Political interference, lack of professional leadership behind PIA's chronic losses: audit report
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A 10-year special audit report of the Pakistan International Airlines (PIA) presented in the Supreme Court on Tuesday attributed the national carrier's chronic losses to a lack of "professional and experienced leadership".
Prepared by the Auditor General of Pakistan (AGP), the 500-page report identified the last decade's worth of losses incurred by the PIA, and also ascertained the reasons leading to it.
The carrier's accumulated losses in 2009, according to the audit report, were Rs73bn, which had snowballed into Rs 360.39bn by 2017.
The audit report gives a break-up of all the factors that contribute to the PIA's annual losses and poor financial performance such as inefficient fuel management, unnecessary expenses on crew, performance of subsidiaries, poor supply chain and contract management, inefficient engineering and maintenance department among others.
However, the report holds the carrier's top leadership as the main reason for the company's troubles, stating: "PIAC has been run like a non-business entity, governed by the non-professional BoDs, managed by CEO lacking industry specific experience."
To improve the airline's performance, the audit report made several recommendations, chiefly among those were the appointment of CEOs and MDs on merit and putting an end to "unnecessary interference from government".
The report further advised that the "National Aviation policy, ASAs with Gulf and Turkish Airline be reviewed" and "efficient and dynamic BoD be constituted to turnaround the airline".
The top court asked PIA to submit a reply on the report within a month.
The audit reported was submitted in the apex court following it's June 2018 directives to do so during the hearing of the PIA corruption case.
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Comments (38) Closed
Oct 02, 2018 01:45pm
To be honest its not a revelation as anyone can see when you have friends and families appointed in top positions then it is destined to fail. The abuses carried out by officials and private use of PIA is also a contributory factor. Time to change. Thanks to PTI for ending private flights, first class travel for officials and looking to appoint new board.
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Oct 02, 2018 01:46pm
This is the same airline which helped Emirates, Singapore airlines who are now top airlines in the world and PIA at the bottom.
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Oct 02, 2018 01:49pm
Really?Does this come as a big surprise to anyone?
Some of us have been saying the same thing about PIA since the 1990s.
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Oct 02, 2018 01:50pm
As an Airline professional I can say that this move is absolutely correct. I fail to understand why PIA must import senior management from other sectors such as oil & gas and telecom. This is a complicated industry and must be lead by aviation professionals. The same applies to the middle management as well. The managers appointed to execute the sales and marketing strategies must be analytical in mindset and should position themselves in the center of customer experience, sales and analytics.
International routes must be re-analysed to see where the 5th and 6th freedom traffic is headed, which would help in development of new routes based on volume and yield.
SABRE should be discontinued and substituted with internally developed window based system to save billions annually.
Digitalization of distribution channel is a must to tap into the online market.
Integration with portals via API is necessary to expand product visibility.
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Oct 02, 2018 01:54pm
"The top court asked PIA to submit a reply on the report within a month."
And who at PIA will compile this reply? The very same unprofessional, untrained and inexperiened political appointees, who will no doubt, refute every word and finding of the Audit Report?
Insanity is defined as doing something over and over in the same manner, but expecting different resutls. The outcome of this exercise, after considerable expense, no doubt, will be to allow PIA to continue as usual without any changes to the top leadership or the business service model.
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Oct 02, 2018 01:58pm
Back in 2015 PIA published an advertisement to recruit the fresh talent for the air crew, hundreds of applicants were called for the interview,after the letters for the final interviews were dispatched the interviews got postponed for indefinite period of time by the management and are still pending, no official intimation to the applicants has been made by the management regarding the cancellation or further pendency of the recruitments
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Oct 02, 2018 02:00pm
Its very easy to point out weaknesses but one should realize that being state owned and Peoples airline, PIA have always covered those routes where no other airline would go due to profitability reasons.. I am against over staffing and political appointments but they are not the real reason of losses PIA is having.
Haj operation is one prime case where PIA has to incur huge costs as Plane takes millions of passengers one side but is brought back empty and the same cycle is repeated when Hajis have to come back.. its a state responsibility and can't be compared with COMMERCIAL airline operations..
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Oct 02, 2018 02:35pm
Ten year "special audit report"? I could have said this ten years ago in 30 seconds.
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Oct 02, 2018 02:47pm
Will killing few goats in runway will help PIA revive? Simply disgusting. In which world you guys are living?
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Oct 02, 2018 02:55pm
PIA the incurable cancer ....!!!
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Oct 02, 2018 03:12pm
Shaheen Air already suspended its operation due to inability to pay its debt. Air Indus, Bhopal, Aero Asia , Hajvairy has also wind up its operation. PIA and Air Blue are struggling big time, it’s also time to question CAA Pakistan to review its policies that why airlines are not flourishing in our country
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Oct 02, 2018 03:32pm
Appointment of CEOs and MDs on merit and putting an end to "unnecessary interference from government", is what no government can ever agree because, that is the only reason all the people in Government live for.
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Oct 02, 2018 03:56pm
Shut down pia
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Oct 02, 2018 04:01pm
Privatization is the answer.
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Oct 02, 2018 04:11pm
I am sorry but everyone in Pakistan knows it. How is this a newsworthy item?. What I would really like to hear is how we are going to improve it?.
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Oct 02, 2018 04:20pm
It seems this time short comings will be sorted out.
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Oct 02, 2018 04:24pm
I belive the govt will bail them out and help them start on clean slate. I agree that open skies policy will need to be reigned in.
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Oct 02, 2018 04:32pm
This is not the only national airline suffering from mismanagement and political intervention as other are dead or going to die like Air India. To privatize PIA has to be converted from lose making into profitable institution by swallowing bitter pills.
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Oct 02, 2018 04:51pm
PIA has some of the best routes direct into Pakistan. I am absolutely certain that majority of them are or would be profitable. I live in London and PIA is the only airline that offers direct flights to Lahore. I always used to travel on PIA but have now switched to Emirate/Etihad due to some bad service experienced on PIA. A PIA flight to Lahore is approx. 7.5 hours compared to say Emirates (with a stop over in Dubai) approx. 12 hours. I would love to travel on PIA if they could improve the service. All PIA needs is a competent management who has the vision and experience to run the airline. Believe me Emirates/Etihad etc. would not be able to compete with PIA on the direct routes into Pakistan. Please run it like a proper company!!!
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Oct 02, 2018 05:08pm
The Airline who trained today's world top class airline now on the verge of destruction because
of incompetent management, un-qualified staff and political interference. Hire Competent staff,
Qualified management and no political appointment can make this organization back on track.
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Oct 02, 2018 05:10pm
Somethings to consider
American Airlines 950 planes-34000 employees
PIA 30 planes- 18000 employees.
No one is willing to address “elephant in the room”
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Oct 02, 2018 05:30pm
The Airline who trained today's world top class airline now on the verge of destruction because
of incompetent management, un-qualified staff and political interference. Hire Competent staff,
Qualified management and no political appointment can make this organization back on track.
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Oct 02, 2018 05:44pm
Like all other fields. How can this be different?
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Oct 02, 2018 05:50pm
@akber_eh Reasons you have mentioned of the losses PIA is incurring are correct to some extend. our nabor country India also do the same on the Hajj Days but their airline is still doing good business and making profit on the same root.
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Oct 02, 2018 05:52pm
I agree with the report yet I am surprised that Labor Unions at PIAC are not mentioned in the audit. I believe if airline is privatized and the unions are banned as well as an able leadership is at the helm this entity can turn-around.
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Oct 02, 2018 06:11pm
Auditor General's report on PIA's near bankruptcy submitted to the Supreme Court is not surprising. Both PPP and PML governments are guilty of meddling in PIA matters, giving thousands of jobs to political "jiyalas", appointing MDs who had no experience in aviation. Leaders of these political parties were responsible for PIA's failure and should be held accountable and punished, for the destruction of the once proud national flag carrier. PIA had created Emirates Airline by providing its aircraft, pilots, cabin crew and management. Emirates first historic flight was EK600 Dubai to Karachi in October 1985. Today Emirates is considered one of the best airline in the world.
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Oct 02, 2018 06:24pm
A very sad & unfortunate news exposing the hollow slogans of “Roti, Kapra, Aur Mayan & Qarz Outro Aur Mulk sunwaro” by two major parties rule during last 10 years. It is disgusting to note that this Rs. 360B+ losses occurring nonstop during their tenure & as audit report says the air carrier was being run in a non businesslike manner. It is disgusting and deplorable to watch how a vibrant and efficiently run airline has been brought to its present pathetically sick state through loading it with unnecessary politically appointed labor force, incompetent MD,s CEO,s, & BOD, having no background in this highly competitive business. The constant sore point of our failing economy has also been picked up by the visiting IMF team asking the govt. to come out with a plan to circumvent this constant outflow of funds towards upkeep of this loosing public sector entity.A politically difficult task to privatize, resulting in layoffs & compromising formal security of our airports/vital installations
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Oct 02, 2018 06:38pm
Why do they need a team of auditors to come up with this revelation? This is known to all that political interference, lack of professionals at the key positions, nepotism and corruption are the main 4 reasons for all the problem not only in PIA but throughout the country.
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Oct 02, 2018 06:44pm
You can think this report as a template and keep changing word "PIA" with othes like "Steel Mills", "Railways" and so on. Most part of the report will sill be relevant. We are running business as a business but eating it like father's property. You know the result.
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Oct 02, 2018 06:53pm
@HAYAT .you are to the point absolutely right, first ask CAA and review it's policies then check airlines,PIA excluded of course.
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Oct 02, 2018 07:04pm
@akber_eh
But they charge twice as much as normal fare on hajj flights.
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Oct 02, 2018 07:14pm
@Haider Khan that’s absolute true. We have PCB run by journalists/beureaucrats/politicians,health run by politicians same goes in aviation and the story goes on. As long we keep our friends and family in these institutes it will continue. PPP PMLN have ruined the country for their personal benefits. I hope and expect PTI does not follow the same trend
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Oct 02, 2018 08:51pm
Salam Sir: My humble suggestion that we engage a professional accounting / consulting firm to devise "turnaround" strategy". Usually their fees is a % of the income earned based on their strategy. They take the role of CEO / COO and run the organization the way they feel appropriate, and bring on the table the agreed / targeted results in a period of time.
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Oct 03, 2018 01:29am
The air line is run as if it belonged to the x prime minister , and the top officials of the country, no professionalism,no sense of duty , bunch of inefficient people, time has come when everything must be set right, corruption must come to an end.
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Oct 03, 2018 02:35am
A couch potato will never win a marathon.
No organization will function efficiently if there is no requirement to make a profit, and taxpayer money is always there to bail it out. You can blame it on management, government or aliens. This fact is true of government departments around the world - they are the most inefficient organizations in any country.
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Oct 03, 2018 03:35am
Cut down the perks and the luxury of the pia staff and improve the services of the passengers .stop the delays in flight operation , delay in more then 10 minutes should be a cause for show notice to the ground staff and crew .the flights reaching America USA are always delayed , costs a lot of money to PIA , keep the passengers overnight in hotels and the extra price they have to pay for the parking space,so the flight looses money , instead of making money.will some one look into it.
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Oct 03, 2018 05:06am
No more free ticket , no more quota,get rid of excessive surplus staff.
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Oct 03, 2018 08:17am
This was known to the previous governments, so this is nothing new. PIA is treated just as any other government department where political governments induct their workers. Unless PIA becomes non-political, it will continue to incur lossess.
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