Category Archives: Pakistan International Airlines

Pakistan International Airlines – Losses Continue to Flow

Pakistan International Airlines (PIA)’s public relations team seemed to be very active this month. A month started with Russian airspace closure to PIA’s flights – The restriction came at a time when Russia had liberalised its airspace through historic relaxation of its airspace regulations. According to the sources, this was resulted due to PIA’s late move to airspace renewal on-time. Since, Russia is a quickest way to get to Europe, this move offcourse have serious implictaions on ill-fated PIA, who is already suffering badly when it comes to figures. The move will result in 15 to 20 minutes of extra flying time for most of the flights from Pakistan to Europe, the United States and Canada and back and increase the cost of flights. About 80 flights a week using Russian airspace for overflight will be affected.

Getting Figures Right

The state-run airline currently services domestic and international routes with a fleet of Boeing 777, Boeing 747, Airbus A310, Boeing 737 and ATR-42 aircraft. PIA suffered a loss of 135.8 million dollars in the first nine months of the year, according to its third-quarter financial report posted on the airline’s website. Accumulated losses stood at 88 billion rupees (one billion dollars). The national flag-carrier plans to induct 16 new aircrafts, lay off over 4,000 non-essential employees and double its revenue though aggressive marketing in the next five years. Ailing state carrier Pakistan International Airlines (PIA) is asking the government, saddled with its own mounting debt, to write off losses of 1.7 billion dollars to save it from looming bankruptcy – Now this is like putting an extra burden on billion dollar debt government.

Violation of airline safety conduct

PIA was created out of private airline Orient Airways in 1955, just eight years after Pakistan came into existence, and today has a fleet of 40 planes, a combination of Boeing 747s, 777s, 737s, Airbuses and ATR aircraft. Performing well until the 1970s when corruption and overstaffing hit company fortunes, PIA’s reputation was further battered in the 1980s as it failed to maintain its fleet. The airline recently imposed new rules to force pilots to fly on its terms, after a row over working hours and pension benefits led pilots to adopt an unofficial “go slow” protest leading to flight delays. Pilots said they were routinely forced to fly 12 hours per day, two hours more than the civil aviation rules allow, and occasionally for as long as 18 hours. Violation of airline safety conduct is something of a norm to PIA, but its not just PIA, the recent accident of Airblue also rasied the issue to retiring age of Captain and number of flights. To my knowledge of travelling with national flag, PIA operates B777, from New York to Karachi/Lahore – the route in past was operated by B747, who was used to make regular stops at Manchester to pick/drop passengers. This has not only reduced the operating life of the aircraft but also, cabin environemnt was no less than an attraction to newly board passengers like me, who see half of the cabin full of dead bodies. Excessive operation of used jumbos, resulted in 747 ban to European airspace, which finally resulted in grounding these plans. Now same routine is being adapted by B777. Worse of all, I have also travelled in PIA’s A310-300 who marginally meets the distance requirements of 3500 nautical miles distance between Manchester and Lahore.With 9 Boeing 777 in service (both long and extended range) why I had to travel on A310, I simply don’t know, may B777 were busy somewhere else. So far most of the planes operational in PIA including new 777 is active on conventional manual controls – some not even incorportaing the Glass Cockpit technology. Almost any new highly automated aircraft is brought down technologically by PIA engineers. Its not that PIA’s pilots aren’t interested in new technology, its PIA who is not bother to spend on training.

Enterprise Resources Planning (ERP) system

The national flag-carrier plans to induct 16 new aircrafts, lay off over 4,000 non-essential employees and double its revenue though aggressive marketing in the next five years. Under a five-year strategic programme, the PIA plans to acquire an Enterprise Resources Planning (ERP) system and implement it across the organisation to streamline business processes, strengthen controls and introduce financial discipline. An ERP is an integrated computer-based application used to manage internal and external resources including tangible assets, financial resources, materials and human resources. Under the programme, a sound system of internal controls will be established. The management is set to have a zero-tolerance policy for fraud and irregularities. A set of strategies will be implemented to turn around operations and make PIA a sustainable and profitable entity.Growth in revenue will be achieved through induction of new aircraft and expansion of the existing network. The airline also plans to pass on the increase in fuel prices to customers as it believes that the rapid escalation of airline expenditure in the recent past is mainly due to an unprecedented increase in fuel prices. Realising that retention of ageing 747 aircraft means continued increase in maintenance cost, the old aircraft will be phased out. Replacing the ageing 737 aircraft is a priority while the A310 aircraft will be replaced as and when financial resources allow investment. The 737NG or A320 are being considered as replacement. ATRs (short-haul European aircraft) will be acquired to increase frequency and capacity on socio-economic routes. It is planned to retain all types of 777 and ATRs in the fleet beyond 2014. During Haj season one 777 will be acquired on wet lease in each year from 2012 to 2014 when an A310 is also planned to be inducted into the fleet. Operational restructuring and human resource rationalisation is also part of the survival and turnaround plan as overstaffing is one of the PIA’s main problems which involves significant costs, clogs communications channels, diverts management’s attention from key airline issues and makes job responsibilities more obscure.

Enterprise Resources Planning (ERP) – if implemented it may serve the purpose, but I must point out that success of ERP implementation highly relies on investment in training (for IT personnel) as well as the coporate policy protection of the data, as well as controlling the way it is been used under ERP. I see this as a big transition, so big that I fear of the PIA implementation and data protection under ERP system. The blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale. Furthermore, Once a system is established, switching costs are very high for any partner (reducing flexibility and strategic control at the corporate level).

Many have blamed privatisition and years of bad planning for the fate of PIA, it is actually the years of corruption, nepotism, bad management and poor planning, that is truely responsible for the loss the airline is suffering today.

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Filed under Airbus A310-300, Boeing, Boeing 737 next generation, Boeing 777, Boeing 787, Engineering, Flight Global, Flight Simulation, Foreign Office Pakistan, Global Aviation, Islamabad, Manchester, Ministry of Defence Pakistan, Orient Airways, Pakistan, Pakistan Aeronautical Complex, Pakistan Defence, Pakistan International Airlines