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ORGANISATIONAL BEHAVIOUR ASSIGNMENT

PEST ANALYSIS REPORT ON PIA

Submitted to: Wajeeha Siddiqui By Shahid Saleem 0811129

TABLE OF CONTENTS

1. 2. 3. 4. 5. 6.

About PIA..3 Mission and Vision Statement4 PIA Fleet5 PIA Board of Directors.6 PIA Management..7 Political analysis8 7. Economic Analysis9 8. Social Analysis..11 9. Technological Analysis.12 10. Conclusion.14 11. Bibliography.. 15

ABOUT PIA Pakistan International Airlines Corporation, commonly known as PIA, is the flag carrier airline of Pakistan. The airline, with its head office on the grounds of Jinnah International Airport in Karachi is the 31st largest airline in Asia, operating scheduled services to 23 domestic destinations and 36 international destinations in 25 countries across Asia, Europe and North America. Its main bases are Karachi, Lahore and Islamabad/Rawalpindi. The airline's secondary bases include Peshawar, Faisalabad, Quetta, Sialkot and Multan, from which it connects the metropolitan cities with the main bases, the Middle East and the Far East. The airline is owned by the Government of Pakistan (87%) and other shareholders (13%).1

Pakistan International Airlines came into being when it merged with the privately owned Orient Airways in the year 1955. PIA has many firsts to its credit like the shortest flight time between London and Karachi and the first Asian airline to land in Norway. PIA is the first airline to get certified (initial certification) on Safety Management System (SMS) by Civil Aviation Authority CAA - Pakistan. CAA Air Navigation Order (ANO 91.0032 issued in September 2008) binds all airlines operating in Pakistan to have SMS. PIA heralded the nineties by donning a bright new corporate identity. Old-timers may remember the flutter that the earlier green and gold livery had created when it was first introduced in 1974. However, in keeping with the changing times, PIA introduced a smart, sporty 90's look. The familiar PIA green was reinforced with moss green and pale blue stripes were incorporated into the new corporate identity. The stripes, a universal symbol of sport, highlighted PIA's active participation and sponsorship of a diverse range of national games. PIA's players have always been at the forefront of Pakistani Cricket, Hockey, Squash, Football, Chess, Bridge, Polo and Table-Tennis teams. The nineties also saw the expansion of PIA's massive Hajj and Umrah operations to Pakistan's smaller cities, in addition to the major cities of Islamabad, Peshawar, Lahore, Quetta and Karachi. PIA's growth continues unabated and the airline now operates globally, covering the entire domestic landscape and international destinations spread over 4 continents Impressive statistics for a comparatively young airline? Since its inception in 1955, PIA has indeed, come a long way.2

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http://en.wikipedia.org/wiki/Pakistan_International_Airlines http://www.piac.com.pk/PIA_About/pia-about_History.asp

MISSION STATEMENT As a symbol of national pride, we aspire to be a choice airline. Operating on modern commercial concepts and capable of completing with the best in international as well as domestic market. PIAs Vision To be fiercely competitive, consistently exceeding customer expectations and be the choice employer that embraces technology in all spheres of its activities.3

http://www.scribd.com/doc/18020110/Muhammad-Mahmood-Aslam-COMSATS-Institute-of-InformationTechnology-Lahore-HttpPakistanihrblogspotcom

PIA FLEET Currently PIA has 40 aircraft in its fleet. These aircraft are4: 7 12 6 1 5 4 2 3 x ATR 42-500 x Airbus A310-300 x Boeing 737-300 x Boeing 747-240B (SCD) x Boeing 747-367 x Boeing 777-240ER x Boeing 777-240LR x Boeing 777-340ER

ATR 42-500

(Copyright PIA)

Boeing 777-340ER (Copyright Matt Cawby)

PIA Board Of Directors

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http://www.historyofpia.com/fleet.htm

Ch.Ahmed Mukhtar Minister for Defence and Chairman - PIA Syed Naseer Ahmad Malik Nazir Ahmed Mr Javed Akhtar Lt. Gen (Retd) Syed Athar Ali Federal Secretary Defence Capt. Muhammad Aijaz Haroon Managing Director PIA Prof. Mian Ijaz ul Hassan Mr Mubashir Iftikhar Mr Husain Lawai Mr Shaukat Ali Rana Mr Salman Siddique Federal Secretary Finance Mr Muhammad Shuaib Secretary-PIA 5

http://www.piac.com.pk/PIA_About/pia-about_BoDirectors.asp

PIA MANAGEMENT Managing Director Captain Mohammad Aijaz Haroon Deputy Managing Director Mr. M. Salim Sayani Director Finance & CFO Mr. Faisal I. H. Malik Director - Corporate Planning Mr. Shahnawaz Rehman Director - Engineering and Maintenance Mr. Maqsood Ahmed Director - Flight Operations Capt. Shuja Naqvi Director - Information Technology Mr. Shahid Sarwar Director - Human Resource & Administration Mr. Hanif Pathan Director - Marketing Mr. Imran Ahmed Khan Director - Precision Engineering Complex AVM Muhammad Kamal Alam Siddiqui Director - Procurement, Logistics and Food Services Mr. Javed Kamran Director - Training and Development Mr. Dilawar Farid Baig Director Mr. S. Kamran Hasan General Manager: Corporate Safety & QA Capt. Salman Azhar Chief Engineer: Engineering QA Mr. Aslam Tariq General Manager: Passenger Handling Services Mr. Syed Aijaz Mazhar General Manager: Ramp Services Capt. S. Bayar Masood

General Manager: Management Information Services Mr. Zulfiqar Husain General Manager: Public Affairs Mr. S. Sultan Hasan6

POLITICAL ANALYSIS Political factors are those which affect the requirements placed on organizations arising from the actions of national and international governments and governmental agencies including legislation and the general political dimension which issues and activities may assume. PIA is a government owned organization. Pakistan is right now being ruled by a democratic government.The government has many times planned the privatization of the State owned. However as of yet no reasonable agreement or solution has been found. On February 18, 2009 the carrier was dropped from the privatization list. PIA has been incurring losses in recent years and one reason for this loss is issuing low priced ticket to ministers and foreign diplomats. Officials of the Saudi embassy in Islamabad, including a former ambassador, take the lead under the head of diplomatic discount. Well over 100 low-cost tickets were issued to the embassy officials. Other foreign missions, which have availed the facility, include the Canadian High Commission and the embassies of the UAE and Russia, followed by government dignitaries and bureaucrats, including top PIA officials. According to the PIA official spokesperson, Mr Syed Sultan Hassan there was no uniform policy under which PIA offered discounted or free tickets. PIA is a public sector organization and for the sake of national interest and as a gesture of goodwill, it offers low-priced tickets to diplomats of friendly countries, Mr Sultan said. PIA, he said, regularly received directives from the ministries of defence and foreign affairs to offer tickets on concession which we have no other option but to follow orders7.

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http://www.piac.com.pk/PIA_About/pia-about_Management.asp http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/front-page/12-piaoffering-discounts-despite-losses-710--bi-08

Transparency International is finding ways and means for bringing transparency and accountability in the airlines procurement policy so that allegations by the vested interest to discredit the national flag carrier may be contested in true national sprit. All the purchases in PIA are carried out with strict compliance of Public Procurement Regulatory Authority (PPRA). Tender Notices are published in print media and also displayed on the PIA and PPRA web-sites the contract goes to the lowest bidder and as per PPRA rules no negotiations are done with the parties. To further strengthen accountability and transparency within PIA; Mr. Aijaz Haroon, MD-PIA volunteered Third Party Observers for overseeing the awarding of major contract by PIA through a senior team of Transparency International8. On 5 March 2007, the European Commission, following an on-site visit, banned all but eight planes of PIA's 44-plane fleet from flying to Europe citing safety concerns. PIA signed a lease deal for seven new Airbus A320-200 from Kuwait based leasing company ALAFCO ban on PIA. In the same year, PIA signed a lease deal for seven new Airbus A320-200 from Kuwait based leasing company ALAFCO, the factory built aircraft were to be delivered between 2009 and 2010, and however the deal however was cancelled in 2008. During April 2009, the management decided to launch a long-term Business Plan of PIA including purchase of new aircraft with details of the plan being finalized9.

ECONOMIC ANALYSIS Economic factors are those factors that affect the financial functioning of the organization such as the potential for growth or for retrenchment in the economy at large in relation to the market for the organizations products or services.

Operating performance

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http://www.piac.com.pk/PIA_About/pr_13Jan10.asp http://en.wikipedia.org/wiki/Pakistan_International_Airlines#Expansion

Year Revenues Rs Millions Profit/(Loss) Rs Millions 2008 89,202 2007 70,481 2006 70,587 2005 64,074 2004 57,770 2003 47,788 (35,880) (13,339) (12,763) (4,412) 2,307 1,299

Source: http://en.wikipedia.org/wiki/Pakistan_International_Airlines#Financial_performance

PIA total accumulated losses stand at an amount of Rs.142 billion. Year 2008 was the worst year for PIA in which it had to face financial losses amounting to Rs 40 million monthly due to unprecedented increase in prices of petroleum products and devaluation of rupee. Rs 61 billion loans taken from local banks at a high rate of interest was the root cause of major problems being faced by PIA. The senate has formed a standing committee on defence production to bail PIA out of this crisis. PIA has a lot of potential in terms of growing its sales. It serves 23 domestic destinations; there is no competition in many of the domestic sectors. Fuel prices have been stable in the last year or so and PIA can control costs. One way of cutting costs is to cut down on catering on domestic routes like Air blue has done. They only offer a packet of crisps on their domestic flights unlike PIA offers full meals. PIA should also operate smaller aircrafts on it domestic sectors as to save cost. Consumers have become price conscious due to the recession prevailing in the economy. Corporate travelling has gone down due to the slow down in trading activities in Pakistan. PIA should finish the business class service in domestic routes like Air blue did. This way it will be able

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to accommodate more economy class passengers. These are times when passengers are looking for more value for money. Salim Siyani, Deputy Managing Director (DMD) PIA, has proposed Strategic Think-Tank Review Board comprising leaders of South Asian Airline Industry, Civil Aviation, Tourism and Support Groups to develop and save the regional airlines from decline through the worst global recession since 1930s. He said, We need to have a think tank review board comprising of leaders and legends such as the ones present at the seminar. The record setting growth of neighboring countries will reach such a level in 5 years that strategic partnership is vital for our mutual growth and prosperity in this vital industry. He added. He said a demand and supply gap exists in aircraft maintenance, repair and overhaul MRO business. Middle East has demand of $2.3 billion and supply of $0.9 billion resulting in a gap of $1.2 billion. Similarly SAARC countries have a demand of $2.0 billion and supply of $0.7 billion resulting in a gap of $1.3 billion. DMD PIA further said all participants should Brainstorm on regular basis and invite other experts from around the world. We need to create environment for growth and training of our human powerhouse, which could bolster up the regional aviation growth10

SOCIAL ANALYSIS These are factors affecting the total supply of labor, such as demographic changes in terms of the age profile of the working population, number of people in the job market etc. and changing cultural norms of behavior and attitudes in society at large which influence peoples expectations and behavior at work. Pakistan right now has the highest composition of youths in its age demographics PIA has its own training centre. The PIA Training Center is a leading airline training institution that delivers the highest standards of aviation instruction. The Training Center is built around a highly advanced training infrastructure, approved by local and international regulatory authorities such as CAA, ICAO, and IATA. The PIA Training Center's courses are based on a unique, standards-based curriculum designed to impart knowledge and best practices in all the aspects of the airline industry. The PIA Training Center provides quality training to PIA's pilots, engineers, air hostesses, and to employees of other associated PIA divisions.
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http://www.dailytimes.com.pk/default.asp?page=2010%5C02%5C25%5Cstory_25-2-2010_pg5_6

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PIA dropped its degree requirement from graduate level to intermediate level. Pakistan right now has the highest composition of youths in its age demographics. The general age requirement for working at PIA is minimum 19 and maximum 24 keeping this in mind. Older people are required for more experienced jobs. Physical requirement for PIA candidates for cabin crew jobs differ from gender to gender. Males must have a minimum height of 5 feet 6 inches and for females it is 5 feet 2 inches, with proportionate weight. A good majority of our workforce falls in the under 30 age bracket. PIA banned employees with full beard for male crew cabin staff jobs. Only French beards are allowed. This was done for security reasons. Religious scholars have condemned the Pakistan International Airline administration for banning its employees from having beards, terming the move as violation of the constitution and fundamental rights. Airlines around the world tightened security after 9/11 attacks and Pakistan is also under great threat. PIA faced the problem of their pilots working slowly deliberately to protest. They wanted improvement in the pilots' working condition, which would help enhance safety of flights. After a long series of negotiations the matter was resolved .PIA had losses of Rs.660 million because of the pilots go slow policy. The pilots were ready to fly extra flights to make up for this loss. PIA was the first airline in Pakistan to operate a flight with an all female crew at command and in the cabin. PIA was also the first airline in Pakistan to have woman as a captain of a plane. This shows that PIA also promotes the employment of women in important divisions of the company. Usually women work as airhostesses in PIA.

TECHNOLOGICAL ANALYSIS

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These are factors affecting the processes of production, such as changes in computer technology and communication and the implication of new manufacturing processes. PIA was one of the first airlines in Pakistan to implement the SMS system. This system works where passengers are informed about flight delays and cancellation well before time through SMS and phone calls. With the advent of e-ticketing PIA have a lot of potential making sales online. It already has limited destinations on its website. Tickets can be purchased through credit card payments. PIA also has a round the clock call centre that caters to various queries of clients regarding fares and seat availability. PIA has also installed self check in kiosks. Customers with only hand carry baggage and no check in baggage can avail this facility. This reduces passenger queues at check in counters. PIA also offers a variety of movie, games, music and duty free shopping aboard its international flights as part of its in-flight entertainment system. PIA uses Abacus software .This software has made it easy for employees and travel partners to distribute the products PIA offers. PIA has also implemented the revenue management system that calculates the revenue it is generating from its sales and allows it to offer flexible fares to the market. This is the reason why we see fares being cheap if purchased early. This system helps identify the demand for its product. PIA allocates a certain quota to each fare level. As seats get sold and one quota of fare level gets sold out then another fare level is offered. In the economy class cabin there are five levels, in economy plus there are 3 levels and in the business class there are four levels of fares. Passengers can also make booking through mobile phone. PIA along with mobilink has introduced this service. Now Mobilinks customers can make seat reservations (one way or return both) through their mobiles. As a result of this reservation the customer gets the PNR number, which can be used to buy the ticket from PIA office or E-Kiosks. In addition to this the customer can also get flight, seat availability and Frequent Flyer points information by sending an SMS on 742211

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http://www.mobilinkworld.com/index.php?option=com_content&task=view&id=102&Itemid=235

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CONCLUSION In conclusion the future looks bright for PIA. PIA needs to put a stronger control on pressures from some elements of the government, of employing nondeserving people and giving away low cost tickets. This current time period is the worst for airlines as many airlines have either shutdown or on the verge of bankruptcy. It is a quite an achievement for PIA to be still surviving.Things look better now with fuel prices not fluctuating so much. PIA needs to increase its network and frequency of flights to some destinations. PIA cut down on its Dubai flights, (it had two daily flights and now only one) which was a bad move as Dubai is a profitable sector. Airlines in the west offer very limited service in order to cut costs in their domestic flights as compared to PIAs domestic service. PIA could implement this practice in its airline too. The advent of e-ticketing will still take time to become prominent in Pakistan airlines started it a few years ago so it will take time for it fully settle in the consumers mind. The economy will also take time to recover and hence travelling for business will go up.

BIBLIOGRAPHY

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http://www.piac.com.pk http://www.scribd.com/doc/18020110/Muhammad-Mahmood-Aslam-COMSATSInstitute-of-Information-Technology-Lahore-HttpPakistanihrblogspotcom http://www.defence.pk/forums/current-events-social-issues/278-pia-gets-firstwoman-captain.html http://www.dailytimes.com.pk/default.asp? page=2010%5C02%5C25%5Cstory_25-2-2010_pg5_6 http://www.dailytimes.com.pk/default.asp? page=2009%5C08%5C23%5Cstory_23-8-2009_pg7_4 www.docstoc.com Education MBA http://en.wikipedia.org/wiki/Pakistan_International_Airlines

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