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Only 30 planes left, 20 ATR for domestic use only. 50 in the junkyard. 8000 employees left in PIA. Debt constantly increasing. Massive loss when Nawaz/Marima launch Pakistan Premier Airline, now operation shutdown with billions of losses. Setup for Mian sahab favorite London route.
https://www.nation.com.pk/reporter/atif-khan
ISLAMABAD - Pakistan International Airlines (PIA) has closed its Premier Service after bearing huge losses in around six months.
According to the official data, total earnings for the service between August 14 2016 and February 8 2017 remained around Rs0.96 billion.
The loss incurred on direct operations was Rs1.14 billion while the total loss was calculated at Rs2.88 billion.
Premier Service had started on August 14, 2016, on the country’s 69th Independence Day with A330 aircraft on Islamabad/ Lahore-London-Lahore/ Islamabad sectors.
Tall claims had been made at the time of its launch that PIA would be transformed into a profit making modern airline.
The national flag carrier also announced better in-flight entertainment and many other features, including a complimentary limousine service for its Premier Business Class customers on their arrival at London’s Heathrow Airport.
It was told that in order to provide better quality services as per international standards- an aircraft had been acquired from Srilankan Airlines on wet lease.
Since, as per National Aviation Policy an aircraft cannot be wet-leased for more than six months, PIA’s agreement with Sri Lankan Airlines for wet lease of one Airbus A330 expired on February 09, 2017 and the aircraft was returned.
Explaining the huge losses, the management argued that the PIA fares were worked out to be increased in anticipation. However, owing to capacity glut the overall fare levels did not increase and PIA had to settle for the min fare range (all inclusive) of GBP 532-682 against competitor fare range (all inclusive) of GBS 520-670.
It was therefore decided that till the time PIA’s own fleet (B-777s) was upgraded with value-added services (Wi-Fi and flatbed seats, IFE) the Premier Service be suspended.
It is also worth mentioning that after suspension of Premier Service, the flight operation to London has not suffered. The premier service was on six frequencies out of total ten. PIA still operates same number of flights to London by its own fleet of Boeing 777s.
Officials claim that the airline was selected after a transparent bidding process. Tender for Wet Lease of up to (04) Wide Body aircraft was floated on May 19, 2016 and bids were opened on June 30, 2016.
Three bidders, namely Sri Lankan Airlines, HiFly and TAG Linhas Aereas De Angola participated in the bidding and after technical evaluation the evaluated bidder with the lowest cost per seat per Block Hour as per the tender floated was selected.
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35
PIA’s deficit has dropped from Rs32bn in 2018 to Rs11bn in 2019, claims minister. — APP/File
ISLAMABAD: The Senate was informed on Friday that the open skies policy cost the national exchequer Rs107 billion in a single year.
“The PIA’s financial crisis started with the advent of the open skies policy adopted in the 1990s and subsequent grant of liberal rights, particularly to the United Arab Emirates and other Gulf states. Approximately Rs107bn was lost by the national exchequer during 2017 as a consequence of allowing open skies/liberal traffic rights arrangement to the airlines of Gulf countries, including the UAE, Turkey and Sri Lanka. All the passengers of these airlines were the right of airlines of Pakistan, whose earnings otherwise would have contributed to the country’s economy,” Minister for Aviation Ghulam Sarwar Khan told the house during the question hour.
He said the authorities first adopted the open skies policy in 1992 upon commissioning of Jinnah International Airport, Karachi, which had been designed keeping in view the open skies policy.
The objective of the open skies agreement between two countries must only be based on commercial reciprocity and organic (point-to-point) market growth, as envisioned in the National Aviation Policy 2019, the minister said. However, in the case of Pakistan’s open skies with city states like Dubai, Abu Dhabi, Sharjah and Ras-al-Khaimah, it has damaged commercial viability of the airlines of Pakistan and adversely affected the national exchequer.
“For their airlines to survive and their countries to prosper, they seek liberal rights from densely populated countries. These countries seek unrestricted traffic rights for multiple cities in countries like Pakistan while offering only one point in their territory. For example, Emirates Airlines has permission to operate to 11 cities in Pakistan, whereas the airlines of Pakistan can only operate to one point in Dubai,” the minister said.
“The airlines of the UAE and other Gulf countries siphoned off sixth freedom traffic through their hubs for the UK, Europe, the US and Canada which otherwise was the right of Pakistani airlines or airlines of the country to which the passenger was travelling. With the adoption of liberal grant of traffic rights, the other airlines started robbing the PIA’s traffic share and the capacity glut resulted in dumping of available capacity on low rates.”
Answering a question, Mr Khan claimed that the national flag-carrier’s deficit had dropped from Rs32bn in 2018 to Rs11bn in 2019 and this was made possible by good governance. He said acquisition of new planes and making grounded planes operational also contributed to increase in revenue.
He said the PIA was passing through a dire financial state but the government was keen to make it self-reliant. “Efforts are under way to improve financial health of the corporation by reducing its losses/deficit through various means and modes... Despite facing difficulties, the PIACL has been able to improve its performance with an objective of reduction in losses.”
The minister said the major reason behind the PIA’s losses was the increased financial cost due to the loan legacy inherited from the previous governments and rising mark-ups and debt servicing. Moreover, a significant increase in fuel prices and devaluation of currency have also contributed to losses.
He said the decrease in losses was being addressed at two levels — enhancing revenues and curtailing costs. “Revenue side is being addressed by improving market share through realigning sales team, manning stations on merit, aggressive sales promotion, improvement in product and services, focusing on revenue generation through ancillary sources, mounting new flights and expanding on existing productive routes such as Saudi Arabia and Gulf.”
The minister said the cost curtailment side was being addressed through austerity measures and reduction in unnecessary administrative expenses, discipline and accountability in functions to tap leakages and wastage, cutting down loss-making routes and other ventures, route rationalisation and shifting operational facilities suitable to PIA flight operations.
“Consequently, all performance indicators such as revenue, seat factor, yield and revenue per available seat are all showing tremendous growth as compared to previous years while considerable reduction in operating and administrative costs has been achieved,” he claimed.
Adviser to the Prime Minister on Commerce Razak Dawood, while responding to a question about failure of Pakistan’s commercial councillors posted in different countries of the world to show tangible results, told the house that as many as 23 commercial councillors had been called back. He said that 58 individuals had been interviewed for the position of commercial councillor, of whom 43 had been selected and 35 started working. He said these officers had been given training and in the coming months would be given targets for promotion of exports.
The house will meet on Monday at 4 pm.
Published in Dawn, February 8th, 2020
Huge losses lead to closure of PIA’s Premier Service
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https://www.nation.com.pk/reporter/atif-khan
Atif Khan
December 11, 2017ISLAMABAD - Pakistan International Airlines (PIA) has closed its Premier Service after bearing huge losses in around six months.
According to the official data, total earnings for the service between August 14 2016 and February 8 2017 remained around Rs0.96 billion.
The loss incurred on direct operations was Rs1.14 billion while the total loss was calculated at Rs2.88 billion.
Premier Service had started on August 14, 2016, on the country’s 69th Independence Day with A330 aircraft on Islamabad/ Lahore-London-Lahore/ Islamabad sectors.
Tall claims had been made at the time of its launch that PIA would be transformed into a profit making modern airline.
The national flag carrier also announced better in-flight entertainment and many other features, including a complimentary limousine service for its Premier Business Class customers on their arrival at London’s Heathrow Airport.
It was told that in order to provide better quality services as per international standards- an aircraft had been acquired from Srilankan Airlines on wet lease.
Since, as per National Aviation Policy an aircraft cannot be wet-leased for more than six months, PIA’s agreement with Sri Lankan Airlines for wet lease of one Airbus A330 expired on February 09, 2017 and the aircraft was returned.
Explaining the huge losses, the management argued that the PIA fares were worked out to be increased in anticipation. However, owing to capacity glut the overall fare levels did not increase and PIA had to settle for the min fare range (all inclusive) of GBP 532-682 against competitor fare range (all inclusive) of GBS 520-670.
It was therefore decided that till the time PIA’s own fleet (B-777s) was upgraded with value-added services (Wi-Fi and flatbed seats, IFE) the Premier Service be suspended.
It is also worth mentioning that after suspension of Premier Service, the flight operation to London has not suffered. The premier service was on six frequencies out of total ten. PIA still operates same number of flights to London by its own fleet of Boeing 777s.
Officials claim that the airline was selected after a transparent bidding process. Tender for Wet Lease of up to (04) Wide Body aircraft was floated on May 19, 2016 and bids were opened on June 30, 2016.
Three bidders, namely Sri Lankan Airlines, HiFly and TAG Linhas Aereas De Angola participated in the bidding and after technical evaluation the evaluated bidder with the lowest cost per seat per Block Hour as per the tender floated was selected.
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Open skies policy caused Rs107bn loss in single year, Senate told
Iftikhar A. Khan Published February 8, 2020 35
PIA’s deficit has dropped from Rs32bn in 2018 to Rs11bn in 2019, claims minister. — APP/File
ISLAMABAD: The Senate was informed on Friday that the open skies policy cost the national exchequer Rs107 billion in a single year.
“The PIA’s financial crisis started with the advent of the open skies policy adopted in the 1990s and subsequent grant of liberal rights, particularly to the United Arab Emirates and other Gulf states. Approximately Rs107bn was lost by the national exchequer during 2017 as a consequence of allowing open skies/liberal traffic rights arrangement to the airlines of Gulf countries, including the UAE, Turkey and Sri Lanka. All the passengers of these airlines were the right of airlines of Pakistan, whose earnings otherwise would have contributed to the country’s economy,” Minister for Aviation Ghulam Sarwar Khan told the house during the question hour.
He said the authorities first adopted the open skies policy in 1992 upon commissioning of Jinnah International Airport, Karachi, which had been designed keeping in view the open skies policy.
The objective of the open skies agreement between two countries must only be based on commercial reciprocity and organic (point-to-point) market growth, as envisioned in the National Aviation Policy 2019, the minister said. However, in the case of Pakistan’s open skies with city states like Dubai, Abu Dhabi, Sharjah and Ras-al-Khaimah, it has damaged commercial viability of the airlines of Pakistan and adversely affected the national exchequer.
He said open skies policy was mostly adopted by either countries having insignificant indigenous traffic of their own or by city states that had no domestic network, like the UAE, Qatar, Bahrain and Singapore.
“For their airlines to survive and their countries to prosper, they seek liberal rights from densely populated countries. These countries seek unrestricted traffic rights for multiple cities in countries like Pakistan while offering only one point in their territory. For example, Emirates Airlines has permission to operate to 11 cities in Pakistan, whereas the airlines of Pakistan can only operate to one point in Dubai,” the minister said.
“The airlines of the UAE and other Gulf countries siphoned off sixth freedom traffic through their hubs for the UK, Europe, the US and Canada which otherwise was the right of Pakistani airlines or airlines of the country to which the passenger was travelling. With the adoption of liberal grant of traffic rights, the other airlines started robbing the PIA’s traffic share and the capacity glut resulted in dumping of available capacity on low rates.”
Answering a question, Mr Khan claimed that the national flag-carrier’s deficit had dropped from Rs32bn in 2018 to Rs11bn in 2019 and this was made possible by good governance. He said acquisition of new planes and making grounded planes operational also contributed to increase in revenue.
He said the PIA was passing through a dire financial state but the government was keen to make it self-reliant. “Efforts are under way to improve financial health of the corporation by reducing its losses/deficit through various means and modes... Despite facing difficulties, the PIACL has been able to improve its performance with an objective of reduction in losses.”
The minister said the major reason behind the PIA’s losses was the increased financial cost due to the loan legacy inherited from the previous governments and rising mark-ups and debt servicing. Moreover, a significant increase in fuel prices and devaluation of currency have also contributed to losses.
He said the decrease in losses was being addressed at two levels — enhancing revenues and curtailing costs. “Revenue side is being addressed by improving market share through realigning sales team, manning stations on merit, aggressive sales promotion, improvement in product and services, focusing on revenue generation through ancillary sources, mounting new flights and expanding on existing productive routes such as Saudi Arabia and Gulf.”
The minister said the cost curtailment side was being addressed through austerity measures and reduction in unnecessary administrative expenses, discipline and accountability in functions to tap leakages and wastage, cutting down loss-making routes and other ventures, route rationalisation and shifting operational facilities suitable to PIA flight operations.
“Consequently, all performance indicators such as revenue, seat factor, yield and revenue per available seat are all showing tremendous growth as compared to previous years while considerable reduction in operating and administrative costs has been achieved,” he claimed.
Adviser to the Prime Minister on Commerce Razak Dawood, while responding to a question about failure of Pakistan’s commercial councillors posted in different countries of the world to show tangible results, told the house that as many as 23 commercial councillors had been called back. He said that 58 individuals had been interviewed for the position of commercial councillor, of whom 43 had been selected and 35 started working. He said these officers had been given training and in the coming months would be given targets for promotion of exports.
The house will meet on Monday at 4 pm.
Published in Dawn, February 8th, 2020
