EDITORIAL: The European Aviation Safety Agency’s decision last week to finally remove the four-year ban on PIA flights, which had severely damaged the national flag carrier’s already struggling finances and reputation, offers a crucial opportunity for the airline to rebuild its European operations and attempt to stabilise its financial footing.
The ban, it must be recalled, was a result of the then aviation minister Ghulam Sarwar’s highly reckless statement on the floor of the National Assembly that “almost 40 percent” of pilots working in Pakistani airlines possessed fake licences.
That irresponsible declaration, which had followed on the heels of the tragic crash of a PIA flight in Karachi resulting in 97 deaths, woefully undermined international trust in Pakistan’s aviation industry, leading European and UK authorities to impose bans on PIA flights to their territories.
These had been some of the airline’s most lucrative markets, and the bans resulted in revenue losses of around Rs 40 billion annually and impacted 58 weekly flights to Europe. Moreover, several foreign airlines also ended up suspending Pakistan-origin pilots due to concerns over the authenticity of their licences.
As it later emerged, the minister’s assertions were not entirely grounded in facts, making the disastrous financial and reputational consequences for PIA and the country both unnecessary and avoidable.
The ban reversal should now result in several welcome developments, notably the enhanced outlook for privatising PIA, making it a much more appealing prospect for potential buyers. Given the botched attempt to privatise the national carrier last month, this particular outcome offers a crucial lift to the government’s efforts in advancing its privatisation goals.
However, during the period that PIA stays under public ownership, the government must realise that it needs to transform the way it is being run. Instead of operating it, as it does any other public sector entity, there has to be an acknowledgement that the modern-day airline business is a highly specialised, competitive and intricate one, and there is no alternative to running it but as a commercial entity that follows industry norms prevalent in the aviation sector globally.
It has to be kept in mind that the deregulation of the American aviation sector in the 1980s revolutionised the airline industry, paving the way for the rise of budget carriers. Even state-supported Gulf airlines are now pivoting towards the low-cost segment. This shift highlights that operating PIA in the same manner as in the past is no longer viable, and any effort to modernise the national carrier must align with these global industry trends.
Moreover, decision-makers must also realise the perverse effects of PIA being bogged down by huge interest payments on its massive loans, making the airline less appealing for potential buyers, given its already persistent losses and outstanding liabilities. These payments also drain essential resources that could otherwise be invested in modernising PIA’s operations.
The government’s current approach, therefore, raises some serious questions. A more sensible solution could be for the government to take on these liabilities, as leaving them on PIA’s books ultimately may prove to be more costly for the country.
In the final analysis, the lifting of the ban should serve as a catalyst for the government to reinvigorate its efforts towards a successful and efficient privatisation of PIA. This development could provide a much-needed boost to government’s privatisation efforts, creating a timely opportunity to attract serious buyers, and thereby avoiding a repeat of the previous botched privatisation attempt, which simply cannot be afforded anymore.
The government must ensure a transparent and well-managed process, while also looking towards recalibrating terms it set during the earlier privatisation effort in a bid to create a more favourable and realistic framework acceptable to potential buyers.
Copyright Business Recorder, 2024
Comments
Comments are closed.