–Premier incurs another Rs900 million losses to national carrier in seven months
–Costly service restricted to Boeing 777 aircraft as A-330 aircraft returned
–No plan to roll back PIA Premier, says PIA spokesman
Seven months since its launch, the Premier Service of Pakistan International Airlines (PIA) has proved to be a white elephant for the federal government, incurring a loss of at least Rs900 million, Pakistan Today has learnt.
Prime Minister Nawaz Sharif had inaugurated PIA’s Premier Service at the Benazir Bhutto International Airport here on Aug 14, 2016. Tall claims of revival and transformation of the PIA were made on the eve of the launching. However, within months, the management has been forced to review its decision.
The PIA, under its premier service, had introduced better in-flight entertainment, among other features. Moreover, complimentary limousine service was also provided for its Premier Business Class (PBC) customers upon their arrival at London’s Heathrow airport.
The service was also going to be launched on other routes, including China, with the availability of the A330s aircraft. Initially, the PIA management had signed an agreement with SriLankan Airlines to get three A330 aircraft from Sri Lanka on a wet lease.
The first of the three aircraft had landed at Karachi airport on August 6, while the remaining two were expected to arrive by February 2017. However, it seems the management, after registering a huge financial loss, changed its mind and returned the leased aircraft in March 2017.
The airline management could have explored renegotiation with Sri Lankan administration to shift the agreement from a wet lease to dry lease.
A well-placed source in the national flag carrier confided in this scribe that the experience had proved to be counterproductive for the management, and the service was likely to be rolled back gradually.
“In the first phase, the management has returned the single A330 aircraft which was obtained from Sri Lanka on a wet lease. The management has now again released advertisements seeking new options for hiring aircraft on a lease. If the PIA fails in getting a good response, the premier service might be rolled back completely,” the source added.
The source said that due to financial loss, PIA had withdrawn Premier service to all routes and the service was available only on one route from Lahore and Islamabad; then to London’s Heathrow airport.
The performance of the PIA bosses could also be gauged by the findings of a recent report compiled by a Senate’s Special Committee formed to evaluate the performance of the PIA, on the basis of in-depth interviews and meetings with current and former PIA officers.
The committee comprised of Senators Muzaffar Hussain Shah, Farhatullah Babar and SAFRON Minister Lt-Gen (retd) Abdul Qayyum.
The report has put losses of the airliner to Rs103 billion during the tenure of the current PML-N government. Moreover, the official figures state that the debt on the national flag carrier has crossed the figure of Rs200 billion—which was Rs162 billion in 2012.
The report says the airline has no permanent chief executive officer (CEO) while the acting CEO has complained of undue interference by the government and the PIA’s Board of Directors (BoD) in administrative matters.
The report claims that unsuitable selection of top officials has given birth to the formation of imbalanced and non-professional BoD members, some of whose members are totally unaware of the concept of aviation and finance.
Moreover, the report further states that the PIA has been politicised by successive governments which inducted thousands of unqualified and unsuitable employees in it.
“Behind every union, there is some political party, and most of these unions are resorting to blackmail. They pressurise senior management and want to have their say in every posting and promotion,” the report reads.
The report also notes that three of the directors have been drawing more than Rs300,000 salary per month and have not been assigned any work for months.
The report also notes that corruption is rampant in the purchase of spare parts, allocating of space for freight, and purchase of tickets. The report further finds that bribes are used for enrolment and postings in catering and engineering departments of the PIA. Another glaring anomaly is in the salary structure, as wages are on the higher side in some senior management cases as compared to the input.
The report also accused successive governments of not exercising the political will needed to pull the airline out of its troubles. It also cited frequent changes in top leadership and induction of cronies lacking strategic vision and ability to make a credible business plan as reasons for the current state of affairs at PIA.
‘Premier is world-class service without any additional cost’
PIA’s Spokesman Danyal Gilani, however, argued that PIA Premier provided a world-class service to passengers without any additional cost; therefore, it was not appropriate to do its cost-benefit analysis in financial terms alone.
Without commenting on the actual amount paid for lease to Sri Lankans, Gilani said the lease money not only included salaries of cockpit and cabin crew but also involved insurance, as well as repair and maintenance, expenditure.
“We had to induct this aircraft on a wet lease because A-330 was a new aircraft for PIA and trained pilots, crew and staff were not available to run its operation independently,” he added.
He said PIA’s perception index improved thanks to Premier’s excellent service provided to passengers. “This was one of the major factors that one million additional passengers travelled on PIA in 2016 as compared to the previous year,” he said.
However, Gilani’s claim could be contested by the fact that the premier service was launched in mid-August which meant that the service only added customers in the last four months of the year.
Gilani’s claim also looks optimistic at best, as the then PIA chairman Azam Saigol had told a Senate Standing Committee on Sep 5, 2016, that the national flag carrier had missed its revenue target of Rs54.77 billion in the first seven months of 2016 by 21 per cent.
Saigol had informed the committee that PIA had earned Rs43.19 billion from January to July 2016 which is 6.4 per cent less than the Rs46.15 billion it earned in the corresponding period in the year 2015.
Asked why PIA Premier was then being debated for closure, Gilani said there was no plan to roll back Premier. In fact, he said, a statement had been issued by him on January 4, 2017, to clarify media reports alleging that planning is being done to stop PIA Premier.
Asked why then the aircraft obtained on wet lease had been returned, Gilani said that the aircraft had been returned because, as per national aviation policy, an aircraft cannot be wet-leased for more than six months.
Drawing attention to a press release issued by PIA on February 8, 2017, Gilani said, “Following the PPRA rules, PIA has already shortlisted the aircraft offered against a recent tender for wet lease which is planned to be inducted in the later part of the current month after completion of regulatory formalities. Till the arrival of shortlisted aircraft, PIA’s flights to London will be operated by PIA’s Boeing 777 aircraft.
“It is, however, true that PIA Premier is available only from Lahore and Islamabad for London Heathrow.”
Gilani also admitted that, for the time being, the Premier service has been restricted to Boeing 777 planes.