The Demise of Pakistan International Airline (PIA)

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PIA

PIA

Pakistan International Airlines (PIA) had been on the verge of bankruptcy for over the last decade as loses plunged to 360 Billion in June 2017. Followed by the incompetent decisions from the non-experienced Board of Directors (BOD) to massive corruption within the department; the airline lost its ground completely. One may ask, what decisions primarily became the reason for the airline’s decline?

Before we lean forward to understand the way National Airline was treated, it is equally important to know the condition of other state-owned institution that, like PIA, were utterly destroyed.

This is a 2017 report of state-owned enterprises of Pakistan. The graph below shows the debt of all the major institutions of Pakistan.

PIA

From the report, it is evident that the major part of the economy (SOE’s) is playing an adverse role in the country’s growth. Ask yourself this question; knowing this humongous debts plus the growing external debt of Pakistan, how can you or anyone can expect a relief in terms of taxes or inflation?

Back to the topic! Let’s do a fact check on PIA of over 10 years.

Aircrafts

PIA

This is how PIA witnessed a rapid decline in its aircrafts. Some were either grounded due to technical failure while others went under the pile of corruption as some were either sold or misused. It is safe to say that in the democratic era of PPP and PMLN, PIA completely lose its direction and fell into an abyss of financial crisis.

Losses & Reasons

PIA kept on soaring with heavy losses on ground as well as due to inefficient decisions by the Board of Directors. The airline suffered heavy losses on dry release and wet lease contract that is estimated to be over Rs43 Billion. Another Rs80 Billion were lost due to corruption in passengers’ tickets and misusing reservation booking data by travel agents. The graph below shows a very accurate picture of the losses of international airline.

PIA Debt in 10 Years’ Time

PIA debt kept on soaring for over the last decade as the losses plunged to 360 Billion in 2018. Though, PIA witnessed a minimal increase in the revenue between 2007 to  2017, but the expenditure increased with a much higher rate.

The institution has been run like a non-business entity. The Board of Directors (BOD) were not only non-professional but also they lack the industry experience while exhibiting total absence of prudence.

Apart from the aviation loses, there were many other reasons for the steady decline of Pakistan International Airline.

  • Loss Making Routes

Pakistan International Airlines had been suffering huge loses in covering routes like Karachi-Kabul, Karachi-Dhaka and Lahore-Delhi.

  • Grounded Planes

Following the losses from the wet lease contracts and dry lease contracts, grounded planes further add distress for the already declining airline. Majority of the aircraft were grounded due to technical failure, and they remained grounded for years and years due to the negligence of BODs and lack of budget to repair them.

  • Ghost Employees

Not only do the board of directors were incompetent and non-professionals, an excessive majority of the PIA employees were hired without any merit as merely on political grounds. This backfired PIA heavily as it slowly leaned towards a grave debt.

  • Luxury Trips Of PIA Officials

Who doesn’t know the amount of losses PIA suffered due to luxury foreign trips by the PIA officials? This is how badly it was treated for over the last decade.

The new government has made some brilliant changes in the PIA forum with a number of moves. From bringing austerity drives to selling and renting of PIA properties to fixing grounded airlines to adding new aircrafts to PIA; Imran khan has by far been very successful in uplifting the declining airline. PIA revenue showed a steady increase in 2018 and is expected to generate some billions at the end of 2019. Will Imran Khan be able to take PIA back to the skies is yet to be witnessed.

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