ISLAMABAD, May 7: The Pakistan International Airlines (PIA) is “facing problems right now” in introducing the revenue accounting system, Quasar, contracted at a cost of Rs275 million. Asked why had the system failed to take off, PIA said: “As is common with systems of this magnitude and nature, we are facing problems right now.”

According to the initial plan, PIA said, the system was scheduled to start function on Sept 30, 2003, but due to logistic issues, the operation was delayed till May 2004.

The contract for the project was awarded to M/s Sabre, despite the fact that “the latest version of Quasar had not been tested in real life environment”.

The airline did not put any penalty clause in the agreement and get any bank guarantee from the supplier. It is learnt that PIA’s proposal for imposing a penalty for the late delivery of Quasar was opposed by M/s Sabre.

According to the work order for the project, dated December 20, 2002, shows that the entire risk relating to quality and performance of the equipment lay “with the customer (PIA)”.

Explaining the reason for not including a penalty clause in the agreement, PIA said: “As the system was acquired under our existing master agreement with M/s Sabre, inclusion of any additional clauses in the work order for acquisition of Quasar was not required”.

Till March 16 this year, PIA had paid an amount of Rs245.95 million in connection with Quasar while Rs28.54 million remained outstanding. Moreover, PIA had incurred $70,545 on account of “cost of free passages” provided to M/s Sabre’s personnel.

In reply to a question in this regard, PIA said: “We have released only partial payment to M/s Sabre and a sizable amount has been withheld. It would not be out of place to mention here that provision of free tickets to members of the vendor’s team is a normal practice in the airline industry.”

Answering another question, PIA said it was constantly in touch with the party (M/s Sabre) and they were making efforts to resolve all the issues. “A firm time-line is being developed in coordination with M/s Sabre to make the system fully functional,” said PIA.