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December 25, 2015
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PIA’s privatisation affair

Islamabad

December 25, 2015

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PIA has been a flag bearer of Pakistan for many decades. It was the first Asian airline to operate a jet plane and it was a major success story of the 60's and the 70's in the aviation industry. 

PIA's services were sought by Emirates and Malta airlines when they were being established. Much has changed in the last few decades where corruption, patronage and incompetency have replaced professionalism, innovation and hard work.

The story of PIA is that of many public sector organisation in Pakistan. Corrupt politicians have used them as tool of patronage to further their own interests by avoiding merit during the process of employment. Therefore this has led to the complete reliance of the organisation on the state. 

Currently the financial sheet of PIA looks awful, it has an approximate debt of Rs300 billion. Interest payments of almost Rs3 billion is paid per month (total of RS36 billion per year). Just the debt servicing is almost as big as half the budget of Benazir income support programme. PIA's fleet came down to almost 18 aircraft in early 2014 which have now been restored to 42 aircrafts. Shujhat Azeem along with the top management of PIA should be given credit for this turn around.

PIA currently employs almost 18000 employees. It has one of the highest ratio of number of employee per plane. One can argue that PIA spend much less on its employees compared to other airlines but then other airlines are making profits and PIA has not made yearly profit in the last decade. One can safely assume as per the current balance sheet that it will not make a profit in the foreseeable future. One has to also remember that all of this is done to keep PIA afloat but when one travels in the airline the service that it provides to customers is pretty ordinary. I personally like other Pakistanis have suffered at the hands of the PIA staff. Delayed flights, ordinary catering services, malfunctioning planes and poor customer service these characteristics are now associated with PIA.  

The case of PIA is that whether an airline or rather any organisation should be run by the state or by the private sector. If one looks at the organisations such as that of Pakistan Railway, a case can be made that railway is used by low income groups therefore subsidising it makes sense. Similarly utility store should also remain in the public sphere as it is being used by the low income group. Similar case cannot be made for PIA which is being used by high income groups. Therefore, this entity should make profit if not then it should go bank corrupt. The state sponsorship of PIA should stop. The money that the state puts in PIA should go to the development of schools, hospitals and other facilities.

If one looks at the most successful industries in Pakistan like cement, telecommunication, textiles and IT. All of them are being run by private sector. It is not the task of the government to run companies, the government responsibility is to provide regulatory framework through which these industries should prosper. As far as the political side of this story is concerned, opposition politicians will oppose the privatisation as they will be a major loser. PPP has recruited thousands of their own party workers in PIA. Similarly, other political parties have been using PIA for their own benefits. The argument that the responsibility of the staff of PIA rests with the government is incorrect. 

The government or rather the state is responsible for all the people in the country. It cannot subsidie one segment on the cost of the other. Government has to do the privatisation not because the IMF is asking it to do it but rather because privatisation is the only viable way forward for PIA, its employees and the people of Pakistan. 

The writer is working as the CEO of Telsec Corp

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