Background of Pakistans Airline Industry Pakistan International Airlines Corporation (PIAC) established in 1955, was the only airline

of the country. It has enjoyed the active patronage of successive governments, whose initial leadership was dynamic and committed. Consequently, the airline was established on a sound professional foothold. This can be measured from the illustrious record of the airline in the 1950s, 60s and 70s, during which PIA was considered the most vibrant airline in the Asian region. The development of the airline also contributed significantly towards improvement of its human resources and infrastructure. However, the commercial airline industry has experienced rapid change in its regulatory environment worldwide. The winds of change began in the U.S with the introduction of the Airline Deregulation Act of 1978. After operating under strict regulation for nearly 40 years, the airlines were given freedom to choose the routes they served, and to set the prices they charged. But, Pakistan is still in transition as the policy with regard to deregulation remains clouded with uncertainties and lack of clarity. So, various segments of the industry remain completely confused. Pakistan Civil Aviation Authority (CAA) was created in 1982 as a regulatory body through an act of parliament, at the behest of the International Civil Aviation Organization (ICAO), to govern and align civil aviation activities in the country with ICAO recommended practices. The newly created CAA faced severe resistance from PIAC. As CAA started to move forward and made efforts to seriously undertake its regulatory duties, the resistance from the national carrier started to take an ugly shape. Neither the government of the time, nor the leadership of PIA and CAA made any meaningful and concerted effort to curb these unhealthy tendencies. This resulted in a gradual but certain decline in standards in all areas of airline operations. Problems PIA is suffering from severe financial shortcomings, poor management, lack of maintenance and nepotism Corruption prevails in every field from buying new aircrafts/spare parts to different contracts, sales, traffic and cargo Complaints of terrible service, long-delayed flights, emergency crash landings, cancellation of flights, shortage of planes & non-serious attitude of administration PIAs fleet is quite old, includes 39 aircrafts among which a no. of them have been grounded due to shortage of spare parts Increase in fuel prices and devaluation of local currency Lack of vision, inefficient infrastructure and bad governance

Over staffing - Average ratio of staff should not exceed 100 per aircraft while PIA enjoys 450 compared to 225 in other airlines. Similarly, instead of paying 1000 people the market value of their salaries, you are giving salaries to 5000 people Right person is not at the right place and lack of sense of ownership The age of an aircraft is judged by calculating its flying hours. In Pakistan, there are 35 - 40 years old aircrafts without any record of their flying hours Aircrafts in Pakistan are bought on lease from foreign countries and their maintenance cost is far more than the total lease amount Weak inspection and feeble enforcement of laws and rules. Low security measures and weak monitoring. Tyre burst at landing and fuel leakage are common. Usually measures are taken after accidents No regular checks by CAA (Civil Aviation Authority) - Regulator of airline sector in our country which is governed by Ministry of Defence. CAA also lacks in intime investigation for the crahes Nobody stands responsibility. Pilots are considered responsible in emergency situations as well as weather i.e. micro-burst and wind sheer. Faulty instruments and mechanical failures are the significant causes Regulators ensure aircraft inspection, correct pilot certification, routes check and functional equipment; CAAs functions, which is not an autonomous body and comes under Ministry of Defence Pakistan Civil Aviation Authority is aligned with ICAO (International Civil Aviation Organization) Cheaper rates offered to the customers by some airlines while big airlines are expensive e.g. Bhoja Air vs. PIA/Shaheen Air, therefore operational costs are not met appropriately Usually sectors are criticized and economic viability has been finished because of politicization/political interference PIA bears accumulative heavy losses reached to 100 billion. It needs Rs. 58 billion bailout package which included Rs. 45 billion for debt services while Rs. 13 billion for immediate liabilities payment. It has $15 billion long-term debt on which it has to pay annual interest in millions of dollars PIA has hired obscure vendors that are not very well known, just to save money Lack of motivation, as the jobs are permanent and employees know their jobs are secure, so they do not put in extra efforts. Undue interference of employee unions

Pakistan is inadequately and poorly served by its own and foreign carriers both for passenger and cargo carriage Lack of meaningful incentives to the industry does not allow quality carriers to develop in the country, whereas the talent goes abroad due to lack of investment Our government has yet to understand the importance of civil aviation as a driving force in the growth of a developing economy. Pakistans tourism industry continues to remain stunted because of many reasons. Apart from the questionable law and order situation, lack of adequate support infrastructure, archaic laws, hostility of a segment of our society towards foreigners, there is also a lack of confidence in our international carriers in terms of value for money and reliability The airport infrastructure is inadequate to handle the growing number of travelers, and tonnage of cargo, expected to be processed through these airports in the next years. Additionally, there is a long over-due requirement of upgrading technologies existing at these airports. All this requires heavy expenditure because little has been done to upgrade these important facilities and operational equipment on a regular basis None of our airports is worthy of being called a world-class facility. Securityrelated facilities at these airports are not quite in line with global standards None of our airports is capable of handling the new technology large aircraft. The passenger handling facilities at various terminals, as indeed the landing and parking spaces, are also inadequate All our civil airports are now in the middle of densely populated cities. Hazards for landing and taking off aircraft are therefore on the rise. Bird hits are a common phenomenon resulting in frequent disruption of operations, inconvenience for the traveling public, huge avoidable expenditures for the airlines and a serious safety concern for life and property. New airports need to be built away from populated areas to service large passenger and cargo traffic The downstream industry in Pakistan, which is dependent for its survival on a thriving aviation industry also remains limited and weak A vibrant airline industry plays a pivotal role in projecting a country and improving its global market image but not so in Pakistan. Our carriers, airports, personnel involved in public dealing, all have to play a part. Of course, nothing can manifest itself on the ground unless the government of the day ensures implementation and coordination of laws and activities considered essential to achieve positive results in this regard The national carrier has a long way to go in improving its service, image and profitability. The government currently absorbs PIAs heavy losses on a regular

basis, apart from blessing it with concessions, some of which are not available to other airlines. Resultantly, PIA continues to monopolize the domestic market No Pakistani carrier has made any significant contribution towards developing a decent cargo airline, or even bothered to undertake regular flights dedicated to carriage of ever-increasing exportable goods and reciprocal cargo. As a result, foreign carriers are the major beneficiaries of this business. Solutions PIA requires exemplary leadership, a qualified and merit based staff and technically strong administration Sound decisions should be taken by the administration to run the system smoothly. Blames are held on CAA because it keeps a check on the airlines, but it needs to be strengthened There should be better planning and maintenance. Unfit aircrafts should not be licensed or restored. The whole system requires to be empowered Merit system should be introduced with a professional recruitment criteria Drastic measures should be taken to boost the economy Institutes should be privatized and de-politicized to ensure accountability. PIA could be privatized. If not, then independent board comprising of private sector experts who are credible and dedicated to work in the interest of company should be in place and given the authority PIA must cut its costs to pay off its debts. Its net worth is 16 billion whereas the debt on PIA is 1.11 trillion. Can be done by selling of the unnecessary assets and reducing unnecessary expenses e.g. constructing a water purifying plant can help PIA save annual Rs. 10 million expenditure on mineral water that can then be used to pay off debt Ground handling must be improved. If there is any problem in the aircraft, that can be revealed before its too late To help improve the marketing, the sales of the tickets should be like that of a commercial organization. The travel agents should be less in number. Moreover, they should be given the targets which if they fail to achieve should result in the cancellation of the license The problem of overstaffing should be dealt with. The no. of employees per plane should be reduced to 100 or less. The excessive employees who are not competent should be removed from the organization The government needs to set up a professional high level national committee on civil aviation. It should consist of representatives from the airline industry (PIA and

private carriers), government, military, regulatory body, tourism and support industries An individual with high intellectual integrity and professional repute in the field of aviation should be appointed to head the committee The government should mandate the committee to study the countrys National Aviation Policy and also those of other countries to come up with a comprehensive and futuristic policy that could be implemented. These studies would identify global trends and various weaknesses that exist in our own policy The committee should be given six months to complete its work. It should also be provided adequate support to undertake its task with ease The committee should take inputs from the various players in the aviation industry. In-depth discussions should be undertaken to understand the rationale behind each point of view The committee should undertake detailed in-house brain storming in the light of studies and inputs to crystallize the essential ingredients of a healthy and progressive aviation policy The head of the committee should ensure that the national interest remains foremost with no biases. The government must support the head of the committee in achieving this objective The draft National Aviation Policy created would have to be comprehensive, flexible and progressive enough to stand the test of time and allow the country to achieve progress in the face of the evolving technologies, competition and other challenges The government in consonance with all the stakeholders, should consider restructuring CAA, so that its current functions of safety regulation, economic regulation and airport infrastructure development can be carried out effectively in a professional manner The government should ensure the writ of the restructured CAA. Violator should be dealt with firmly The government should stop bailing-out the national carrier. PIA should be encouraged to run on professional and commercial lines, as provided in PIAC Act 1955, and it should be expected to embrace competitiveness by using modern information technology and other management tools to improve its efficiency Accountability should be institutionalized and corrupt individuals should not be allowed to remain a part of professional aviation institutions. Responsible people should stand accountable and bosses should be more powerful than employee unions.