KARACHI, Oct 12: The Pakistan International Airlines has issued the following statement in response to a report published in the Oct 10 issue of Dawn, headlined 'Higher commission may bring huge losses to PIA':

"The appointment of a GSA/PSA/CSA is an industry practice subject to an airlines commercial viability. The appointment could be for single territory, for different territories or for a specific region, depending on the airline's requirement and, secondly, on the capability of the agent to provide required sales service coverage for the carrier.

"For the areas where a carrier is not interested in establishing its own set-up mainly due to the high cost factor, language barrier or the complex regulations of a country, it prefers to have an agent who can perform the required activities on its behalf.

"PIA has its PSAs working in different countries on behalf of the airline which has been a successful proposition for the carrier for many years on the basis of that experience, PIA appointed Golden Star Aviation as its CSA in 1998 for Belgium on their request.

In different phases, M/s Golden Star has been appointed as CSA for PIA's European territorial points based on the stations' improved performance. It was agreed in the 2001 agreement to allow Golden Star Aviation to also sell in Germany, Denmark and Netherlands, apart from France.

Later, they were appointed CSA for PIA's all European points to streamline the marketing and financial functions. "A commission of 7.5 per cent is an industry policy which actually comprises 5 per cent sales commission for the cargo agent and 2.5 per cent overriding commission to the GSA who provides extra services in this regard.

Productivity incentive has also been awarded to different cargo agents or shippers to optimize earnings according to the corporation's requirement. "The Kales Group are business partners of Golden Star Aviation and hence a bank guarantee from Kales Group is not an infringement of the agreement. Golden Star Aviation maintains its headquarters in Paris and has offices in different cities of Europe which work in collaboration with Kales Group.

"Regarding unreported airway bills, only six airway bills out of the total referred to were executed by Golden Star Aviation. All of them stand accounted for and settled.

"In accordance with the prevailing practice in the airline industry, commission is allowed on CC shipments. CC shipments are charged at published rates. These shipments are destined for defence departments which initiate a bill at the time of taking delivery of the shipment. This bill is taken as payment and commission is released to the agent on the basis of this bill.

"Evaluation and clearance of spot deal requests have been received from the concerned country manager which are evaluated at the head office and clearance of the same is always sent to the respective country manager. The said proposals are discussed with respective country/cargo manager according to the prevailing market conditions.

"Since the appointment of CSA in Europe, PIA has seen substantial growth in its cargo revenue from the European region. The positive results from Europe encouraged PIA to launch a twice-weekly freighter operation to/from Europe in 2003.

After the coverage of market by CSA, the operation was increased to four weekly flights in 2004. In 2005, the operation is planned to be increased to six weekly flights". According to Dawn Correspondent Arshad Sharif, the report was based on documents including internal audit reports.