Pakistan International Airlines (PIA) has approached banks and other financial institutions to convert its loans into preferential shares to arrest piling up of loans/interest, revealed Secretary Civil Aviation division Muhammad Ali Gardezi. PIA is a defaulter of different organisations to the tune of Rs 226 billion, including Rs 36 billion of Civil Aviation Authority (CAA).
Different measures including restructuring, reevaluation of properties and conversion of loans into preferential loans are being taken; however privatisation is the only way forward. Gardezi said in his briefing to the National Assembly Standing Committee on Cabinet, presided over by Parveen Masood Shatti.
The committee was further informed that PIA generates about Rs 8 billion on average per month while its expenditure stands at Rs 12 billion and to cover the gap of about Rs 4 billion per month, it has no other option but to go for loans. PIA pays about Rs 3.29 billion per month as interest on loans. However, due to a significant reduction in oil prices, PIA is surviving. He further said that due to a reduction in fuel prices and induction of new aircraft on lease, PIA is going in operational profit at the rate of about Rs 200-300 million.
Secretary Aviation said different banks have been approached to convert PIA loans into preferential shares to which they have given a verbal agreement. The move would help in arresting further loans and interest. The committee expressed its strong displeasure over substandard food and other facilities in PIA flights. MNA Marriyum Aurangzeb claimed that PIA has awarded food contract to a private hotel which serve the left-over food of the hotel. The Committee directed that PIA may take strong measures to improve the quality of food and other facilities. The committee directed the PIA to submit a complete report on the said issue in its next meeting.
The committee discussed the issue of Rs 1000 and Rs 300 charges on international and domestic passengers respectively. In a written response it was informed that ICAO permits recovery of cost of service and development of infrastructure through levying of aeronautical charges. Pakistan CAA has undertaken many infrastructure development projects and procurement of equipments for which the concerned charges have been levied.
The committee expressed its strong displeasure that CAA was unable to initiate action against responsible for making loss of Rs 671.39 million on account of Cargo Throughput Charges despite a laps of considerable time. On assurance given by the FIA that an inquiry is in process and would be shared with the Committee within 30 days, it deferred the issue till next meeting. During the course of inquiry relevant record has been provided to the enquiry officer. Officers/officials of CAA are regularly visiting the office of the Enquiry officer as per their direction along with relevant record to provide all possible assistance in the interest of justice.
The committee refused to immediately stress FBR for withdrawing Federal Excise Duty (FED) of Rs 5000 imposed by Federal Board of Revenue (FBR) against free tickets of PIA employees. However, the matter was deferred to the next meeting. FBR officials briefed the committee on "Federal Excise Duty of Rs 5000/ imposed by FBR against free tickets of PIA employees". Federal Excise Duty was levied on services provided or rendered in respect of travel by air of passengers embarking on international journey in economy & economy plus class from Pakistan through the Finance Act, 2014 @ Rs 5000 per passenger. There is no such exception created by the law whereby only the employees of PIA were subjected to a levy of excise duty; rather it is a duty levied across the board on all the passengers embarking upon for international flights. However, excise duty is not charged from Hajj passengers, transit passengers, supernumerary crew and diplomats. This excise duty had been levied since 2007. Earlier, the rate was Rs 3840 which was enhanced to Rs 5000 through the Finance Act 2014.
PIA officers' association said that government has imposed FED in budget 2014 on rebated passage (ticket) issued to PIA employees at the rate upto Rs 2,500 per sector. PIA extends facility of rebated tickets to their employees and ensures that these tickets are utilised/allowed in a manner that there is no impact on revenue loss/gain on the corporation. However, after the increase in FED the rate of such tickets dropped from 55,000 last year to 16,000 in the current year.