contrary, rates for popular airlines like Emirates, Qatar and Etihad have gone down, averaging about Rs106,500 for a return ticket to New York.

Last week, the government approved Rs13.6bn bailout package for the airline. However, Khan insists this will solve none of the carrier’s problems. “PIA has to go out of government control, they cannot run this airline, there’s too much vested interest, and too much interference,” he says. “The only way forward is to make a good board, empower them, give them a free hand and make them accountable — only then will things get better — otherwise more money is going down the drain.”

As economist Asad Sayeed suggested earlier in the year, PIA’s problems seem to be more on the revenues side than on the wages end. And that the experiment with numerous corporate bigwigs at the airline’s helm have not changed the downward spiral of the carrier. Importantly, he notes that PIA cannot be seen in isolation, but as part of a big wheel, that not only includes the Civil Aviation Authority, but by association, the Pakistan Air Force.

Aasim Zafar Khan

Aasim Khan
The author is a Lahore based journalist. He may be contacted at [email protected],

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