Bailing out PIA

During a briefing on PIA in a meeting in the Presidency that was jointly presided by the President and the Prime Minister and also attended by Ch. Ahmed Mukhtar, Federal Minister for Defence, Sardar Aseff Ahmed Ali, Deputy Chairman Planning Commission, Capt. Muhammad Ijaz Haroon, Managing Director PIA and officials of relevant ministries and PIA, President Asif Ali Zardari rightfully advised the government to consider making strategic investment in building fuel storage capacity and advance purchase of fuel oil to help bail out the PIA from its financial woes.

The President said that the government could consider hiring the services of consultants to suggest workable plans for strategic investment in the PIA through public-private partnership. He also advised the government to also consider developing the Roosevelt hotel property in New York owned by the PIA as a source of permanent income without actually selling the property and retaining PIA's ownership of it. The fund raising efforts for the PIA requires innovative and non-traditional solutions as the problem was too big for normal bureaucratic procedures and periodic dole outs. The government may revisit the earlier decision to place the Roosevelt hotel under the Privatization Commission so as to examine the possibility of developing the property for regular income. PIA could be salvaged throughout of box solution and advised the government to have separate smaller meetings of experts on evolving a workable business plan.

Giving briefing on the PIA the Managing Director of the Airline said that the PIA had 40 airplanes in its fleet operating for 23 domestic and 35 international destinations and employing over 17000 employees. The average age of an aircraft is 13 years but more than half of the PIA fleet is over 23 years old. The airline industry worldwide had suffered huge setbacks due to volatility in the fuel prices. The projected profit of 9.6 billion dollars of the industry in June 2007, turned into loss of over 6 billion dollars by June 2008.

Although fuel prices had come down, PIA still faced a difficult situation due to many other challenges. Poor governance in the past ignoring best industry practices, aging aircrafts, capacity glut, rupee depreciation and geopolitical situation were factors that posed challenges to the airline. The airline has focused to improve the equation between revenues and costs during 2009. Marketing has been geared to maximize revenues and thereby restore profitability. The overall seat factor is also planned to be higher this year than in 2008. The meeting was informed that a 14% increase in capacity is planned which would also improve the revenue growth considerably. About the improvement in services the MD PIA informed the meeting that the facility of online booking had now been extended to more destinations and the list would be expanded further. The reservation system has also been streamlined besides introducing courtesy and customer care training for the front line staff.

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