How the mighty have fallen
‘There was a time when the US First Lady Jackie Kennedy travelled by PIA. The First Lady thanked the pilot Capt Saleh ji with a hug’, says General Ghulam Mustafa.
I myself travelled internationally almost fortnightly in 1990s and can state it with absolute confidence that PIA aced other airlines. The only close runner was the German carrier. But then again, this is my personal opinion and not supported by any survey or data.
PIA has the honour of being the first Asian airline to fly a Boeing 707 as well as to add jets to its fleet. What went so wrong in the past years to convert PIA from a hugely profitable organisation into one that is a drain on the exchequer? As close as 2014, the Pakistan International Airlines (PIA) had attained operating profit of Rs1.67 billion for the first quarter of 2014 – January 1 to March 31 – as against a loss of Rs5.65 billion of corresponding period last year. (April 29, 2014)
PIA owns billions in terms of assets abroad. “It owns Roosevelt Hotel in New York having 1,026 rooms and 22 luxury suites for heads of states, Scribe Hotel in France with 600 rooms besides properties at London, Milan and other places.” (February 5, 2016) Could loans have been taken to reopen long routes currently closed against these properties to buy new planes?
Closure of routes has increased overheads on PIA by virtue of overloading it with surplus staff. Khurram Hussain in his op-ed gives an interesting example of Malaysian Airlines. I quote him, “How many of those invoking this airline as an example know that the government of Malaysia, growing tired of the continuing losses at the airline, hired a German managing director last year whose first major step was to issue 20,000 termination letters to every employee in the organisation?
“The majority of them were rehired the same day on contract, which changed the terms of their employment and made performance a key criterion for remaining in the job. Now how would those opposition politicians who have gone on TV to give the example of Malaysia Airlines as a model for Pakistan react if the government of Pakistan were to bring in a German MD, on a salary priced in euros, who started off by terminating everyone’s job in one stroke, then rehired a select number on terms similar to those of commercial organisations?” (February 4, 2016)
What really caught my attention was his suggestion of firing and rehiring employees on terms that makes performance key criterion for remaining on the job. However, this presupposes appointment of qualified persons to key positions and a policy of complete non-political interference.
It was extremely distressing to hear therefore of the resignation of Nasser N S Jaffer, Chairman of PIA, as a result of the death of two PIA employees in a clash with security employees on the 2nd of February. The clash was a result of decision of the government to privatise the national career. “The employees on strike were not allowed to collect their last month’s salary, say the PIA employees.” (AAJ TV, February 6, 2016) Further, a local newspaper reported, “Prime Minister Nawaz Sharif said protesting employees of PIA will be fired from service and can be sent to jail for a year…” (February 2, 2016) Such strong-arm tactics are leading to more bitterness. Passengers are stranded; the national carrier suffering billions in losses.
“The federal government has converted the repealed PIA Privatisation Ordinance into a bill to keep the PIA sell-off option open. By turning the repealed ordinance into a bill, the government has ensured the bill will be debated by the National Assembly’s Standing Committee on Cabinet instead of the PIA Special Committee, which has been formed to decide the fate of the struggling national airlines.”(January 5, 2016)
“Pakistan and the International Monetary Fund have reached a staff-level understanding to delay privatisation of Pakistan International Airlines by about six months, allowing the government to review its policy that has drawn the opposition’s wrath.” (February 4, 2016) PIA is not the only national asset on the anvil. Others are the Faisalabad Electricity Supply Company (FESCO) and the Pakistan Steel Mills.
In principle, one should oppose privatisation of public concerns. Privatisation itself does not necessarily ensure better efficiency. Further, private organisations are more geared towards making profits than making essential services available to larger segment of population with the latter not being an overriding operational concern. The profits reaped by private airlines as a result of PIA strike is an example. “Usually, the one-way fare from Karachi to Lahore or Islamabad is around Rs8,000 to Rs9,000 but after the PIA strike, the private airlines have increased the fare to Rs15,000 while their tickets are being sold at around Rs25,000 to Rs30,000 in black. The stranded passengers complained that they were stuck due to the PIA employees’ strike and were being taken advantage of by the private airlines, which had almost doubled the fares.” (Pakistan Today, February 4, 2016) Privatisation may eventually seek to increase prices at the detriment of the consumer with no controls as amply obvious by the example quoted.
How does private ownership ascertain transparency and credibility?
Will a complete disassociation of governmental control lead to monopoly by private operators in a necessary services sector? Does this serve public interest? Managerial efficiency, organisational mechanisms and delivering at the job are key factors. Does privatisation, holding of shares, policy decisions and management, by virtue of being held by private owners ensure this?
Privatisation can only work as a part of greater reform system that supports and encourages professional efficiency. In spite of privatising PIA, government regulation remains important for public welfare. While privatising, transparency of the decisions and the process is mandatory. Favorites must not be awarded and others overlooked. Privatisation of management without privatisation of assets is an option that offers interesting possibilities.
“PIA operations must be given under an autonomous body and completely taken away from ruling parties’ influence, if we want it to survive at all, for which change and amendment in present laws is a must,” says Rubina Aziz. Aziz is a Human Resource professional, focusing on organisational structure, a policy and procedures consultant having worked in USA and UK, and on many USAID projects.