Plan for PIA

The government’s change of mind on the sale of PIA had less to do with any abandonment of its commitment to the ideology of privatisation and more of a recognition that it would be near impossible to find anyone willing to purchase the national carrier. Decades of mismanagement have left PIA in a financial black hole, where it is losing more than Rs30 billion a year. The government is now reportedly considering options to turn PIA’s fortunes around. Some of the proposals being considered – such as closing down PIA’s office in New York, which costs more than $150,000 a year but does not have the traffic to justify that expense – are sensible and should be implemented as soon as possible. Others could be more problematic. Apparently, PIA wants to shut down loss-making routes. That might make sense for international routes where other airlines can be used as an alternative but it would create issues domestically where PIA is often the only option for air travel to smaller cities and towns. Closing routes also means a loss of jobs which would be strongly opposed by the unions and could even lead to a strike.

PIA’s losses are too deep to be for it to be revived by small steps like closing a few offices and routes. There needs to be a more fundamental change in the PIA culture. Its aircraft are ageing and the fleet needs rapid modernisation. Instead of investing in aircraft, PIA meets its needs by getting planes on short-term wet leases. The airline had previously tried to take advantage of its valuable landing slots in British airports by coming to a route-sharing agreement with Turkish Airlines but the deal had to be abandoned after union protests over potential loss of jobs. PIA has also explored selling the Roosevelt Hotel in New York, which could fetch as much as a billion dollars. A sale of the Roosevelt, along with the Scribe Hotel in Paris – also owned by the PIA – could give the carrier some breathing room as it tries to restructure. But this strategy will only work if the government finally becomes serious about treating PIA as something more than a place to hand out jobs to supporters. Otherwise, the monthly losses will continue to mount to the point where PIA can no longer be sustained.