Commercial aviation is a highly regulated and specialised industry subject to strict international regulations which demand that the most qualified CEOs run it efficiently, offering clients safe, reliable schedules and affordable fares to retain market share. Any compromise in essential safety regulations can result in censure and suspension of flights such as a temporary partial ban by the European Union. It cannot be handed over to Way Forwards Committee of employees, nor to bureaucrats or serving pilots. The difference between commercial aviation and military aviation is as vast as between an oncologist and a dentist.
What PIA needs is a Gordon Bethune who turned around Continental, or Christoph Mueller who restructured Lufthansa and Sabena, but that requires a strong political will by the government to run PIA as a service oriented entity with the most qualified professionals at the helm and a highly disciplined workforce with no interference from the political quarters. Rafique Saigol and Nur Khan were able to deliver because Zulfiqar Ali Bhutto gave them free hand with no political interference. Nur Khan was aware of his lack of experience in commercial aviation, so he appointed a team of qualified professionals to run the airline with strict accountability and zero tolerance for financial irregularities. When Nur Khan approached the federal government to acquire the services of Enver Jamal as MD, the federal government refused on the grounds of conflict of interest and the request was only acceded to after Jamal had furnished proof that he was no longer is involved in any business concern dealing with aviation. In the past two decades, PIA’s human resources have been eroded with top-heavy, mediocre management.
The national flag carrier has provided logistical support on numerous occasions, especially in times of war. It serves to link the remote northern areas with the rest of the country when hostile weather severs road travel and operates on routes which the private airlines, in spite of the Aviation Policy, refuse to operate on, preferring to pay nominal penalties.
Political appointments, cronyism and nepotism, have not only added to surplus employees, but also eroded the airline’s human resources especially in managerial and key executive positions. Surplus staff in lower cadres below Group 4 may not be a burden on total operating cost because salaries constitute 18-19 per cent of budget compared with international average of 21-23 per cent in the aviation industry, but political actors involved in irregularities and pilferage are a problem and need to be weeded out. With an operational fleet of 33 against claims of 38 aircraft, the airline has 14,847 regular employees which does not include 4,000 daily wagers. The recent strike call by JACPIA which shut down the airline completely is unprecedented and needs to be thoroughly investigated. Patronage of political parties through their activists cannot be ruled out given complete unprecedented shutdown.
The basic problem of PIA is mismanagement by a politicised top heavy executive corridor dominated by mediocrity, corruption and controversies, with absolutely no regard for corporate ethics like conflict of interest in addition to massive political interference by successive governments over two decades.
FAILURE OF POLICY:
As a national carrier operating on loss making but socio-economically important routes, offering concessional travel facilities to serving khakis and students etc, it was PIA’s right to have the lion’s share of ethnic Pakistani traffic to Gulf, Mid East, Europe and Far East, especially from northern hubs which make up 80 per cent of the 13 million annual passengers in the country. But since 2006 every government has gone overboard to grant traffic rights to Gulf-based airlines to the detriment of the national carrier, in violation of universally accepted principle of reciprocity governing grant of traffic rights between sovereign states.
In 2006 Gulf carriers operated 90 weekly flights. By 2013, they were operating 250 and by 2015 their share went to 395, while all Pakistani registered airlines operated only 55 weekly flights to the UAE. This has created a surplus supply of almost 20 million available passenger seats against the demand of 13 million seats per year, resulting in a price war by oil rich states which has ultimately created a situation, which, unless this policy is reviewed, would not save PIA, even if it is privatised or put under structural management, without resorting to severe downsizing.
Merely increasing fleet size would not resolve this issue but would only result in escalation of total operating cost as reflected by revenues of 2015 with operable fleet of 33 versus revenues of 2014 with fewer aircraft.
CLIPPING PIA’S WINGS:
Commercial airlines operating on international routes all over the world appoint a choice of manufacturer-recommended vendors located along their routes for supply of essential spare parts but in 2011 PIA appointed Transworld Fze based in Dubai as the sole supplier with first right of removal. By 2013, PIA’s total fleet of 42 aircraft had been effectively reduced to fewer than 20 operational aircraft. In 2004, PIA former DMD engineering AVM Niaz had made a similar mistake, which led to long delays, rise in maintenance costs and compromises which eventually resulted in censure by the European Union. Such criminal misadventures went completely unpunished. PIA has been infested with almost 1,500 ghost employees, most of them political activists getting salaries and involving in irregularities.
SELLING OFF ROUTES:
PIA’s hidden assets are its routes and peak time slots at various international airports which if surrendered can fetch millions of dollars for corrupt executives. For example Pakistani registered airlines have been limited to 9 slots at London’s Heathrow and any additional flights can be operated only to Stansted airport. Airlines have to wait for several years in queue for slots at key busy international airports and these can fetch anything from $5-15 million per slot under the table depending on the airport. Eyebrows should have been raised when PIA having built up passenger load to key international stations suddenly pulls out and by some strange coincidence Emirates etc moves in to capture ethnic Pakistani expatriate revenue load.
RIPPING OFF CUSTOMERS:
PIA will have to be competitive and cut costs, without depriving passengers of basic services, if it wants to compete with other airlines. It must utilise its computerised system to promote direct online sales to at least 70% from the dismal 1% where it currently stands. SouthWest sells over 90% of its seats online offering passengers benefit of no service charges which are levied by travel agents. PIA’s sales from its own counters are under 5% of its total sales. It offers net fares to travel agents who charge 7% on domestic and 9% on net fares for international tickets and sometimes even more. So powerful is this lobby of travel agents that PIA instead of offering net fares at its own counters has agreed to overcharge 7% on domestic and 9% on international net fares. PIA must pass on the benefit to its customers through direct online sales at net fares and also at its own ticketing outlets.
ASLEEP AT THE WHEEL:
In 2011, when a similar strike took place seeking removal of a controversial MD, a serving pilot with an O Level degree, PIA operations continued because the strikers and the management were on opposing sides. In 2016, the whole head office was shut down along with Crisis Management Central Control System created to monitor all operations on real time basis costing millions of dollars. PIA has a 24/7 call centre and a fully automated central reservation control system and a revenue management accounting system, and yet, the airline, for almost a week lost track of actual number of passengers. It had no information about the fate of thousands of passengers stuck in Europe and North America, nor the 10,000 passengers it carries daily on domestic and international flights.
Although offloading of baggage has been outsourced to contractors, passenger baggage was not offloaded from flights when the strike was called. At most foreign stations locally recruited staff or outsourced ground handling agents check in customers and are supposed to look after them in case of flight delays, but with managers abstaining from duties and no senior executive on duty at the head office, it was chaos unbecoming of a scheduled airline.
For one week, PIA was like a rudderless ship caught in a storm with no captain to steer it. The PIA chairman before proceeding to Paris had ensured that Mr Hildenbrand, who was expected to take over as COO, was given presentations by various departments. But he thought it proper to go to Paris for Board meeting of PIA Investments, a subsidiary of PIA, although the ultimatum of the strike had already been given. Why should a subsidiary of PIA with 91.7% shares owned by the federal government have its board meeting abroad and not be subjected to audit in Pakistan, or made to present their balance sheet for approval by the parent company’s BOD?