Will PIA take off?

When in the opposition, political parties vow to privatise loss-making state-owned enterprises (SOEs) if given the chance to come into power. These parties quote mindboggling losses public-sector organisations, especially PIA and Pakistan Steels Mills (PSM), cause the public kitty. But when any of these parties come into power, they start a process of rejuvenating loss-makers by pumping billions of public money into them instead of privatising SOEs.

The PTI government in November 2018 sanctioned a bailout package worth Rs17 billion to PIA, which the finance minister called a “dose of oxygen”, to keep the airline operational. PSM, PIA’s close competitor in loss-making, received Rs1 billion to pay salaries of its workers. Although PSM has remained closed since 2015, its workers receive their salaries through funds to the tune of Rs380 millions that are obtained every month from the federal government.

PIA’s operational losses are estimated to be in the billions while the cumulative loss that the national carrier and PSM have caused to the exchequer over the last 10 years amounts to Rs552 billion. Some powerful interest groups have kept PIA and PSM running despite the huge losses that both organisations run into every year.

In October 2018, the newly-appointed PIA CEO pledges to bring the airline back into an era of glory that it once enjoyed. However, it is pointless to talk about the past glory of the organisation when it is in a financial crisis. The first priority of the management should be to reduce the plane-to-employee ratio of about 700 employees per plane, which is the highest compared with any other airline apart from Syrian Air. About 18,000 employees work for the airline, which operates about nearly 30 planes.

Could we compare PIA’s employee-to-aircraft ratio with that of, let’s say, Singapore Airlines, which stands at 140 employees per plane, and Emirates Airlines, which is 220 employees per plane? PIA could become profitable and more efficient by shedding its heavy baggage of overstaffing from top to bottom. PIA reportedly employs more than 500 pilots.

On the contrary, privatised state entities are doing fine. The glaring example is that of PTCL. After it divested 26 percent of its shares and handed over its management to a strategic investor, PTCL’s performance improved manifold. We can recalls a time when the divisional engineer (telephones) was a snobby bureaucrat who was hard to approach. Now, if you apply for a new PTCL connection, you can get it on the following day in most cases. Privatisation is the key to improvement in any state-owned organisation.

Nevertheless, PIA stands out prominently among other state enterprises mainly because of its high visibility. It attracts immediate public attention when its planes veer off the runway or leave behind the luggage of pilgrims returning home from the holy land. One feels sorry for the garlanded pilgrims at the airport, with anxiety over their misplaced luggage written all over their unsmiling faces, or when a passenger boarding bridge crashes due to it faulty design – as was witnessed at the newly-inaugurated Islamabad Airport. Similarly, when some of the airline’s pilots were recently found to have credentials that rendered them unfit to fly, it raised much of a hullabaloo. In short, the airline remains in the news for all the wrong reasons.

After all, what’s the big idea behind retaining huge loss-making organisations in the public sector and injecting precious tax money to keep them afloat? Hard-earned tax money worth billions is poured into these bottomless black holes when the end result is blatantly known: instead of improving, these organisations need more money. In fact, the taxpayers have a right to ask why their taxes are wasted to keep perpetually loss-making SOEs running.

Aren’t PIA and PSM commercial organisations that are supposed to sustain themselves financially, earn profit and expand themselves? Instead, both entities seem to function as charity organisations, waiting for donations from the public exchequer. There is no doubt that PIA is still operational. But whether it will survive on its own without relying on public money worth billions of rupees from time to time remains a moot point.

The writer is a freelance columnist based in Lahore.

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