PIA dispute with agents goes to London High Court

LONDON: The Association of Pakistan Travel Agents (APTA-UK) has issued a whopping £2.69 million claim in High Court here against the Pakistan International Airlines (PIA).
The UK is considered to be one of the most lucrative locations for Pakistan because of the fact that thousands of visits take place each year between the two countries, and business from this location has grown year on year.
Now with the oldest established sales agents rising up against PIA and its style of management, the PIA may find itself in a difficult situation.
The 43-member strong APTA, which represents some of the oldest established PIA ticket sales agents, claims it has been wronged by Pakistan’s national flag carrier by failing to honour its commitment and pledges the airliner made to its members in return for promoting the national airliner exclusively.
The court claim relates to PIA’s alleged failure to provide two percent incentive or over-riding commission (ORC). Riaz Hussain Syed, the APTA president, and Mahboob Ahmed, its chief executive, told The News reasons behind their decision to knock the door of courts.
According to Riaz Hussain Syed, in 1994 the association agreed with the PIA at a minimum benchmark of two percent for each travel agent every year on the conditions that APTA members will only promote PIA and each agent’s yearly sales must not be less than £250,000 per annum. As the business increased phenomenally, in 1998 the PIA set the minimum benchmark at half a million pounds against two percent ORC that the agents accepted.
The PIA says there is no written agreement between the two but for the British courts it will be sufficient to see that the two parties were engaged in business with each other for a minimum of three months according to the legal requirement and that would be enough proof for the courts to rely on the credibility of APTA claim.
The APTA says it has written proofs of the commission being paid into its accounts through cheques advice clearly stating what the money is for. Also, APTA has letters which show that the PIA has been writing to sales agents from time to time offering more incentives in order to increase sales, including two tickets to those agents who earned over a million pounds business every year.
According to the PITA, since Captain Mohammad Aijaz Haroon took over as the PIA boss, relations between the two has really worsened as Haroon has been accused of breaking promises made to the sales agents.
He held a meeting with APTA members on 22nd of June 2008 in Manchester and promised that the airliner will not allow more than 43 agents to operate under its umbrella, but asked the agents to produce revenue of £110 million per annum. The PIA boss promised that he will get the agreement signed by the PIA’s director marketing, but despite taking the signatures of the APTA executive, he, according to the APTA officials, never returned the signed agreement.
The APTA officials believe he balked under pressure from the army of PIA managers who have their vested interests in keeping the PIA operations the way they are at the moment.
Riaz Syed added: “All managers were against it because the new deal minimised the powers of managers. They were all upset about it and as a result they forced Aijaz Haroon to tear the agreement in public in Manchester when questioned by a member of the APTA. The agreement didn’t even materialise”.
Mehboob Ahmed, the chief executive of APTA, pointed to the wider problem of corruption in the PIA and urged the government of Pakistan to cut to size the number of 28 Pakistan-based staff working in the UK to make the airliner efficient.
“Just in order to skim off benefits from the airliner and to eat up commissions at different levels, the PIA has been divided into North and South zones. Each employee costs the airline between £40,000-£50,000 while most of the work can be done be less than half this number using Internet facility.”
The decision to go to the court has been taken, both Syed and Ahmed said, after failing to engage PIA bosses in any meaningful conversation.
“We will not expect any incentive from the PIA in future but we will go to any level of court to get our due right and will not let PIA hide behind the veil of secrecy and deceits,” APTA leaders resolved.
Captain Mohammad Aijaz Haroon, the airliner’s Managing Director, told The News in a telephone conversation that PIA was fully prepared to contest the case of APTA members and was hopeful of a victory in the court of law. The PIA MD said: “We are more than happy to face the legal challenge in the court and we will sort hem out”.
Haroon didn’t want to speak much about this case as ‘it may prejudice the court case’ but added that sales agents overall in the country were satisfied and on good terms with PIA.
The changes that we have introduced have been positive and we are going to cross £100 million sales this year from the UK which is one of our top three most lucrative centres, he said, adding the court would decide the difference between an agreement and any incentive scheme launched by the companies.
Without specifying who he meant but Haroon said: “Previously, a particular group was holding matters in its hands and sales remained around £70 million a year which will change to over £100 million this year. A handful of people want everything for themselves and that’s not on.”