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A NEW plan is in the offing to bifurcate PIA into two companies and sell one of them to an international party. The plan would split PIA’s sprawling operations into two — creating an airline on one hand, and putting ground operations such as hotels, catering and ground handling in a separate compartment. The airline can then be sold off, while the other operations could be consolidated for sale later.
This is, indeed, a novel idea and it should be given the space to succeed. Earlier efforts to privatise the state-owned airline have come to grief because of strident opposition from the labour unions who fear mass layoffs, and, reportedly, even from the Ministry of Defence which has large interests in the airline. The concerns of the labour unions are well understood, and layoffs at a time of high unemployment should be avoided to the extent possible.
But all other considerations for retaining the airline as a national asset have now been overshadowed by the sorry state of the carrier’s affairs for a number of years now. The fact that the airline has a workforce of 17,000 for a fleet of 36 aircraft, 10 of which are grounded, is evidence enough of its inefficiency. The accumulated losses, that had crossed Rs186bn when the plan was originally formulated in January, have left the airline with a debt burden of Rs276bn. This has made debt service one of its largest expenditure heads after operating costs.
Having come this far, and stoked the embers of expectation, the government must now see through the successful implementation of the plan. Retaining PIA as a national carrier no longer appears workable, and if a viable path exists to divest the airline without sparking mass layoffs, then the plan deserves a chance.
It is also worth noting that PIA would be amongst the first regional national airlines to be successfully privatised. However, it is equally important that mistakes of the past with regard to privatisation be avoided. Principal amongst these is wasting the proceeds. Since the government is intending to raise almost $4bn via its privatisation plan this year, it is crucial that we have thorough transparency on how those funds are utilised. The law requires them to be used for drawing down debt, not for financing the current account deficit. This must be ensured. Frittering away hard-fought gains has been a national failing for far too long now.
Published in Dawn, September 28th , 2014
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Comments (45) Closed
Sep 28, 2014 01:05pm
If Govt. has the courage to Privatize the Air Line, why not try to cut down staff to curtail heavy expenses. This can be done by forming a Parliamentary Committee consisting of major 4/5 parties headed by Leader of the opposition. Terms of reference can be = Turn losses into profits of PIA= There must be a National Airlines free from political influence. Today PIA is the only Airline which operates directly from Pakistan to USA, Canada, UK and some other destinations where large number of less educated people travel without going through the transit arrangements. It will involve for all Pakistanis to obtain visas for various countries through which they have to transit. Deep thinking of all factors need to be exercised.
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Sep 28, 2014 01:19pm
We should not be selling off our national assets. However, massive layoffs and restructuring will be required to turn around PIA. Anyone who buys PIA is also going to do the same. So why can't we bring in top management from successful airlines and restructure the airline ourself?
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Sep 28, 2014 01:27pm
Hope this will improve PIA's services.
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Sep 28, 2014 01:28pm
Indeed its a novel plan for filling some one's pocket to great depths!
Privatization is not the Panacea!
Right size it, increase efficiency, get rid of all political appointees, get professional management...but all this takes efforts...so just privatize it ....and do the muk mukah...future generations will not forgive the current leaders for this blunder!
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Sep 28, 2014 01:36pm
Hard decisions are inevitable in the face of difficulties. So go ahead and God be with you. We want to see and travel with pride once again on PIA.
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Sep 28, 2014 01:57pm
It is a very sorry affair. However if such a step helps in improving the Airline's efficiency and image i.e. also country's image then one should go ahead with the proposals. It should, nevertheless made sure that the new emerging Airline does not come in any way under the influence of the country's Politicians which also means the President, Prime Minister and the Cabinet Members etc.May God strengthen Pakistan !!
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Sep 28, 2014 02:07pm
I sincerely wish your voice reaches the deaf ears!
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Sep 28, 2014 02:21pm
PIA was plundered mercilessly by the political elite (PPP and others) to increase its pay rolls by stuffing it with most incompetent personal via naked patronage. The PML (N) instead of redressing it is selling off to make more money via such deals, whither PIA that was built by the sweat blood and tears of the employees of Orient Airways and luminaries like Nur Khan. They built the great people to fly with with nothing but determination, hard work and dedication. I admire PML (N) they cannot improve and build but are master at selling off.
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Sep 28, 2014 02:21pm
No way. Just search for a new CEO internationally, one who has the experience and competence to make PIA what it was Once.
If the PM and his party continue with this trend we will find out that in the end the purchasers were Hamza and Party.
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Sep 28, 2014 02:24pm
How will this idea be sold to the Zardaris and Shareefs who fill PIA with their cronies in return for unquestioned election support? Marsoon marsoon PIA na desoon!!. Democracy is the best revenge, remember?
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Sep 28, 2014 02:37pm
Post-1971 PIA is not even the shadow of the previous years.
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Sep 28, 2014 03:29pm
There is no greater country on Earth than Pakistan. In every category of national assets, we are ready to sell and to do that we will come up every novel ideas to make it happen... There are no new ideas. There are only new ways of making them felt.
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Sep 28, 2014 04:03pm
Sell the grass not the pasture. Imagine, a workforce of 17,000 for a fleet of 36 aircraft. In other words 473 personnel for a single airplane. Think, a Twin Otter in PIA's inventory carries 19 passengers and it requires 473 staff to support just 19 passengers on flight!
The 17000 workforce doesn't include ground staff of CAA and Shaheen Ground Services who give technical support like Air-traffic control, refueling, loading/unloading, connecting mobile stairways or jetways and driving the passengers to the airplane.
Down sizing the white elephant from political recruitment is the only solution to the PIA's miseries. To counter the backlash from labour unions, another National Airline needs to be established with almost same name (Pakistan International) The assets of PIA could be shifted or sold to the new airline gradually. Qualified staff on merit from PIA can be recruited at a steady pace. With time an efficient airline with right size of workforce will serve and present PIA and its useless and disgruntle staff can be retired.
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Sep 28, 2014 04:18pm
You are too naive and simple. Why PIA is in such a state; because it was planned for sometime. First Faryal Talpur wanted to buy it and now Nawaz wants to make money off it. PIA is one of Pakistan's assets and should not be privatized. All the efforts should be made to fail the plan of Nawaz to sell it and everyone should work hard to make it successful again.
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Sep 28, 2014 05:06pm
There some assets that should never be privatized. PIA and PTCL ,STEEL Mills, GAS/ELECTRICITY, PUBLIC TRANSPORT, HEALTH included. They should be run in parallel and in competition with private firms.
When PIA was at its best it was public/government owned. The difference between now and then is that then we had honest professional people working for the PIA. Now its political cronies of the ruling parties.
DO NOT; DO NOT privatize PIA. There are professionals still around who can bring PIA back to its past glory.
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Sep 28, 2014 05:09pm
Oh wow, what a plan! Lets privatize Pakistan too. Damnit! This plan, clearly is not for the betterment of Airline but to make money or some other reasons because if it was for the betterment then why can't the staff layoffs are done. Any new management will do this eventually, its inevitable. What difference does it make that some thousands joins millions looking for jobs.
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Sep 28, 2014 06:16pm
Incredibly humiliating... selling off the flag carrier! Yes, let's just give up on improving administration, thanks Nawaz.
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Sep 28, 2014 06:38pm
its unbelievable. I'm it is so obvious. the buyer knows that the "other business" of the PIA is the money drainer and a problem for them & hence the condition to remove it from the core business. Who in world will buy you no money making non core business? Why not PIA do the separation and outsource the core business to some pvt entity.?
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Sep 28, 2014 06:43pm
Why don, t you increase the number of planes from 36 to 136 and take advantage of the passengers present in the market with a better management and brighter vision.
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Sep 28, 2014 06:53pm
"thorough transparency" is unimaginable with this family rule. Even my little mind can get this much!
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Sep 28, 2014 07:28pm
This all is being done to earn and fill own pockets with the heap of money.If the privatization is the mere solution, then whole Pakistan should be privatized.To avoid own incompetency, govt is taking these steps. Pak needs to wake up now
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Sep 28, 2014 07:34pm
There is a third option possible. Lets give the ground service to some other country, too. As that also requires some administrative abilities whcih we do not have to begin with, otherwise we could have run our own airline ourselves. The third option is only to keep the supplying of passengers to PIA. Which we can always do even if we have to put a clause in the passport that one must fly by PIA.
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Sep 28, 2014 07:50pm
PIA should be sold to the current employees of PIA. These employees/owners will be solely responsible for maintaining, managing and operating the airline. Inshallah, we will all see how the airline turns around and becomes profitable.
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Sep 28, 2014 08:36pm
The novel plan is to give the best part of PIA to the foreign bidders and retain the sick part. NO part of PIA should be sold. In order to fulfil his craze of selling countries assets than Nawaz Sharif may sell the Raiwind Palace. The CJ must take notice and stall its sale like Ex-CJ Ifthikar Mohammad Chaudhry stalled the sale of Pakistan Steel. Its management be handed over to the PAF for revamping and running the airline bearing Pakistan's flag.
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Sep 28, 2014 10:13pm
As reported earlier if other airlines in the Gulf are primary contenders for pia, this will likely be the end of the airline. Gulf airlines are mostly successful enterprises
Successful corporates will frequently buy out smaller competition to consolidate their business. Since pia's routes compete with them, the likely scenario will be to replace pia's routes with their own and maybe keep a minimal presence within the country and even that if profitable. I feel this a very poorly thought out plan or a very conniving one. Either way not the best for our country
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Sep 28, 2014 10:49pm
Generally speaking PIA is a reflection of whats happening in Pakistan. As in the banking industry now its the turn of the aviation industry.Few decades ago it was the Pakistanis who set up the banking and aviation industries in the present day UAE. Now they gonna buy us out.
Its like in the state of Florida in the US where people take in tiny pet Anacondas and put them in their basements. They feed them and raise them like any other domestic pets. Soon these Anacondas grow up into their natural state and if one is not careful,usually there first big meal is the host itself.
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Sep 28, 2014 11:44pm
What are these people are talking about national asset - in USA there is no national or flag carrying airline. It is a business should be run like a business - business to make money and serve people in the best interest of the people who are paying for the services. not in the name of national pride and VIPs rich Pakistanis, army generals and political leaders are using it as their personal airline. PIA aircrafts takes off when they are ready not what schedules is. If Pakistanis really wants to progress - there should no business run by the government except defense of the country and government affairs at domestic and international level. Period.
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Sep 28, 2014 11:46pm
Excellent editorial. Until Pakistanis realize that there is no free lunch, Pakistan will continue to slip further and further behind the rest of the world.
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Sep 28, 2014 11:54pm
@One Nation The question asked has been answered so many times. The short answer is : Take a good look at the political set up in this country.......what you suggest CAN NEVER HAPPEN.
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Sep 29, 2014 12:52am
Please Invite , take,,value and implement some recommendations from the top executives of our friendly competitor Etihad Airways for improvements in Pakistan International Airlines . Learn , how Etihad has become the most efficient,fastest growing airline of the region.
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Sep 29, 2014 12:56am
The employees were given jobs based on nepotism. Not all but according to sources I can not mention. That is the case. The people who abused their power are in opposition today. They will do anything to ensure these guys will keep their job.
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Sep 29, 2014 01:49am
I am an avid supporter of the opinion that "This is, indeed, a novel idea and it should be given the space to succeed." The writer of this line is adequately acquaint of the gory consequences if we apply any other solution instead of privatization.
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Sep 29, 2014 01:52am
@xpakistani. Compare Pakistan with USA only in the sale of National assets.
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Sep 29, 2014 02:33am
@John British Air was privatized. So was lufthansa, Air France, KLM, IBeria, Swiss, etc. etc.. Maybe you should research their improvements post privatization before passing comment
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Sep 29, 2014 03:41am
Create another national carrier. Shift all good assets including aircraft, facilities and people to the new entity. Let the existing one rot and die. Simple as that.
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Sep 29, 2014 04:09am
It should not be sold.
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Sep 29, 2014 04:53am
It's a shame, nuclear power, nation of 240 million strong Muslims and without national air line.
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Sep 29, 2014 04:56am
@Syed Ahmed
Syed I do not believe that this commercial institute to be handed over to PAF or any other branch of military because there are many big business minds available to take this airline out of its problems. The military personnel are not trained to generate revenue and profits, nothing wrong with it, but for a commercial organization a business mind is needed. Most importantly there should not be any political influence involved so that many of the hard decisions may be made.
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Sep 29, 2014 05:05am
@Syed Husain
No no and no because these are the very people how have gained positions in the airline through political and other connections and are the reasons for the destruction of this company. They are least interested in the success of the company but just in perks, salary and what ever they can make on top through illicit means. I know this because it was my father who is among the founders of this airline.
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Sep 29, 2014 06:23am
"17,000 employees to operate only 36 fleet(out of 36, 10 grounded)". If you do math, there are over 650 employees per fleet, looks to me is a highway robbery. The CEO(Administered by ministry of defense and PM is the chairman of the administration) must accountable for his incompetent business model which caused taxpayer billions in lost.
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Sep 29, 2014 06:34am
People might not know who actually destroyed PIA.
Late General Zia Ul Haq and three times prime minister Nawaz Sharif and his associates,specially biggest crook Shahid Khaqan Abbasi .
Extremely ill informed people about aviation business, blames ratio between aircrafts and staff.
PIA have the worst scheduling in the world, wrong route planning, ineffective marketing, zero customer service ,no route planning, no fleet planning.
PIA marketing & sales staff does not generate a single cent revenue for the carrier.
PIA is closing its offices ,online and offline.closing its operating stations(gold mines).
PIA is in wrong hands right now.
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Sep 29, 2014 08:08am
Mushraff is responsible for current position of PIA . In his era PIA and other industries suffered the most .
Electricity crisis is also a gift of Mushraff .
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Sep 29, 2014 10:53am
@M. Emad exactly. The beginning of black period when ZAB took PMs office & started misusing national assets add they belongs to his forefathers.
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Sep 29, 2014 12:16pm
Give them an opportunity and these politicians will sell off your nuclear assets as well - of course if the price is good. Shame on you politicians. In medicine, we amputate when gangrene is confirmed to save the rest of the body from rotting - the same needs to be done to PIA - Sack the cronies and PIA will be back to glory - Inshallah.
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Sep 29, 2014 12:46pm
I am all for selling the airline. In fact they should seel it to Sir Richard Branson. He'll transform it within a year.
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