There is no end in sight for the standoff between the Pakistan Airlines (PIA) and Pakistan Airline Pilots’ Association (PALPA) which is demanding a raise in salary, even as the national airline becomes technically insolvent, according to its external auditors.
“These conditions indicate existence of material uncertainty which may cast significant doubt about the Corporation’s ability to continue as a going concern”, the auditors’ report said about PIA in its 2012 Annual Report.
Surviving on government’s funds committed in its letter dated September 2, 2008 that “it will support the Corporation’s going concern status,” PIA corporate reports also show a GOP-EXIM ICIEC’s guaranteed loan facility of $122 million for overhauling of B777 and its engines for first quarter of 2015 and in 2014 another $52 million for acquisition of aircraft on dry lease, in addition to periodic financial bailout packages.
The basic purpose of the creation of a national airline funded by State was to serve revenue paying travelling public, offering them safe and reliable air travel facility. But this has been relegated to secondary priority, with successive governments abusing the airline to provide jobs for cronies, leading to overstaffing in every cadre, and creating powerful unions, which instead of confining themselves to legitimate welfare of members, hold the airline hostage for vested interests.
Ever since 2008, every managing director (MD) of PIA, except Shahnawaz Rehman, has been a beneficiary of pilots salary raise which has been negotiated with PALPA and in absence of corporate ethics such as transparency or no conflict of interest. Salary hikes have continued unchecked, while airline losses have risen astronomically. In the midst of Hajj operations, yet another strike in the guise of going by the book has hit PIA with demands of almost 100 per cent salary hike, dropping disciplinary cases against pilots or staff involved in smuggling or money laundering cases and violating CAA regulatory limitations enforced to ensure passenger flight safety.
Successive PIA managements, mostly headed by political cronies with visible conflicts of interest and negligible professional management qualifications are responsible for PIA’s fall from its days of glory under Rafique Saigol and Nur Khan to its present dismal state, where indiscipline goes unpunished and seldom have any recruitments been made on merit. Nor are those involved in corruption or financial indiscipline held accountable.
PIA financial insolvency is even acuter than Malaysia Airlines (MAS) which, because of political interference and appointments, mismanagement, poor procurement deals and union interference forced Malaysian government to hand over the airline to Christoph Mueller, a German national who had recently turned around Aer Lingus and prior to that SABENA and LUFTHANSA, as their CEO. Mueller after taking over in May 2015 issued letters of termination to all 20,000 employees, with three months notice, while simultaneously issuing fresh offers of employment to 12,000 for a new airline, MA Berhad replacing MAS. The new airline started functioning from September 1.
Ever since 2003, PIA has been on a decline because of mediocre management, pilferage, bad procurement deals, kickbacks and political interference. Although an uphill task, the national airline, given vast potential of ethnic clientele and cargo could still bounce back, provided it is handed over to an independent professional management free from political interference, with a strong board of directors, instead of one dominated by political cronies and bureaucrats. Mere induction of aircrafts on lease without a proper business plan and without corresponding induction and training of crew and technicians smells foul. Chairman and MD of PIA, director corporate planning and PIA’s board of directors should account for this irregularity which an airline already on the verge of collapse can ill afford. Instead of enforcing strict administrative and financial discipline, why are executive assignments and foreign postings being doled out on shaky grounds, including appointment of present Hajj coordinator based in Jeddah accused of holding a fake degree, but who’s still employed because of a stay order, which PIA is making no efforts to get vacated?
PIA BOD, in a meeting in Islamabad in January of 2009, for approval of corporate budget for year ending December 31, 2008 projected to break even in 2009 with projected revenues of Rs 120 billion and projected profit of Rs 600 million a mere 0.6 per cent net profit. In actual fact PIA losses increased from Rs 42.416 billion as of March 2008 to Rs 76.645 billion on January 1, 2010 and by September 30, losses further escalated to Rs 88.338 billion. In 2014 PIA incurred a loss of Rs 32.22 billion. By March 31, 2015 total accumulated losses have risen to a staggering Rs 228.78 billion. PIA’s total liabilities exceed its total assets by a whopping Rs 196 billion, qualifying it by all accounts as an insolvent commercial entity. During this period, while PIA’s fleet kept shrinking, its routes kept getting slashed, and revenues continued to decline, its workforce including pilots continued to increase, while salary raises for pilots given by managements headed by former pilots and cronies of PPP as MDs were phenomenal. For a serviceable fleet of 18 PIA owned aircrafts, excluding those on wet lease, the national airline has over 700 pilots, yet director flight operations has intentionally maintained a shortage of pilots on B777 to justify hiring on contract basis pilots who have reached age of superannuation. This artificial shortage has been manipulated ever since B777s’ induction into the fleet, to benefit senior pilots financially because of fabulous salaries linked to years of service and enormous hidden and tax-free money in terms of excess duty overtime and Atlantic crossing allowance of $350 per pilot for each one way crossing among many others.
The enormity of financial benefits accruing from delayed flights has resulted in pilots exceeding not only their own PALPA agreement on Flight Duty Time Limitations (FDTL), but also state regulatory and mandatory limitations of CAA which are 16 hours from blocks off to blocks on, which can only be exceeded in rare circumstances where aircraft is likely to be stuck or other unforeseen circumstances with special approval by DGCA. The recent incident in which Captain Iftikhar Kalim and Capt Zahid Barola’s licenses were suspended for two years were for violation of CAA duty limits on an A320 flight from Sialkot to Riyadh to Lahore and back to Sialkot.
Any grave violation of safety limitations imposed by state regulatory authority such as CAA and approved by ICAO jeopardizes insurance claims liability by airline and passengers in case of a crash, and can lead to imposition of ban or censure such as that imposed by EU in past, with devastating consequences.
Moreover, aircraft manufacturers have built resting bunkers for crew members on long range aircrafts such as B777 and A380 for pilot operations beyond 15 hours therefore 10 hours flight duty cannot be agreed upon by any airline. Even PALPA agreement allows flights beyond 14 hours with duty time limitations of 16 hours with four pilots.