The last leg of the incumbent government witnessed numerous policy decisions and legislations - one of them is the inclusion of the top loss-making public-sector entity, Pakistan International Airlines (PIA), in the active privatisation programme.
Moreover, the government has reversed a seven-year-old political decision that contributed to the massive losses incurred by the airline.
The Cabinet Committee on Privatisation (CCOP) also gave a green light for hiring a financial advisor for the Roosevelt Hotel, a prestigious landmark in New York City owned by PIA. The CCOP made this decision after rejecting a proposal by the Aviation Ministry to bring the Roosevelt Hotel under its umbrella by initiating a restructuring plan through the Public Private Partnership Act. Outsour-cing of the country’s airports to the private sector is also being actively worked upon.
PIA, Pakistan’s leading loss-making entity, has seen its total cumulative losses surge to Rs742 billion. According to media reports, the airline incurred a loss of Rs110 billion in the 16-month tenure of the Pakistan Democratic Movement (PDM) government. It is not the first time that PIA has been included in the active privatisation programme. It has been on the cards since 2013 with the start of PML-N tenure.
The nearest it got to privatisation was in 2016 when the then Chairman of the Privatisation Commission had stated that the government would privatise PIA by July 2016. “We are planning to privatise PIA in view of its heavy and recurring financial losses,” according to him. This did not happen.
Under pressure from the protest by PIA trade union, which took an ugly turn with the death of one protestor, and opposition by PPP (Pakistan People’s Party), the then PML-N government introduced a major amendment in the PIA law and passed the PIAC (Conversion) Act, 2016 and incorporated a change that effectively ended its privatisation prospects.
The incumbent government has decided to amend the PIAC conversion act of 2016 and after this amendment, the government can sell 100% of its stakes in PIAC to a private party.
The privatisation of PIA and its subsidiary and the outsourcing of airports to the private sector constitute the only option available to stop hemorrhaging money and inject fiscal sanity into the national aviation industry. But the task will not be an easy one and the process of privatisation will encounter many formidable obstacles and fierce opposition.
One of the enticing arguments presented against privatisation by certain quarters is that the national carrier and country’s airports are sensitive national assets with strategic importance and must remain under government’s control.
This may hold ground for some in Pakistan but nowhere else in the world is it a matter of sensitivity. India sold its national carrier to Tata Group, which is reported to have placed an order for a fleet of state of art aircrafts to position the airline as the front-ranking carrier, offering competition to Emirates and similar airlines.
Whereas, the first Indian airport to be privatised in India was Cochin airport as far back as 1999, followed by Hyderabad in 2002 and Bengaluru in 2004; Delhi and Mumbai — the two largest airports in the country - were privatised in 2006.
The private sector took up the airports as commercial projects and invested heavily and transformed Indian airports into world-class airports. Their Privatisation was resisted stoutly by airlines but the government was unrelenting and went ahead in the best interest of the passengers and the national image.
Pakistan International Airlines commenced international services in 1955 to London, via Cairo and Rome. In 1964, PIA became the first non-Communist country airline to fly to China. The airline played a vital role in the establishment of Emirates airline in 1985.
In 2004, PIA became the launch customer of the Boeing 777-200LR. On 10 November 2005, PIA used the Boeing 777-200LR to complete the world’s longest nonstop flight by a commercial airliner.
This flight lasted 22 hours and 22 minutes on the eastbound route between Hong Kong and London. Soon thereafter, PIA experienced a rapid decline hitting rock bottom when it was barred from flying to Europe and the US. Several attempts aimed at restructuring the national carrier, with much money pumped in, only made things worse. Restructuring plans in Pakistan are meaningless. Such plans inevitably lead to more incentives and privileges to be exploited.
Copyright Business Recorder, 2023
The writer is a former President, Overseas Investors Chamber of Commerce and Industry
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