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Same formula: PIA’s problems


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A SUPPOSEDLY professional, apolitical management is in place now, but old habits die hard it seems. The formula to make PIA profitable again appears to be the same regardless of how political or non-political its management. The struggling airliner asks for a fistful of cash as an emergency bailout. It usually wants the fanciest of new aircraft to operate and a grotesquely bloated employee count is one of the items on the priority list. In addition, or perhaps linked to that last point, a political heavyweight or two in the incumbent government remembers relatives or friends employed by PIA who were treated unjustly, obviously by the previous government, and those heavyweights make it their business to right the wrongs done unto their near and dear ones. So it is that two brothers of Senator Mushahidullah Khan, the PML-N information secretary, have been retrospectively promoted in PIA and the family believes that an injustice has been righted.

In the larger scheme of things, especially for a top-heavy, massively overstaffed organisation, the promotions of the senator’s brothers may be a small affair but it does suggest that a true shift in institutional culture, both on the political side and in PIA, has not yet taken place. And surely, putting aside the PML-N’s pledges about transparency and a by-the-book approach for a minute, that cannot be a good thing for either politics or airline business.

Yet, the broader issue is of PIA’s survival itself. Having asked for Rs16bn and drawn up a wish list that the government is supposed to pay for, the new management of the national carrier has been given Rs7bn. Was either the demand — for Rs16bn — or the actual bailout sum — Rs7bn — grounded in a viable plan? The demands for emergency cash infusions vary. Sometimes it is Rs20bn, at other times it is several times that for new planes; then again, it can be a smaller sum to allow the airline to keep its planes up in the air for the next few hours or days. But the basic questions are never really answered. Is PIA’s immediate problem that the average age of its fleet in service is 16 years or the fact that it has 18,800 employees for the 24 planes it operates, an employee-to-plane ratio of more than four times the global average of profitable airlines? The un-happy truth is that for all the red on PIA’s balance sheet, the airline has learned that it can milk the government endlessly.

Comments (11) Closed

gamal Jul 17, 2013 09:46am

Why the government is running an airline in the first place? Isn

Naeem Syed Jul 17, 2013 02:50pm

About a week ago I wrote this in The comments Blog regarding the latest free meal that the ECC had given to the PIA. The the ratio of about 800 employees to each operating Aircraft was the main reason for PIA's chronic financial problems and not the myriad of other reasons that the Board is always belly aching about. The solution was to run it like any other profitable business is run and the ECC should have made it a condition of the bail out to follow at least these guidelines. 1. Within 30 days to offer buyouts to at least 10% ( 2000) non essential Staff. 2. Every Quarter for the next Year at least 2000 given buy outs . 3. No more pensions, No more free Air travel. No free Transportation. 4. Existing Pensioners option to take a comprehensive buy out or Pension stops in 5 years. 5.Absolute freeze on Hiring. 6. 100% computerization of all aspects of operation to stop financial malpractice. 7. Immediate replacement with new ones of all uneconomical aircraft on Dry leases. 8. Improve service, Security , and Service on a War footing. 9.Replace the more complacent older Cabin staff with younger and energetic cabin Staff. should be aware flout these conditions and you face 10 years in Jail.

These draconian measures have to be taken in order to make the airline profit again otherwise guaranteed it will go the way of the Pakistan Railways. Give this Airline to me and this is what i would do. Absolutely.This is not the time to consider Political lash backs it is a time to do all the above with a smooth and even hand. The Unions should be there to protect the workers but enjoy too much unnecessary Power. I appeal to these Union heads to put the National Interest ahead of their own to help revive and rejuvenate the National Flag Carrier. If the Airline is put out of business what are they going to with their members.Protest? I could go on for another hour.

Aiman Kay Jul 17, 2013 08:40pm

@Naeem Syed: It seems you are an insider. Why don't they give you the job?

Irfan Jul 17, 2013 10:08pm

What continues to amaze me is nobody mentions the Human Resource Management as a solution to help ailing organization gain sound footing. Suggesting a curtail of staff and bringing it within a reasonable ratio is one of the solution but the problem goes deeper than that. PIA is perhaps only organization where education and expertise are not valued in the literal sense. A shallow look at different departments in organization will reveal that people occupying positions of power & authority are normally the one's having least educational qualification. The more educated and talented are often left languishing at the hands of HR malpractices. Brain drain is a natural consequence.The bread winners of the organization are often seen leaving for greener pastures. The newly inducted enter PIA with an intention of gaining valuable aviation experience and leave for Gulf carriers. Human Resource is considered the most valuable asset in an organization and if taken in literal meaning contributes to the wellbeing of the organization. It works on the simple premise, "give to organization, and the organization will it back to you". I say have the right Strategic HR practices at PIA and you will see the rewards.

Akhter Husain Jul 17, 2013 10:28pm

The editorial rightly pointed out that "But old habits die hard"We,as a nation have become demanding and demanding nation with no care for producing and generating one.We need men like Noor Khan to get the air line back to a profiting and competitive business institution.The gimmickry of politicians will make things even worst.

non digital Jul 17, 2013 10:45pm

@Naeem Syed: Your suggested measures are all fine. But they will never ever happen as far as it's a state run airline. You know what, even if Govt. try to start only first one or two measures, all staff will be on roads. Strike strike strike bla bla. PIA MUST BE PRIVATIZED. There is no other solution. And while selling it, the buying should be carefully selected. I am sure top MEA airlines like Emirates, Etihad etc. will buy it and it will grow again. It will boost the aviation sector of Pakistan without any burden on the economy.

TAM Jul 17, 2013 11:11pm

With the same set of vultures at helm in PIA, who will give another power point presentation and another new Business Plan, which they have been giving for two decades now, this Rs7.5billion will go down the drain. You need to either sack at least 500 people responsible for all this mess, than terminate services of all those involved in crimes and submitted fake degrees. If Govt cannot do that, close down PIA and follow what Philipine Airlines did.

Khalid Jul 18, 2013 02:02am

@Naeem Syed: Couldn't agree more. I was shocked to see the figure of 800 employees per aircraft. No wonder it has been a disaster. US Airways employs 63 people per aircraft !!. I would just like to mention one more thing. I believe 80% of the currently employed people in PIA have not been through any screening and are only there because of nepotism, which has been eating the airline for many decades. PIA needs to employ people on the basis of MERIT, a word we have long forgotten the meaning of in Pakistan.

Mac Jul 18, 2013 02:55am

Need less then 5000 employee to run the air line with modern technology and bring on positive changes to the airline which will improve 15% profitability year on year for the National airline career - There is no rocket science its pure proper management with efficiency driven systems .

Abdul Rashid Jul 18, 2013 03:19am

Mushadullah is senator for PML N is lucky he got one ticket for National assembly for family, now promotion for his two brothers, will PIA survive or going to be closing.

Muhammad Musa Jul 18, 2013 06:27am

There are three air lines operating in Pakistan, of Pakistan origin, I am almost certain those can not be running below break-even. I know they have added new wide body aircrafts, recently. What magic they are doing.