PIA: new board, old disease

One of the more laudable decisions made by the government in recent days is the wholesale reformulation of the PIA board of directors. Historically, the bureaucracy has dominated the boards of companies like PIA. The freebies afforded to members of the boards of companies owned by the taxpayer are legend. Rare and unfortunate is the retired federal finance secretary who isn’t on a couple of these taxpayer-funded junket machines.
Given the dominance of retired and serving CSP and DMG officers around the Sharifs, it takes exceptional clarity of purpose to block the status quo from continuing to dominate. The new PIA board is an example of the good intentions of the Sharif government. The inclusion of some titans of industry like Mian Mansha and Arif Habib shall surely blunt the enduring presence of bureaucrats on the PIA board.
Many other concurrent moves are afoot to fix PIA. We’ll examine the general direction of these moves momentarily, but first, let us contextualise the relative importance of fixing PIA on the national agenda. Fixing PIA is a big challenge. However, no one would claim that it is a bigger challenge than fixing the loadshedding problem, or breaking the back of the thriving terrorist enterprise in Pakistan. The prime minister has repeatedly said he will not rest till these two problems are solved.
So even though PIA constantly bleeds taxpayer money, constantly provides substandard service and is a constant source of national embarrassment, the PIA problem is really not the biggest of the challenges to the government. Fixing PIA and doing so quickly is a test of this government. If it can fix PIA, it will engender confidence. If it can’t, we should worry about the fate of the much bigger, more existential challenges faced by Pakistan.
Other than the new PIA board, the government has taken a number of key decisions related to PIA and the aviation sector in general. The first decision was the appointment of an aviation czar, in the shape of adviser to the prime minister, Capt Shujaat Azeem. Azeem’s status as the owner of a key Civil Aviation Authority (CAA) contractor by the name of Royal Air Services raises a number of concerns, though he is reportedly no longer the active CEO of that company. Those concerns are relatively minor however, given Azeem’s sterling reputation and his record of success across a number of contexts, cultures and industries.
The other major decision has been the establishment of an aviation division, separate from the ministry of defence, under which PIA had been until now. Headed by Azeem, on the surface, a new aviation division is also a reasonable decision – although reports about the aviation division using PIA resources like it they are theirs to use are worrying.
The aviation division should not have been established without its own budget and resources. Now, it is eating into PIA’s already meagre revenue streams by taking up space in the PIA office, at an opportunity cost of Rs9.6 million annually.
So, in summary, a new new aviation czar was appointed on June 6. The new aviation division was notified on June 8. On July 3 the PIA board was reconstituted. On July 10, this board met and discussed a range of issues, including the purchase of ten new aircraft for PIA. The next day, under the chairmanship of Finance Minister Ishaq Dar, Ecnec approved another bailout package for PIA along with, reportedly, the decision to sell 30 percent of PIA’s shares through the KSE.
At the meeting, Dar was furious that the bailout request was made most unprofessionally and with no substantive basis. One report suggested that participants were unable to identify whether PIA needed Rs16 billion or Rs24 billion. It makes all the sense in the world then that the approved bailout is worth Rs7 billion.
Of course, it will become harder and harder to make sense of what is happening at the new aviation division and PIA, given the abundance of talent being accumulated there. An advertisement for a new MD for PIA has been placed in the national press. Former Reckitt Benckiser Pakistan CEO Aslam Khaliq is the acting CEO and chairman of PIA. The de facto Minister for Aviation, Capt Azeem, speaks for PIA in board meetings and at Ecnec. The bureaucracy’s lonely representative in all this is the new Secretary Aviation, Muhammad Ali Gardezi. In this cloudburst of leadership talent, who exactly will be calling the shots?
Perhaps it doesn’t matter. The most appropriate bit of the action is the statement from PIA high-ups, or the aviation division high-ups as to what the purpose of all this frenetic activity really is: to make PIA profitable. Has anybody asked why PIA needs to be profitable?
After all, it is a taxpayer-owned corporation. It runs a number of unprofitable routes that have value in terms of national solidarity and cohesion. It has also reportedly served as a vehicle for many strategic objectives over the years. The function of publicly-owned companies is not to turn profit, unless those profits are being awarded as dividends to taxpayers.
The larger momentum and direction of all this is clear. A hasty and popular divestment of government ownership of PIA in favour of the private sector— privatisation, privatisation, privatisation is the rallying cry. I myself have long endorsed it. However, the speed and incongruence already on display ensures that any privatisation effort will not be fully thought through and will not be able to deliver value for money to the taxpayer that owns PIA.
We can be certain for example that Palpa and the range of unions at PIA are already preparing for a long-drawn-out war of attrition. The culture of taxpayer-funded sympathy for incompetent and often corrupt public sector employees is not restricted to PIA, or to a single political party (like the PPP). It is a national disease.
Government school teachers, government hospital doctors, policemen across the country and PIA flight attendants all have one thing in common. They are hired, posted and promoted on the basis of who they know. And who they know, most often, is a politician or a general. This bhai chaara, or brotherly love, is a national calamity – and it cannot be mitigated by tweaking at the margins. Yet tweaking at the margins is all that the current system seems capable of.
Despite the new air czar, the new aviation division and the shiny new PIA board, on July 15, the brotherly love at PIA was once again in full effect. Two relatives of a senior PML-N figure were promoted, with full back pay since 2007.
If this is the new government’s idea of how to turn a profit at PIA, we shouldn’t hold our breath on loadshedding or terrorism. Those who can’t solve the less complex problems have no chance at solving the more complex ones.
The writer is an analyst and commentator.