Reasons spelled out: passenger market growth fails to translate into profits for PIA

The operating revenue of Pakistan International Airlines (PIA) declined to Rs 80 billion during January-September 2015 compared to Rs 85 billion in 2014, while a Rs 16.28 billion saving was attributable to a decline in oil prices in the international market.
A senior PIA official who declined to be named said there exists a revenue passenger market of almost 12 to 13 million per year within Pakistan, which is expanding gradually at the rate of 7 to 8% per year. "What has gone wrong is that in 2006 Gulf-based airlines were operating only 90 flights per week from Pakistan. Since 2010 the share of Gulf-based airlines has risen and by 2012 they were operating 210 weekly flights from Pakistan," he added.
In 2014, their share had risen to 280 and by 2015 it was 395 weekly flights, he said, while nearly half of the PIA fleet was grounded due to mismanagement and controversial procurement contracts during 2008-2013; examples are Transworld FZE, Dubai, who exercised their right of refusal which led to escalation in maintenance cost.
Successive governments since 2007 to-date gave their consent in return for favours from the Gulf governments, while PIA was the sole loser. "It has to fly on socio-economic loss making domestic routes and it no longer has the advantage or edge as it no longer has the lion's share of international passenger traffic from Pakistan," he lamented. "As compared to market of 13 million revenue passengers per year the available seat capacity is over 20 million and Pakistani airlines have a share of only 40% on international and regional traffic while Gulf-based airlines carry over 60%," he added.
A professional management would have ensured that PIA does not lose market share, nor allow its capacity to decline through gross mismanagement, pilferage and controversial procurement contracts for essential technical spare-parts, he added. Declaring the surplus employees as one of the major reasons for a dilapidating condition of national flag carrier, he said that in 2006, PIA employed 18,368 regular employees, while its fleet strength was 42 aircraft.
In 2015, he said total strength of its regular employees was 14,847 and effective fleet strength of only 33 aircraft. "In addition, there are 4,000 daily wage employees which implies that PIA's total employees are 18,847. After every four years all daily wage employees are regularised especially when PPP comes to power," he added.
He said that the online sale of PIA tickets has been restricted to 1% for the past several years because of pressure from politically 'influential' travel agents. "Aviation Industry practice within the region such as Emirates is 70%, with some airlines like South West in US selling almost 85% seats online," he added.
Bilateral agreements should be mandatory for grant of traffic rights to all foreign airlines, especially Gulf-based airlines, he said, adding the imbalance of approximately 55 flights per week to the UAE for all Pakistani airlines as compared to almost 400 weekly flights operated by Gulf-based airlines is "suicidal" for national aviation industry.