It has been reported that during the recent Cabinet meeting, the finance ministry was empowered to issue a Government guarantee for an additional borrowing of one billion rupees by Pakistan International Airlines (PIA). This is not the first time the national flag carrier has been in financial trouble, nor is it likely to be the last if the status quo remains.
That each successive government has made promises to change this very status quo and usher an era of lean and effective governance at the PIA with the capacity of turning the company's fortunes around is well established. That all have failed to-date is also patently evident. And there are several major reasons for these failures.
First and foremost has been a policy decision not to hedge fuel prices, a common practice amongst all other international carriers. Thus in the event that fuel prices rise, PIA would automatically go into heavy losses unless support was provided by the government of the day. The dramatic jump in fuel prices in recent months has hit PIA extremely hard. It is indeed ironical that even though the former government subsidised fuel rates for the general consumer as well as electricity rates, it never thought it prudent to provide a hedge cover to PIA.
Second, PIA needs senior management that understands the basic principles of commercial aviation. It must be emphasised that knowing how to fly a fighter plane does not automatically provide one with the expertise to run a commercial airline.
One would hope that other services would follow the precedence set by Chief of the Army Staff General Kayani in recalling all service men employed in civilian institutions and that PIA would be permitted to lay-off retired armed services personnel within its ranks, if so warranted.
Organised resistance by a powerful union to lay off surplus staff whose induction, many aver, was entirely for political reasons is yet another reason for the financial woes of the company. Others also point to the VIP culture rampant in the country because of which PIA is routinely pressured by cabinet members, parliamentarians and their cronies to be upgraded to business class after having paid economy class fare.
While Prime Minister Yusuf Raza Gillani has set a precedence by announcing a 40% reduction in the allocation to the office of the prime minister, yet one would hope that he also attempts to end the VIP culture from PIA - a root cause of at least a part of its financial woes.
Many financial experts have spent long hours in formulating plans to revitalise the national carrier. That those plans with the best intentions in the world have failed must be acknowledged now. Therefore the instructions to PIA to devise three business plans capable of turning the company around may churn out good plans but with limited chance of success unless implemented in letter and spirit: those with a vested interest have always managed to derail the best laid plans in the world.
Some economists argue that a buy-out or merger may present the best solution to this perennial problem. Why not allow a foreign airline to either buy out or merge with PIA? There is little doubt that if the government begins to contemplate such a solution there will be allegations of selling the family silver at throw away prices - charges that a popularly elected government will shy away from.
In addition, the worldwide credit crunch is unlikely to get us a good price for PIA at this point in time. Thus in the short term the government must allow for hedge cover for fuel purchases, and allow the present management that is led by an airline veteran complete freedom to induct a management team that understands commercial aviation with full powers to take personnel and commercial decisions without interference from the government.