When the current management of the national flag carrier was appointed by the Government of Pakistan in April 2001, the challenges it faced appeared to be insurmountable. Intense competition in the wake of industry deregulation, years of financial adventurism and the growing obsolescence of many of the airline's systems had led to a state of imminent collapse and insolvency.
The new management immediately initiated a series of radical measures to save the airline from any further damage and embarked on a well worked out plan to turn the airline around and once again make it a profitable and self-sustaining organisation.
With the complete and unstinting support of the Government and the co-operation and hard work of the employees, the management has been able to put the airline back on track. As a result, PIA has once again become a viable organisation and has regained the esteem that it once possessed.
This is no small achievement, in view of the fact that over the years the airline's systems had deteriorated significantly, quite apart from the fallout following the events of September 11, 2001, which caused a slump in the aviation industry world-wide.
YEAR 2003: The year 2003 reflects a landmark performance in terms of operational achievements, pre-tax profit increase and business growth, all emanating from the initiatives undertaken by the management since 2001.
Globally, the year 2003 proved to be a turbulent one for the entire aviation industry, particularly in terms of profitability, as it struggled to come to terms with the serious repercussions of the heightened post-9/11 security environment. The expected turnaround for the industry did not materialise; the extent of damage to its growth and prosperity has been huge and recovery has been slow.
The aviation sector during the year was also adversely affected due to a stronger Euro, high fuel prices and intense competition. In sharp contrast to the industry situation, the performance of the airline under the circumstances has been a matter of much satisfaction. Judged by the yardstick of its financial results, the airline can proudly claim to be among the few profitable airlines, and it is now entering into a major fleet renewal phase.
MARKETING FOCUS: Starting in April 2001 through to the end of 2002, PlA's recovery strategy was focused on maintaining a profit base primarily through cost cutting and route rationalisation.
However, after that time, the financial turnaround has been driven by the firm and transparent marketing policies and strategies adopted by the management to uplift the traffic and revenue performance of the airline to the newly set standards.
The crux of the recovery plan has been the expansion of the revenue base, while not discounting cost saving measures like rationalisation of the route structure / network in line with prevailing demand.
The maximum emphasis has been on generation of capacity and traffic from within the existing fleet resources and improvements in yields through tactical adjustments in fares according to market opportunities. The progress made has been very encouraging and PIA, which was going in the red till 2001, has started showing profits.
Passenger confidence in PIA has increased. The improved service standards have resulted in increased passenger loads. The seat factors of PIA flights are high, at around 70%. The overall seat factor is comparable with, rather better than, most in the industry. The new aircraft inducted in 2004, increasing the overall system capacity by 17% over the previous year, have already been utilised to the optimum.
PIA now has an industry-standard frequent flyer program with a three-tier system that is gaining popularity in all classes of service.
NEW MARKETS: In line with the strategy of expanding the revenue base, PIA has adopted a policy of maximising overall capacity by increasing capacity in existing markets where feasible and expanding the airline's network to potential new destinations, including those previously operated but discontinued due to various reasons.
In the year 2003, PIA was operating to 27 international destinations. 11 new destinations have already been added and it is planned to increase the destinations to 50 by the end of 2004.
THE NETWORK: PIA caters to 2.5 million passengers on its international network.
UK: PIA has been operating to London, Manchester and Birmingham. Operation to Glasgow is being planned. The UK market is the highest revenue generating area for PIA. Deployment of B-777s in the UK market has enhanced PlA's image and increased the economy of operation. For Business Class passengers at London, PIA has introduced curbside express facilities.
NORTH AMERICA: PIA is the only direct carrier between North America and Pakistan. It is already operating to New York, Chicago and Toronto. Houston has been added to the PIA network on May 23 and Los Angeles will be online by the middle of the year.
The addition of two new destinations and enhanced capacity will further increase the revenue from this market.
EUROPE: PIA operates to 7 destinations in Europe with flights shared between stations. The current destinations are Athens, Amsterdam, Paris, Rome, Copenhagen, Oslo and Frankfurt.
The European network is being broadened by adding Moscow and Milan by July 2004.
SAUDI ARABIA: PIA operates to three destinations in the Kingdom of Saudi Arabia - Dammam, Jeddah and Riyadh. Umrah and Hajj traffic create short-term high capacity requirements that are met by PIA.
GULF: By June 2004, PIA will be operating to 10 destinations in the Gulf, catering to growing demand from expatriate Pakistanis.
PAKISTAN: PlA's domestic network encompasses 23 destinations. 87% of this domestic market is on jet routes. PIA faces competition on Karachi, Lahore, Islamabad, Peshawar, Multan and Faisalabad sectors. PIA is the only carrier that regularly operates on socio-economic routes and links far-flung, remotely located town with major cities. On these routes, PIA has been incurring losses only to provide a quick means of transportation to under-developed areas.
AUTOMATION: PIA lays a lot of emphasis on automation. After a thorough industry survey, a state-of-the-art SABRE system was selected for reservations, operations and departure control. The latest addition to automation is the Revenue Accounting System for automation of the entire revenue accounting process of the Corporation. This will enable the Corporation to have a most up-to-date Management Information System for setting up and developing Marketing strategies. The airline is also considering a new inventory management system to streamline procurements and save on inventory costs.
CALL CENTER: As PIA strives to become the airline of choice, exceeding customer expectations, it is deploying modern technology in all spheres of its activities. One such exemplary effort is the PIA Call Center, which is a single window to reach PIAC, for access to information related to support, products and customer inquiries.
The PIA Call Center is an integral tool for providing excellence in customer services and customer empowerment by increasing their satisfaction level and is seen as an effective customer relations' management tool helping in retention and growth of PIA customers.
The PIA Call Center covers major cities, including Karachi, Lahore, Rawalpindi, Islamabad, Peshawar, Quetta and Multan. The PIA Call Center is used for its Frequent Flyer Program, Reservation, Complaint Handling, and in future has plans to provide the customers with the facility of providing timely information by using short message service (SMS).
INFORMATION & CONVENIENCE: Log on to www.piac.com.pk to access the latest information on PlA's multi-faceted activities, tenders, job opportunities, photo galleries etc. The web site is easy to browse and one click on the subject lets you into a treasure trove of information on the topic. For PIA customers, this web site, along with the flight schedule, allows you to check the booking status (confirmed, standby, priority standby, re-confirmed, etc) on any particular flight, without coming to the booking office. If already holding a PNR (Passenger Name Record) and if the booking is confirmed, you have the convenience of selecting a seat of your choice while sitting comfortably at home.
The web-based E-mail facility has turned PlA's widely spread offices and installations into a closely-knit, efficient set-up, where communication and sharing information is as convenient as working in one room.
The latest interactive voice response (IVR) technology at the PIA Call Center handles the customer queries such as fax-on-demand and fax-call as well. Plans are underway to extend the service to USA/Canada, Europe and subsequently to other markets.
CARGO FLIGHTS: For cargo flights, Pakistan follows the Open Skies Policy. Several scheduled and non-scheduled foreign operators have availed of this opportunity and there is no dearth of space. These operators, however, prefer dry cargo and avoid the low-yield perishables - fruits and vegetables - so very important to the agriculture base of Pakistan's economy.
For boosting Pakistan's exports and to support our farmers, PIA started a dedicated freight operation on a twice-weekly basis between Karachi and London in May 2003. The frequency is planned to be increased to five per week by the middle of 2004.
SPEEDEX: In July 2003, the airline launched SPEEDEX, PlA's door-to-door Courier Service. This service was initially introduced in Karachi, Islamabad and Lahore and in the second phase has been expanded to 61 other cities of Pakistan. In addition, a Franchise program has also been launched with an aim to proliferate this highly specialised market.
PIA ENGINEERING: During the last two years, PIA Engineering has successfully carried out revamping and inventory control of all technical stores involving 225,000 items. The task was completed during 2003 and as a result the surplus, unusable and slow-moving items were identified. The management has also arranged for the disposal of the surplus inventory.
PART-145 CERTIFICATION: The airline also commenced a project for International Certification from the Joint Aviation Authorities (JAA) now called European Aviation Safety Agency (EASA). During 2002 and 2003 all the inventory procedures were streamlined, requirements were defined, training skills renewed, maintenance facilities revamped and tools and equipments required to support the fleet upgrade program completed. Further, the quality manual "Maintenance Organisation Exposition" (MOE) was prepared and approved by JAA. Later, in January 2004, EASA deputed Civil Aviation France (GSAC) to conduct the audit of all the divisions of PIA Engineering and, on the basis of the findings, the EASA recommended the grant of International Certification PART-145 to PIA Engineering in March this year.
All the eight Divisions of PIA Engineering and Maintenance Department including logistics have been conferred the Part-145 Certification by EASA, the combined Aviation Authority of the European Union countries. This certification includes capability for the total PIA fleet, excluding F-27 aircraft. It currently includes B- 777-200ER aircraft up to Line Maintenance Check "A" capability.
PIA is the only airline in the region where all its Divisions are Part-145 certified and this certification for all its eight divisions was done at one go. This is a major step forward in the recognition of the high maintenance standards of PIA engineering and endorsing it at par with any agency in Europe. The maintenance standard achieved by the department will help generate more outside business in the future as it is permitted to carry out third party work on the aircraft and components of the airplanes registered in Part-145 approved organisations. The PIA Engineering Department has already started outside work and one aircraft has been delivered to an airline after "C" check.
NEW LIVERY & UNIFORM: In order to give PIA a fresh new look reflective of its turnaround as a progressive and dynamic airline, new cabin crew uniforms and aircraft livery were launched in February 2004.
EMPLOYEES' WELFARE: The restructuring strategy of PIA has started to pay off with the measures initiated by the management since April 2001. In recognition of the contribution of its employees in the turnaround, a salary increase of 20 per cent has been awarded. The airline has also taken cognisance of the plight of its retired employees, who did not receive increase in their pensions since 1992, by raising their pensions.
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