During the last few years, there have been serious criticisms against Pakistan International Airlines. The recent one – an editorial in the Express Tribune dated 27 January 2017 was scathing. Commenting on the debt burden and the Aviation Division’s demand for 24 billion rupees, the editorial called for a closure. It argued: “It is time for the federal government to call ‘Time’ on PIA because the quack-doctoring has not worked — again. It is going to be bloody, painful and politically embarrassing but enough really is enough. Pull the plug”.
According to another recent report (The News, 25 January 2017), “with the status quo, the national flag carrier would be facing Rs30 billion losses on per annum basis and the national exchequer would be bound to face accumulated loss of Rs60 billion in next two years. Total losses incurred by PIA had already close to Rs 200 billion.”
During January 2017, a Committee has been formed under Ahsan Iqbal - the Federal Minister for Planning, to finalise a business plan in coordination with the PIA management. Obviously, the PIA management would want more State support, whereas the government would prefer to start a privatization process. Earlier efforts towards privatization have not made progress, because of the strong opposition from PIA employers. With close to 15,000 regular employees (excluding the daily ones) and employer ratio of 390 per plane, the PIA has a worker bulge for its lean plane numbers. Air India also faced a similar bulge earlier, but since 2012, from close to 300, this has come down to 100 plus per AI plane.
The PIA turbulence: Bad Landing of Great People to Fly With
Pakistan International Airlines (PIA), once a “great people to fly with,” is today mired in multiple problems in the ground. For the South Asian society based on emotions and honour, from flags to cricket to airlines, it is never just another issue. It is always about national pride and honour. While the Lufthansa and Singapore Airlines are a matter of pride for their respective countrymen, barring the Sri Lankan Airlines (and to an extent the small Druk Air of Bhutan), the national carriers have always been a subject of jokes and ridicule.
While the Air India, the largest of South Asian national carrier and the Biman of Bangladesh do continue to operate, the PIA seem to be flying further into rough weathers. While some of PIA’s problems are common with the other national carriers in South Asia (and hence manageable with some political patronage), others are unique to Pakistan and makes the bailout difficult.
When compared to some of the other regional airlines, the PIA did/do have few advantages. And some of its problems are not insurmountable. For example the domestic competition from other private airlines as one sees in India. Jet Airways and IndiGo are a serious competition to Air India – both at high end and economic fares. For PIA, the domestic competition is not as tough, despite Shaheen and Air Blue. The issue of rising fuel prices at the international level is also not specific to PIA.
The primary question here is – if other national carriers could manage those issues, what has gone wrong with the PIA? Is the PIA beyond redemption?
Emirates and Qatar Airways: Better Service
With the entry of airlines from the Gulf – from the Emirates to the Qatar Airways, there are numerous options for Pakistani flyers with much better service and an attractive frequent flyer schemes. The crew, on board entertainment, food and ground services – Emirates and Qatar Airways lead and give a serious competition to international brands such as the Lufthansa and Singapore Airlines.
Doha and Dubai: Attractive Regional hubs
Pakistanis travelling to the Gulf countries and those flying to UK, Europe, US and Canada (primary non Gulf destinations) prefer the Dubai and Doha transfer. The PIA not only has to compete with with leading carriers – European and Middle Eastern, but also these regional hubs for long haul direct flights to Europe and American continent. Both Doha and Dubai are world class airports; passengers would prefer to wait and shop, and indulge in the sophisticated services of the multiple lounges.
More than the international competition, a serious issue is with the public patronage of the PIA within Pakistan. While the Pakistanis would still prefer the PIA to fly within when there are no alternatives, affluent ones would prefer the Qatar Airways, the Emirates and the British Airways. The elites take pride in having frequent flier cards with the above, than the PIA. One cannot criticize them; the comfort and luxury provided by the European and Middle Eastern Airlines cannot be compared with PIA.
Political Leadership and Endgame
An important problem dogging PIA is related to political leadership and it’s Endgame. A series of announcements, discussions and resolutions within and outside the Parliament send confusing signals. Consider the following during the last two years with the Sharif government. The same Prime Minister who made a lofty promise a year earlier on restoring the PIA to its past glory, later was instrumental in introducing and passing a resolution on PIA’s privatization. When the workers resorted to strike few weeks earlier in 2016, he evoked Essential Commodities Act to brutally curb it (with the killing of couple of workers).
The largest problem, ofcourse, is within – related to management and professionalism. Most of PIA’s critics refer to the huge debt and continuing losses. According to reports, it is around 300 billion rupees with further annual loss around 20 to 30 billion rupees. The debt and continuing losses is only a symptom of a larger problem. Today, the critics argue that the entire top level management of the PIA is run by those who are “appointed” by the ruling party. Besides cronyism, the PIA has been used as dumping ground for the parties in pushing their own men and expanding the work force. As a result, the PIA has a staggering ratio of more than 375 workers to each aircraft. Both the PML-N and PPP are responsible for making PIA’s top management unprofessional.
Corruption within and outside also is killing the PIA. If “world class management experience” and “deep pockets to inject money in the airline” are required as reported, is the political establishment in Pakistan ready for such an overhaul? Or, is it a rhetoric, to make more money for the few in the name of privatization?
Finally, the PIA’s staff. Passengers complain of the unprofessional attitude and falling work ethics – from the pilots to ground staff. From the late arrival of pilots and crew members, time taken to provide the clearance by the work force at the ground, attitude of those who deal with the passengers –numerous problems trouble the day to day functioning. Worse, from trafficking in goods to people though the aircrafts, there have been numerous criminal complaints involving some staff members. So it is just not political interference, but arrogance and falling standard in work culture. A Pakistani commentator wrote recently: “Somehow, PIA's 18,000 employees feel it's their God-given right to hold the 180 million Pakistanis hostage.”
With this work culture and attitude from top to bottom, even if there is a “strategic investor” willing “to inject deep support” in reviving the PIA, what will he demand? Is he bound to cut size, reduce the non-performing assets?
So, will PIA get privatized?
To conclude, the State is bulldozing towards what is wants, with less transparency. While privatization may be essential to make the venture profitable in few sectors, what is important is a transparent process and a clear way out for the workers. The State in Pakistan seem to be playing its cards close, and worse, using a heavy hand in dealing with the opposition. There is no level playing field for the workers vis-a-vis the State. The weak labour unions and the disappearance of the Left from Pakistan’s political scene places an extra pressure on the workers. For them it is a losing game, unless they resort to violence, upsetting regular functioning and thus creating a vicious cycle.
The return of PIA to become a “great people to fly with” depends not just on debt, competition and rising fuel prices. There are structural, governance and attitude problems.
A larger analysis of the Pakistan Railways and its Steel Mills will also reveal a similar problem of Pakistan’s public enterprises – bad governance, corruption, cronyism and a worker bulge.
Above is an update of the commentary published in the Hindu BusinessLine in February 2016