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Growing presence of foreign airlines


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Illustration by Abro

The Middle Eastern airlines may reap rich dividends of a growing aviation market in Pakistan as pilots of the local industry struggle unsuccessfully to assume control of the lucrative sector.

Heads down, people are waiting for the rough patch to pass, suppressing their fears of hard landing of the domestic aviation industry.

The actual size of the aviation market, value-wise, is not known, but background research threw up some interesting data. A senior official in the sector told Dawn that the total air passenger turnover in Pakistan is about 14.2 million in a year. International passenger traffic touches 7.6 million, 15-20 per cent higher, than 6.6 million domestic travelers.

The gap between the expanding aviation market and the troubled national aviation industry has sparked a controversy among the stakeholders (flight operators, civil aviation, business community, passengers and the government) blaming each other for the situation. It partially explains the delay in the announcement of the new aviation policy on which work started in 2005.

"The draft is sitting with the government. With a government swamped with so many issues so close to election, I don't see it inclined to open another Pandora’s box as it cannot afford to pick and choose between conflicting interests", an informed source in Islamabad confided.

Meanwhile, aggressive international airlines supported by their respective governments have increased their penetration in the growing market.

Pakistan recently allowed five international airlines to begin direct passenger and cargo flights from Sialkot International Airport. Qatar Airways, Fly Dubai, Air Arabia, Etihad Airways and Emirates would start their operations from Sialkot soon. The number of international flights to various foreign destinations from the industrial city will reportedly rise to 45 from existing 21 in a month.

The business community was thrilled. "The transport costs and the ability to respond to demand swiftly in a fast changing, competitive international market makes or breaks a business. Better connectivity will save local businesses time and money. Siakot will return favour by investing in modernisation of the airport and jacking up efforts to outperform their competitors in the international trade", Mohammad Azam, a businessman from Sialkot commented.

"Sialkot is a big commercial centre with a motivated business community. The decision is a step in the right direction", Zubair Motiwala, a known business leader said when reached over telephone.

The ministry that authenticated the government's decision, however, did not share the euphoria. The ministry of defence, responsible for the aviation industry, detested the move that, it said, was forced on it. It believed the decision compromised national interests.

"People will still be happier if you allow them to travel free but would you do that?" a senior officer in the ministry asked when contacted in Islamabad for comments. "The sound economic decisions are not necessarily popular", he answered without waiting for a reply.

"You have appointed bear to guard honey", said another official, mincing words, hinting at corruption among politicians. "The decision to allow airlines of 'brotherly’ Muslim nations the new pick up points has more to do with wealthy emirates ability to please political leaders.

Who in the world promotes others at the cost of his own interest? No one does. If PIA’s market has been served to others it should not be hard to guess why", he added, hinting at questionable deals of some politicians with rich Gulf States.

"Most of these rights are granted on the basis of reciprocity and after bilateral negotiations between countries. You have allowed Emirates to operate from several destinations in Pakistan. How many destinations can Dubai offer to your national carrier? If you can only use one airport because that's all they can offer you, is it fair to trade it for six?" a senior defence ministry official asked.

In support of his argument he quoted from the current aviation policy "Fifth freedom rights to be granted strictly on the basis of reciprocity, ensuring balancing of rights in terms of market value and that the commercial interests of Pakistan are not compromised. Selective concessions may be made for quality airlines".

In all 24 foreign airlines enjoy operating rights in Pakistan, flying 216 flights in a week against 352 flights operated collectively by national carrier PIA and private airlines Air Blue and Shaheen Air.

Attempts were made to contact foreign airlines granted facility in Sialkot but for Emirates none responded. In a short statement emailed to Dawn it stated: "Emirates operates from Karachi and other cities under rights granted by a valid air service agreement between the governments of UAE and Pakistan".

Some aviation experts mocked views of the defence ministry. They supported open sky policy that, they said, would be the starting point if the sector is to navigate a turnaround to economic viability and growth.

"What do retired generals know about business? If you ask doctors to build bridges and engineers to treat the patients it will not work", a former CAA chief said lamenting what he called "the presence of army men’s little finger in every pie".

"Why should people and business suffer for follies of others? If PIA is sinking with Rs154 billion accumulated losses, which are still piling up, it has not been managed professionally. We need to let it go down for it to rise again on sound foundations", an expert said.

"The competition will help. People deserve the right to choose. Yes, I believe an open sky policy will serve the country better", Farooq Rehmatullah, a respected retired corporate executive said.

"It is the growing middle classes, having comparatively higher propensity to spend than their counterparts in the region, which attracts businesses to Pakistan despite associated risks", a market watcher commented.

To realise the potential in the sector, Pakistan will need more airports, higher capacity, supporting infrastructure, finance and human resources. It would require consensus and collaborative approach between the government, industry and the public at large.

Comments (14) Closed

Masood Ali Dec 04, 2012 10:28pm
the army and airforce officers managing pia arnt the problem,its the the politicians who insist on giving their party workers jobs which are not necassary. pia is the only air line which has 3 times more staff per aeroplane than any other in the world.they cant sack or retire old and ugly airline hostesses.or aircrew, politicians use pia as thier own property.they or their family members dont pay.or any of the staff when they fly with pia.i agree with you on all the other points you mention.pia should be sold off,as bankrupt entity.
Indusonian Dec 03, 2012 06:24pm
One of the sisters of Mr. Zardari was planning to buy out defaulted PIA, but for some reason PIA did not file for that, let's see what is next.
Syed rizvi Dec 03, 2012 02:49pm
This is due to poor performance by PIA Pls, restore PIA please Privatise,privatise,before it is too late There is no other solution.
Ali Abbas Dec 03, 2012 04:39pm
Even though it might sound absurd, I will compare our airline industry with our film industry. Pakistani film industry produce bad product so foreign industry takes over. Pakistani airlines have shown time and again that they are unable to provide good service in a cost effective manner. There is too much military inflence and employees are rather corrupt and lazy. Unionized workers in PIA do not want to work, their service is horrendous and there is no accouintability. Let this industry die its natural death and perhaps in future start all over again. In the meantime govt should negotiate better terms with foreign airlines and force them to fly to some of the smaller destinations if they want to monopolize the bigger cities. Its not an unfair business model. Keep supporting national airline is like throwing good money after the bad.
Hornet Dec 04, 2012 04:36am
Well said, a very good observation.
Sam Dec 04, 2012 06:08am
Due to low revenue and low business many foreign airlines have already closed their operations permenantly from Pakistan including recent departure of Malaysian Airlines. The security,economic and investment situation in country is poor.
S. A. M. Dec 04, 2012 02:05am
Ofcourse when retired generals start to meddle in the affairs of aviation industry of which they have no inkling the national carrier is bound to nose dive. What is money to a secure air journey. Everyone would want to travel in an airline which is known for maintaining high security standards.
Eqbal Khan Dec 04, 2012 03:08am
PIA - Well Anyone who ever traveled with them will testify to their un professional conduct, poor service and arrogant staff. But what we cannot see is incompetent ground crew that steals stuff from peoples luggage. Breakdown of PIA aircraft is a clear evidence of ground crew's competence. What else? If you want to turn PIA around then you need to do the following: 1. Make it an independent corporation and not under the MOD. 2. Make Unions Illegal. 3. Take free tickets and passes away form the PIA staff. 4. Maybe Hire foreign competent Managers instead of Army and Air Force Guys. 5. Take Passengers serious. When there is a complaint then be ready to investigate. 6. Fire any and all the staff that does not work, takes long vacations etc. 7. Get rid of excessive staff and political appointees. 8. No more bail outs. Well This is too wishful thinking. It is not going to happen.
Ahmed Dec 04, 2012 01:23am
I am surprised at people who would argue against open sky policy. Let market forces determine who will succeed and fail. I think even CAA should be privatized. Imagine an airline that has more GM than aircrafts. Unions are nothing but a burden on a corporations in Pakistan.
Ali Ahmad Dec 03, 2012 02:29pm
Why are Pakistani's lamenting when they do not have the infrastructure to compete with foreign airlines. PIA is going down........running losses forever! People sing praises that it was once one of the best but.........the reality is different today. At least the presence of foreign carriers creates some competition and results in lower fares for people. Compare the fares from international destinations to Pakistan and you will know how expensive they are. Some years ago Emirates extended the runway at Peshawar Airport so that their planes could land there........surely you will have to return the favour in the form of lucrative deals elsewhere. Brings me back to the don't have the infrastructure........others provide it for you...........then you complain of unfair competition.
observer Dec 04, 2012 03:14am
I don't understand the sick minds that talk about not allowing foreign airlines to operate freely in Pakistan. Things should be open and business should be based on quality of goods and services through open competition. This mentality has ruined PIA and the country. It is very convenient to blame politicians for falling health of PIA. But a more thorough analysis is needed into the situation than starting with a bias against politicians. Pakistan is perhaps the only country where military government or technocrat government are options to Constitutional democray.
Ali Hasan Dec 04, 2012 07:34pm
i agree to you in totality mr. Eqbal Khan. success can never be achieved without professionalism. No doubt we have the best pilots in PIA but without proper aircraft, what good they can be as far as excellence in service is concerned. At the same time, management needs to be restructured and on all the points you mentioned above, not a single one is ignoreable.
Ussama Dec 04, 2012 07:37pm
What can anyone expect from the only airline in the world which is run by Ministry of Defence. Decision makers, be it army men or politicians who decide about the airline, have no clue of aviation. The results are obvious. The airline cannot be run like the way it is being run and having hopes of betterment are a far cry. National airline can only breathe if army lets it, and politicians stop choking it through political appointees and unions.
Riaz Dec 10, 2012 04:40am
how come the army and airforce personel operating PIA not a problem? have u ever worked in PIA or CAA? if u had, u would know how much power these uniformed ppl have in these organizations. Not everything is polotician's fault in this country.