Still... great people to fly with

The mundane pedagogy of free market fundamentalism, summarised in the domestically revered slogan, "It is not the governments business to be in business", appears to be reaching its zenith in recent time in Pakistan. Even panoptic politicians, mesmerised by the panache of capitalism, are unable to comprehend the apocalyptic message for their profession; but let's leave them guessing, for in any case the capricious movers and shakers are hardly intractable.
The rendition today, rather than being a generic critique of all the spiel on privatisation, is limited to the decision to sell all those great people to fly with, albeit not completely disagreeing that some of those great people have perhaps passed their prime. There is a realisation that the elusive Golden Mean of an economy is somewhere between Capitalism and a completely planned economy. Accordingly, the question is not whether privatisation is good or bad, more profoundly, the age old dilemma is to identify national assets, which require government protection or ownership, temporarily or permanently. This view that businesses require protection in their infancy, and in some cases outright public sector control, is supported by empirical evidence from western economies, which themselves only substantively transited to free markets, and even now not completely in some cases, as they crossed the finish line to enter the club of developed countries. A government in a developed country might not need to be in the business of business; but even that is not a hallowed dogma.
Following from the above, the fundamental question really is whether or not Pakistan needs to have a national airline. If the cognoscenti decide that the answer is no, than perhaps liquidation is a better option rather than a privatisation with strings attached; the experience of PTCL should be an eye opener, still not paid for and the jury is still out on whether private management actually improved performance and the value of the asset; however, more on telecom in a future column. If the government pays for the golden handshake, and subsidises losses on socio-economic routes, than the nation pays for all the "kurwa kurwa" while the foreign "partner" eats the "meetha meetha". Minus Pakistan International Airline (PIA), let the free market decide whether planes should fly to Larkana, Sukkur and even Quetta.
On the other hand, if the consensus is that a national airline is a necessity, keeping Pakistan's geography, troubled recent history and welfare needs of the far flung populace, in the forefront, than perhaps all the querulous talk about PIA needs to be quelled. If PIA should not be privatised, then budgetary support is simply, the cost of doing business or, running a government. On a positive score, the airline has recently become operationally profitable on the back of falling oil prices, which, also calls into question, the mendacious premise that the airline was losing money only because of excessive employees.
But in order to reach a decision, perhaps "Flights of hypocrisy" from a recent edition of The Economist can provide some nuances. As the story goes, investigators hired by American airlines, have pieced together a dark tale of ignominious support from the governments of Dubai, Abu Dhabi and Qatar for their respective airlines, Emirates, Etihad and Qatar.
"According to the American carriers, which released the supporting documents for their allegations this week, airlines in Dubai, Abu Dhabi and Qatar have enjoyed a host of benefits, including handouts, "loans" without interest or any schedule for repayment, free land and below-cost charges at state-owned airports. Over the past decade this was worth a total of $42 billion."- The Economist.
No wonder "Dubai's main airport overtook London's Heathrow as the World's busiest for international traffic", another finding from The Economist. The argument that the Gulf States are ideally situated to act as a hub for air traffic between the East and West aside, but minus all those fresh crispy dollars, the airport might have had a subfuse future. Imagine how much money was spent on the Dubai airport, where Emirates has special rights and privileges.
USD 42 billion over ten years is a lot of money; compare this with USD 46 billion economic corridor investment by China in Pakistan, envisaged to be spent over ten years too. The former is for three airlines only; the latter is expected to change the future of a country of around 200 million people. The former is an interest free loan with no payment schedule, free money; the latter is equity which will need to be paid back with high dividends. Perhaps the leadership needs to renegotiate with China, providing them access to Gwadar is definitely worth a few billion dollars in free money.
And that is not enough, there are other hidden benefits. The low tax rate in the Gulf, on employees and corporation, cuts labour costs and enhances profitability of these airlines by a few basis points, which for an airline is the difference between black and red. Curiously, Etihad and Qatar don't even publish their accounts, and may even be in the red after all this support. And finally the cherry on the cake, the unassailable advantage over PIA; the airlines in the Gulf States enjoy a ban on unions; Unions are the bane of existence of PIA. Sincere and honest efforts of the managements are circumvented by collective actions of the various unions in PIA, and there are so many of them that perhaps there is a super union for all the unions.
Nonetheless, it is abundantly clear that these super connectors of world air travel, the much admired airlines in Pakistan, Emirates, Etihad and Gulf have not been standing on their proverbial two feet; contrarily they have been and continue to be absolutely protected and supported by their respective governments. And for the record the very same exposition in The Economist also points out that since the dawn of American commercial aviation, their federal government has helped its airlines to the tune of USD 155 billion. Surprising?
This is a rather stultifying situation, every other nation, especially the home governments of the leading airlines of the world, believe in their national flag carrier and support them financially, operationally and in any other what way; while in Pakistan the sentient decision is to sell the national flag carrier?
What exactly is the cost of revamping PIA; financially perhaps less than USD 1 billion, coupled with a bit of restructuring? Critically the union problem definitely needs a solution, and perhaps corruption might be another hurdle. But it can be done; as Achilles asks in the movie Troy, "Is there no one"?
(The writer is a chartered accountant based in Islamabad)