Pakistan’s national airline under huge debt

ISLAMABAD, Pakistan – Pakistan International Airlines (PIA) is under the debt of over $288 million (Rs. 288 billion). During the scrutiny of audit paragraphs by Public Accounts Committee of the National Assembly of Pakistan, it was revealed by Secretary of Aviation Division, Mohammad Ali Gardezi, that the national flag carrier has 26 aircraft and 18,331 employees — or 705 people per aircraft. The global average is 150 to 200 employees per aircraft.

Gardezi said PIA’s average was higher because airlines the world over outsourced services like ground handling, flight kitchen, maintenance, and repair work, but PIA ran these services on its own. “About 7,000 employees are engaged for these services and PIA pays them Rs5.5bn per year as salaries and other benefits.”

The aviation secretary also expressed resentment over the high-handedness of the unionism, saying every political party has its wing in the PIA. “The management could not take crucial decisions,” he said.

He added that in addition to the collective bargaining agent (CBA), there were seven different associations in the PIA.

Officers, pilots, air traffic controllers, cabin crew staff, engineers had their own associations, and it was very difficult to run the management’s affairs smoothly, he added.

If the unionism in the PIA and the old debt were controlled, the national flag carrier would start earning profit, he said.

He revealed that PIA’s management had chalked out a business plan, and it would be submitted before the board for approval.

Gardezi informed the PAC that out of the 25 international destinations, Saudi Arabia, the Middle East, the UK, and Malaysia were profitable for PIA, whereas the routes to China, Japan, and New York were causing losses. Paris flights managed to meet break-even, he said.

PIA’s management informed the committee that during the Haj season the airline earned Rs9bn, or about 60 percent of its total revenue.

Audit authorities informed the PAC that the national flag carrier suffered Rs197bn loss last year, and this year may add another Rs36bn to its accumulative loss.

The aviation secretary said PIA would overcome all of its losses if it started earning Rs12bn a year. PAC chairman Khurshid Shah remarked that with the decline in the oil prices PIA must gain good profit.

Managing director of PIA told the committee they spent Rs55bn on fuel last year and the figure is expected to fall to Rs46bn this year. The airline would induct modern aircraft into its fleet, he added.