PIA: Trying to build from the broken pieces

Minister for Defence Syed Naveed Qamar on Wednesday informed members of the lower house of the parliament that since March 2008, Pakistan International Airlines
(PIA) has signed only one agreement for the purchase of five Boeing 777-300ER aircraft to meet its growing needs and the aircraft will be delivered to Pakistan in the year 2015.
In a written reply, the minister stated that on February 14, 2012, the approval for the contract was accorded by the PIA Board of Directors in its 336th meeting held on 26th December, 2011.
Responding to another query, the minister said the prime reason for delay of flights was shortage of aircrafts. He added that presently the PIA was operating on 38 international and 24 domestic routes with a fleet of 38 aircrafts.
He said that steps had been taken by the newly appointed PIA chairman to ensure in time arrival/departure of flights and the government was planning to induct some aircrafts, on dry lease, to meet its immediate operational requirements.
“Departments within the organization have been reduced to seven from fourteen for better management and coordination. Maintenance, repair and overhaul (MRO) facilities have been improved,” he added.
The minister stated that an engineering team headed by a quality control engineering expert of baroscopic inspection has been placed at Lahore. He added that owing to these steps, punctuality had been increased to 78.1 percent in the month of July, 2012 as compared to 69.6 percent in June, 2012.
He confirmed that PIA has signed an agreement with M/s Transworld Aviation FZE Dubai for investment, consultancy in procurement of all aircraft parts/spares, GSE, repair management and sales of surplus inventory.
“It is reiterated that the PIA Board of Directors in its 334 meeting held on 24th September 2011 approved to sign the agreement with M/s Transworld Aviation FZE Dubai. Draft agreement was reviewed by PIA legal team and its consultant”.
He said that it was a fact that the first right of refusal for matching the lowest price would rest with M/s TWA Dubai being the special and unique supply cabin concept in aviation logistics, however, it was being negotiated and would be amended accordingly.
“Pursuant to international practice for termination of agreement, 90 days prior notice by either party (bilateral termination) has been incorporated in the agreement,” he added.
While narrating the salient features and benefits of the agreement, Qamar said this would bring in a unique concept of supply chain in commercial aviation.
“90 days credit for the supply of aircraft spares worth $40m/annum would be ensured while 90 days deferred credit facility up to $ 700m/annum for spare, repair and inventory sales management would be availed. Moreover, supply of all aircraft parts, consumable and high cost, life limited parts have been ensured” he said.
He also said that the repair/overhaul of rotors/sale of surplus inventory and management would be made while the PIA would define/provide the annual requirement of spares in advance.
The minister added that a credit line of $700 million to support the PIA operation would be made while a 90 days rolling credit for all supplied parts, components, and services would be ensured.