The new aviation policy approved by federal cabinet has revoked one-sided Open Sky Policy of previous governments who held power since 1992 and were hostage to their conflicts of interest. The Pakistan Tehreek-e-Insaf (PTI) government has given Fair Sky Policy where traffic rights would be given to foreign airlines on reciprocal bilateral agreements as is the policy all over the world along with incentives to boost tourism besides tax relief to promote the growth of state-owned and private airlines.
It is now up to existing management of Pakistan International Airlines (PIA) and Civil Aviation Authority (CAA) to put their act together and pull PIA out of the crisis. The revised aviation policy must elaborate the five-year licence validity of airline transport pilots to ensure that they meet ICAO licence requirements laid down in Annex 1 Personnel Licencing as per Chicago Convention which restricts pilot’s utilisation to at least one medical fitness certification within 12 months for those below age of 60 years and proficiency checks on type of aircraft rating they can fly, etc. Similarly, lifting of mandatory requirements for local airlines to operate on socioeconomic routes must carry sufficient financial penalties so that the taxpayer is not burdened with subsidies.
Regulatory controls by competently qualified CAA must not be relaxed keeping in view closure of Shaheen Air and the manner in which Bhoja Air owners fled without paying compensation to 121 innocent passengers who died on board 20 April 2002 crash or all next of kin of 152 who died in Airblue Flight 202 on 28 July 2010.
Qualified professionals who understand dynamics and demands of commercial aviation must be placed at the helm in PIA to ensure that while passenger safety is never compromised, their comfort, convenience and service standards should be given the highest priority. This will require the immediate installation of in-flight entertainment system on long haul flights, upgradation of seats and improvement in service starting from booking to the passengers’ final destination. The improvement in service and ease of booking with competitive fares will certainly boost sales and attract lost clientele.
Air Marshal Nur Khan succeeded not because of his Pakistan Air Force (PAF) background but because he gathered a team of qualified professionals with commercial aviation experience and did not bring anybody from uniformed services. He also had an advantage that he was handed over an airline set on the path of recovery by Rafique Saigol and a government which offered them complete autonomy with no political or bureaucratic interference. The present management inherited an airline which was technically insolvent.
As per IATA figures existing Pakistan passenger market size has grown to 15 million passenger seats per annum and out of this PIA share is only five million and other local carriers carry two million, whereas remaining eight million are lifted by foreign airlines. Almost $850 million earned from Pakistani clients are being remitted by these foreign carriers directly to their bank accounts through online sales using credit cards because such sales constitute 60 per cent of their total sales while rest is remitted through banking channels. PIA share has dropped from previous over 65 per cent to almost 30 per cent for which both national airline, CAA and relevant ministries are responsible.
Changing of vendors from a variety of manufacturer recommended technical parts suppliers located along the route where PIA lands as per international aviation industry practice to a single vendor started when DMD Niaz cancelled all other vendors and appointed a remotely located supplier in the UK with first right of refusal. This resulted in rising in maintenance costs, leading to groundings and delays in carrying out routine repairs. Mismanagement and mishandling by a bureaucrat with no aviation background resulted in the partial imposition of sanctions by EASA in 2006. Instead of learning from mistakes another politically appointed PIA MD again cancelled all vendors and appointed an unknown vendor located in Dubai FZE in 2011. Almost 50 per cent of PIA fleet was grounded due to lack of spares while in-flight entertainment system which as per industry practice requires upgradation and replacement every five years was ignored and instead funds were wasted on changing crew uniforms and aircraft livery, etc.
Since almost 80 per cent of revenue passenger traffic originates from northern hubs, PIA must cut cost on the repositioning of aircraft from the main base in Karachi especially now that space is available in Islamabad and there is no engine overhaul capability for any aircraft in present fleet at Karachi. This will cut PIA operational cost by almost 24 per cent. The number of hubs within Pakistan must also be reduced to Islamabad, Lahore, Karachi, Peshawar and Quetta now Open Sky Policy has been revoked.
PIA has been struggling to stabilize flight operations to meet growth in passenger demands by adapting to changes in industry trends so as to attain profitability or break-even. There are several reasons for downfall of PIA, major being open-ended liberal aviation policy, depleting human resources, appointment of non-aviation executives, inefficient financial controls, direct interference of both governments and unions/associations in management affairs, poor law and order situation and inadequate use of technology to prevent pilferage and ease of online sales and booking by passengers from comfort of their homes.
The entire airline operation must be based on short or long term business plans based on realistic market forecasts, market opportunities, available fleet and expansion plans keeping in view current financial position and ability to generate finances at affordable terms. PIA must increase its passenger capacity immediately through wet leasing followed by dry leasing to fill the vacuum created by the cancellation of Open Sky Policy and the state must implement policy in a phased manner so that passengers are not inconvenienced.
Unfortunately, PIA has been developing stereotypical unrealistic and replicated business plans that never achieved targets in revenues nor generated any growth in passenger and cargo sales. Successive PIA managements for past two decades were neither in touch with ground realities nor with fast-changing industrial trends to achieve lucrative revenue growth, which could sustain maintenance and in-flight services so essential to attract passengers and regain their confidence. Approximately 55 per cent of PIA revenues is generated from overseas sales in hard foreign exchange. PIA must take appropriate steps to curtail revenue leakage at overseas stations through efficient system monitoring and checks by acquiring services of Pakistani banks and facilitators instead of third-party facilitator for direct settlement in PIA accounts. PIA should shift from conventional agents sales channel and encourage online sales through credit card transactions to save huge agents commission and distribution cost.
In order to keep pace with fast technological changes in commercial aviation PIA’s competitors invested in acquiring technology, maintain efficient internal/external controls and offering passengers convenience in booking and online sales via the internet using their credit cards while national airline failed to embrace technology. Instead, we invested several millions of dollars in acquiring key Sabre Multi-host Systems, IATA Cargo, ERP (Enterprise Resources Planning) and Global Distribution Systems besides maintaining our own IT department.
Most of the systems acquired were under-utilised which indirectly hampered airline growth and caused inconvenience to valuable passengers, besides inefficient controls of revenue. Foreign postings in violation of merit resulted in overseas stations manned by non-professionals on ‘sifarish’ has only added to unaccounted leakages and losses.