THIS week the Supreme Court was informed by the national carrier’s own counsel that PIA’s accumulated losses have risen to Rs119bn. This is a staggering figure even though it has been at least eight years in the making. In the nine-month period running from January to October 2012, PIA posted a loss of over Rs22bn, which had been Rs19bn in the corresponding period the previous year. The airline’s losses began in 2004 and have gathered momentum ever since, in spite of sharp increases in the cost of travel. The present authorities, through their counsel, have told the Supreme Court that they will not accept responsibility for the failures of past managements, thus implying that since the accumulated losses were largely incurred by previous PIA managements, no explanation will be provided for them today.

This is a deplorable attitude. Ever since the current losses started becoming apparent, the airline has been serving up one excuse after another to explain them away — all the while increasing passenger fares sharply. Last year’s annual report, for instance, blamed the losses on factors like “slow economic growth in developed economies” and “the Gulf countries, natural disasters and continued global recession” and the depreciation of the rupee. The latest quarterly results, filed in October from where the carrier’s counsel took the figure of Rs119bn in accumulated losses, add “turmoil in the Middle East, uncertainty about eurozone economies, stress on Pak-US relations” to the list. This is an old trick that managements typically use to explain their poor performance as they hide from the headlines. The board of directors has a duty to ask the necessary questions that cut through this fog of hype and zero in on the main issue: why are operating losses mounting in spite of passing the costs of rising fuel prices to the passenger? The fact that PIA has been able to include such diverse and frivolous reasons in its annual reports shows that the board of directors has not been doing its job of properly monitoring the management’s performance. Perhaps the Supreme Court should ask the board to explain.

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Comments (8)

Iftikhar Husain
November 17, 2012 12:40 pm
The editorial has correctly ponted the trouble in the institution it is upto the government to clean this mess which has been created by them. Everybody knows what is going wrong but there is no will to put it right.
November 17, 2012 10:20 pm
PIA's losses are due to two main factors: 1) PIA management is inefficent and is unable to manage this organization like a business, 2) since PIA is under the control of government, it has become a recruitment field for the politicians. PIA is overstaffed by incompetent and unqualified people. who only go to work to collect their salaries. In order to improve the performance, PIA should be sold to private firm for better management. Airline is the last organization that the government can manage.
November 17, 2012 8:11 am
Civil Aviation in India with Air India in the same hot waters, Kingfisher Airlines shutting down probably, in fact save for some of the Gulf carriers like Emirates, Etihad, Qatar Airways and others such as Singapore Airlines, Thai Airways and probably Qantas, the story is similar the world over. European carriers like Lufthansa, KLM, British Airways, TAP, Iberia, Alitalia are all struggling with mounting losses, or merging with other partners due to recession now, and in America the story is the same. Commecial Aviation is in a bad shape and has never recovered from the fuel price increases prior to 9-11, though that event was a kind of a last straw.
November 17, 2012 3:13 am
We have never seen a detailed report of why PIA is sinking. The report must entail all dimensions of Air Transport Industry and must start from home. Lame excuses must be excluded. We want to know details of short term and long term contracts, maintenance contracts, air craft buying strategy, future expansion plans,spare parts inventory details and buying plans, manpower over heads etc etc. PIA needs top class managers who are honest and smart. The present lot has rotted down to the bone and consist of corrupt cronies.
November 17, 2012 2:54 pm
Apex court is not the panacea for all our ills, it cannot be.
November 17, 2012 5:08 pm
Throughout the 1980's and part of the 1990's I always took PIA whenever I could - simply because I felt this would help our national airlines, and also it was nice to step into a Pakistani atmosphere as soon as one stepped into the plane. I stopped taking PIA about 15 years ago after I had the last straw with their useless administration that had once bumped my wife and children off from their reserved first class seats for which we had paid good money to make room for some Pakistani team or something; another time some PIA employee had called me in Islamabad and tried to get me to agree to take a later flight by lying about the flight I was going to take back to the US having "fanni kharabi". Privatize PIA. The government cant handle it.
November 17, 2012 10:07 pm
Lavish salaray structure, unjustifiable perks, pure nepotism in hiring employees, corruption, ...... endless list.
M. Asghar
November 17, 2012 12:25 pm
One does not need to dig deep to find the reasons for this dismal performance of the PIA establishment: complete lawlessness and lack of accountability as everywhere in the country's other institutions. Fortunately, the Apex Court is there to clean this costly mess. Let us hope that it would move here,too.
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