Our national carrier, Pakistan International Airlines, is suffering operational losses to the tune of Rs2 billion per month due to the rupee’s depreciation and a jump in fuel prices, according to Aviation Secretary Mohammad Saqib Aziz. These operational losses were in addition to liabilities of Rs400bn, including bank loans, as told to the Senate’s Standing Committee on Aviation.
Increase in fuel prices and depreciation of rupee against the dollar are the two major reasons for the airline’s losses as per the government spokesman. But the real cause for the losses is over-staffing and corruption. The financial condition of the airline is so precarious that there isn’t enough money to pay the salaries of employees on time.
The airline has 13,500 regular employees and some 3,500 daily wagers. The ratio of workers per aircraft works out to 450, which is unthinkable in today’s competitive aviation industry.
If non-core staff such as catering, engineering and ground handling crew were separated from the core employees, the ratio of workers against one aircraft would come down to 135 — which is still unacceptably high.
So far any attempt made to cut down the number of employees has been met with stiff resistance. Governments have had to back down after announcing plans to rightsize the airline.
But things cannot continue the way they are. In the engineering section alone, PIA has more than 4,000 employees. And yet, the engineering department does not do the kind of work it did several years back.
Much of aircraft maintenance now is done abroad. The lure and charm of the arrangement is that some higher- ups make millions in the purchase of aircraft parts. Not because the engineering team here lacks competence.
Delays have become the norm in an airline that once prided itself on its efficiency. Five out of the 33 aircraft in PIA fleet had been grounded for maintenance. This possibly doesn’t include the PIA aircraft stranded at a European airport under some dubious deal of a previous CEO. The games played by former executives to enrich themselves have left the national carrier in a shambles.
This is the challenge facing Air Vice Marshal Arshad Khan, who is a serving air vice marshal, and has been appointed the new PIA Chairman by the PTI government. The government is also now looking for a new CEO to take the airline out of its predicament. Everyone seems to be hoping for someone who can turn the airline around. That isn’t likely to happen though.
There are few options for the new management. Unlike what we saw in the PPP and PML-N governments, the option to continue bankrolling the airline and thereby allowing corrupt officials to make money and excess employees to enjoy a free ride, should be discontinued. PIA, as much as some think so, is not a charity. We cannot run the airline as a social welfare project.
Selling off the airline is also a pipe dream. The courts have already ordered that they must be in the loop if any such decision is to be taken. Earlier attempts at privatisation did not give very positive feedback. In its present state, why would anyone in their right mind want to buy an airline that is suffering such massive losses?
What is ironic is that as a running business, PIA seems to have everything going for it. Its flights are almost always full on the domestic sector and also on most routes internationally. The potential for growth is tremendous given the number of Pakistani expatriates all across the world. In the past we saw how PIA took advantage of this passenger pool. Not anymore.
With the current number of employees on its payroll, it will be a hard task to sell the airline. It is time to fix the airline through hard-nosed decisions and political will. Let us stop dreaming of the old days of PIA. They are not coming back. Let us remove the surplus staff. And plug the gaping holes of corruption.
The other option would be to simply shut down the airline and sell off all its assets one by one. This is what the airline will come to if it is not readied for a sale soon enough. This is the hard reality we have to come to terms with.
Published in The Express Tribune, October 22nd, 2018.