Call to revive golden era of PIA

There are three basic pillars on which a safe, reliable and profitable self sustaining aviation industry can function. An airline, an independent and a powerful regulator, free from any control by airline operators and airport authorities, and a potential clientele boosted by tourism industry, thus offering a vast potential of revenue through traffic and cargo to keep the industry viable.
Two vital components, including airline operator and regulator CAA, have been hostage to the Ministry of Defence and political cronies of successive regimes, whilst the latter ie CAA had been reduced to act as a dumping ground for retired uniformed officers and blue eyed boys of ruling elite, both civil and khaki.
Pakistan’s tourism industry stands shattered because of poor law and order situation, with only one alternative which had yet to be exploited by an offensive and capable marketing strategy to cultivate religious tourism for Sikh Yatrees, which required a cohesive strategy by the government, security agencies, hotel and tour operators in coordination with national airline, offering direct flights to Lahore with convenient safe road transportation to Nankana Sahab and other places. Almost 18% of the fuel cost could be reduced by drastically cutting down on positioning flights if operable hubs were in place at Islamabad, Lahore and Peshawar, which generated almost 78% of all revenue traffic.
In the absence of tourism, there existed an abundance of ethnic expatriate traffic which PIA once retained and benefited from, but now due to massive mismanagement and faulty policies of granting traffic rights to foreign airlines in violation of bilateral agreements, had been lost. The existing computerised Revenue Accounting and Reservation System could also stop pilferages, provided the nexus of corrupt marketing officers and few travel agents was not allowed to have control of the system and marketing department.
There already existed a variety of manufacturer recommended vendors to choose from, located conveniently along the domestic and international routes on which PIA operated, instead of criminal decision to select a single vendor located in Dubai or the UK as was done during the past decade with disastrous consequences, such as partial ban imposed by the EU on PIA fleet because of poor maintenance.
The policy decision to remove PIA and CAA from administrative control of MOD was a wise step, but having done that, both these organisations must have qualified professional management, with an impeccable record of integrity, and no conflicts of interests, supervised by capable and independent board of directors. Commercial aviation and its management was a specialised field, which required the best of human resources available, instead of the mediocrity that had monopolised its executive corridors.
Unfortunately, today PIA had been declared by its external auditor in the First Quarterly Report for period January to 31 March 2013, as an organisation where, “Material uncertainty exists that may cast significant doubt on the corporation’s ability to continue as a pending concern and, therefore may be unable to realise its assets and discharge its liabilities in the normal course of business”. In a nutshell, the financial cost had risen by 7.41% in this quarter, while distribution & administrative costs hiked by 22.4% due to a hefty pay package raise by PIA Chairman Yasin Malik and MD Junaid Yunus, himself a beneficiary.
Meanwhile losses in first quarter 2013 were posted at Rs 8.62 billion and accumulated total losses reaching an unprecedented Rs160.508 Billion. The administrative cost alone for first quarter was $23.69 million, while distribution cost was $15.696 million, as compared to $20.174 million and $14.84 million in corresponding first quarter of 2012.
Although fuel costs have dropped from $166 million in 2012 to $144.7 million in 2013, with almost half the fleet grounded for lack of spares and funds. Current Liabilities of corporation exceed its assets by Rs 144.445 billion, with another Rs 55.285 billion taken on short term borrowing from local banks on GOP guarantees, Rs3.671 billion from SCB against UK receivables and another Rs 875 million against Euro receivables from National Bank Bahrain. PIA Investments which owns and runs through a holding company, Hotel Roosevelt in Newyork, Minhal France etc had posted a loss of $1.67 million for first quarter 2013, while PIA fuel management based in British Virgin is a dormant company. The only profit earning subsidiary is the local Sky Rooms making Rs 13.27 million.
PIA’s executive corridors must be cleansed of the rot that had been instrumental in hurting this airline, while surplus employees, highest in the world in terms of employees per aircraft, would have to be reduced, while competent and honest executives selected to replace those who have for decades been at the helm, while PIA was being ruined and its revenues pilfered. Aircrafts if needed, must be taken on lease, preferably with maintenance support included. The ageing fuel guzzlers must finally be grounded and seasonal Haj and Umra traffic handled by leased aircrafts, because the last four of these operations have been a huge burden on the airline with losses running into billions. The federal government owed it to tax payers of Pakistan to take drastic essential steps necessary for PIA to be put back on track as a viable commercial airline serving its revenue paying clients.
An average seat factor of over 75%, will assure profitability, since the best commercial profitable airlines have a seat factor of 82%. It is pilferage, mismanagement, incompetence and not the worldwide practice of rebated passage facilities, which has dented PIA. Either this, or PIA must be shut down, for this country could no longer afford this white elephant, sucking up scarce resources from cash starved tax payer’s kitty, with funds desperately needed for more essential priorities like Power Generation, Health, Education, Railways and other basic necessities for millions.
It is hoped that advertisement for recruitment of a CEO for PIA would bear fruit, and neither vested interests, nor political recommendations, would be allowed to play a role and only merit based selection would be made. The government had to be seen being transparent, which required that the decision making committee empowered to look after PIA must not be influenced by the man who till recently was chairman of a private airline ,with an evident conflict of interest, which made him a beneficiary if PIA failed and its routes were up for grabs. The four member committee tasked to look after PIA and make recommendations included a member, who apart from holding a CPL, owned and run a ground handling agency, which was not enough to qualify him as an expert. The committee must weed out all those who have been instrumental in playing any role, while the airline was deliberately driven into the red, through massive kickbacks in procurement deals, non transparent purchase and lease of aircrafts etc.