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PIA and privatisation

October 09, 2013

ANYONE who has ever studied basic economics knows that in a competitive environment state-owned enterprises (SOEs) do not and cannot work.

Besides a few exceptions, almost all SOEs will be a drain on taxpayers no matter how much downsizing or rightsizing is done to correct their trajectory.

Pakistan International Airlines is a state-owned enterprise involved in the aviation business. The aviation business is notorious for being profitable for everyone associated with an airline except the airline itself.

The sooner our government extracts itself from this sector the better it is for everyone, especially the taxpayers.

Opponents of privatisation say that the airline is our national asset and should not be sold. According to my understanding, an asset is something which gives a return or increases in value over time.

In the case of PIA, its value is depreciating and it needs taxpayers - funded bailout on a yearly basis. In other words, it is more of a liability than an asset.

Fear of privatisation is basically a fear of the unknown, but the sooner PIA breaks the shackles of government control the better it will be for everyone. Having said that, it is essential that the sale is carried in a transparent manner and the taxpayers should get the most out of it.

PIA is a great organisation and the majority of its staff does not need to fear anything as they are capable of making PIA once again ‘Great people to fly with’.