The PAF and the Pak Army operate their own businesses on the side. PAF, for example, operates a domestic airline known as Shaheen (Eagle) Airlines (staff is mostly retired PAF), among other things (Shaheen Logistics, Shaheen Construction & Development etc). Profits from these are used to take care of retired personnel, programs, facilities, and likely the Hajj pilgrimage as well. It is no secret that the Services in Pakistan take care of their men, even after retirement, and the defence budget alone can't afford all that. It is one of the prime perks of serving in the Armed Forces in a country where life-long civil service in any other field generally leaves you in the lower-lower-middle class after retirement (unless you deal under the table, of course, which many do).
Of course, the debate now would turn to, if the PAF operates a domestic airline, won't that take away from the commercial sector? What about all those aspiring businessmen who now have to compete with a corporate version of the PAF? It is the classic Socialist catch, and I guess it is an entirely different debate. It is quite difficult for a "capitalistic" mind to grasp the concept. It's not ideal, but you can't build a strong Air Force in a country like Pakistan without this stuff.
