April 24, 2007	Tuesday	Rabi-us-Sani 06, 1428

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ISLAMABAD, April 23: The government is considering a major initiative to replace Pakistan International Airlines (PIA)’s ageing fleet of over 40 aircraft, except 13 or so Boeing-777 and smaller aircraft called ATRs.

The PIA “delayed replacing its old fleet too much,” Prime Minister’s Advisor on Finance Dr Salman Shah told Dawn.

He said most of the aircraft were purchased in the early 1980 and have completed their normal life.

“Except for eight planes of Boeing-777 and some ATRs, the entire fleet needs replacement,” he said.

This comes following a European Union decision in March this year

to bar most of the PIA planes from flying to the 27-nation bloc because of safety concerns arising out of decades old fleet.

The ban affected 35 of the airline’s fleet of 42 aircraft, with just seven Boeing 777s exempted.

Because of the EU ban, Pakistan has been losing dominance for flights from Europe to the Near East and Pakistan because Etihad Airways and Emirates were winning passengers for this route.

This led to replacement of PIA’s top management early this month aimed at saving losing business of PIA internationally whose operating losses had already crossed about Rs1 billion per month.

The government has since been exploring different options to revive the company.

Informed sources said a proposal for awarding management control of the national flag carrier to Qatar Airways aimed at improving PIA’s bad shape was opposed by the finance ministry and hence shelved.

The ministry said either it should not be called national carrier or it should clearly preserve its national position by remaining within national hands.

However, the ministry favoured a similar arrangement in case a Pakistani face comes forward.

It would, in fact, ready to support if a formal proposal comes from Prince Karim Aga Khan, who is currently in the process of raising his own airliner to tap emerging market in Central Asian states.

The two airlines could in fact synchronize each other with routes, business plans and infrastructure development.

Mr Shah said the maintenance and fuel cost of PIA’s existing fleet was almost double the cost of Boeing-777s Pakistan purchased a couple of years ago.

The new aircraft would be a combination of Boeings and European aircrafts depending on appropriate passenger capacity and long-route requirements, he said, adding too big aircraft may not be economical for long routes where PIA did not get enough passengers.

PIA purchased eight Boeing-777 (240ER, LR and 340ER) in the last few years and “are overburdened with flights to EU-states and other similar destinations,” Mr Shah said.

Five ATR42-500 are other relatively fresh smaller aircraft of 48 seat capacity.

At the same time, the government is also gearing up the privatization commission to privatize the unit for which the new management would need to play a key role.

Zaffar A. Khan is considered to have contributed significantly to the privatization of Pakistan Telecommunication Company Limited (PTCL).

Dr Salman Shah declined to say how much capital injection the PIA would immediately require saying it would depend on the number, size and timing of the replacement.

He said it would need to be decided if we could afford money injections again and again or to put the company on a sound footing.

PIA’s current fleet includes about a dozen 184-seater Airbus A310-300, five 48-seater ATR 42-500, seven 118-seater Boeing 737-300, two 398-seat Boeing 747-200 Combi, six 433-seat Boeing 747-300 besides fresh four 329-seat Boeing 777-200ER, two Boeing 777-200LR (310 seater) and two 393 seater Boeing 777-300ER.

The EU said in its March 5 order that it based its ruling on safety concern surrounding the condition of PIA’s fleet of 747s and Airbus 310s but had allowed the airline to continue to operate its flagship 777s.

PIA had taken a large cut in its domestic and Middle Eastern revenues after the government forced it to ground its outdated Fokker fleet following public protests over a plane crash, killing 45 people in July 2006 near Multan.