ANALYSIS: New player’s entry into aviation industry amid pandemic termed bold

Published December 10, 2020
Prime Minister Imran Khan at the inauguration ceremony of AirSial in Sialkot on Wednesday. — APP
Prime Minister Imran Khan at the inauguration ceremony of AirSial in Sialkot on Wednesday. — APP

KARACHI: While the country’s three operational airlines have been taking cost-cutting measures against the backdrop of a crisis that the global aviation industry has been facing since the outbreak of coronavirus, the decision of AirSial to enter an already saturated market is being seen as a bold move that may give a tough time to competitors but will benefit the people.

The market situation can be gauged from a recent report of the International Air Transport Association (IATA) predicting that airline revenues this year will plunge by 60 per cent as a result of the coronavirus pandemic that “threatens the survival of the air transport industry”.

Pakistan’s commercial aviation sector is no different from the rest of the world as its airlines are taking drastic measures, including job cuts, for their survival.

Operation of three airlines suspended in recent years

RPT licences

Over the years, the Civil Aviation Authority had granted Regular Public Transport (RPT) licences to many airlines. Some of the airlines went out of business like Aero Asia. Currently six airlines — the Pakistan International Airlines (PIA), Airblue, Shaheen Air International (SAI), Bhoja Air, Air Indus and Serene Air — possess RPT licences but only three of them are operational as CAA’s certified operators.

Issued by the CAA director general with the federal government approval for carriage of passengers and cargo services, RPT licence is only a permission to develop an organisation on ground. It is not considered a permission to operate an aircraft for which an airline must obtain an Air Operator Certificate (AOC) from the CAA. The CAA puts certain conditions that an airline needs to meet before starting its flight operations. A fleet of minimum three aircraft is the first such requirement for initiating passenger flights while one aircraft is needed for cargo operations. For getting an AOC, a company must register its fleet in Pakistan.

The CAA had earlier suspended the operations of Bhoja Air and Air Indus in 2012 and 2015, respectively, while SAI’s operations were suspended in 2018. Air Indus, which lost two aircraft in the 2014 terrorist attack on Karachi airport that led to suspension of its operations in 2015, says on its website it is planning to import three latest models ATR 72-600 to restart its operation shortly.

Domestic market

At present, only three of the six airlines — PIA, Airblue and Serene Air — are operational as CAA’s ‘certified operators’. The PIA and Airblue operate commercial flights on both domestic and international routes, but the Serene Air is yet to start its international operation.

The fourth one, AirSial, is set to enter the domestic market after it met the requirement of having minimum three aircraft, as its chairman Fazal Jilani is reported to have announced selling tickets after the formal inauguration by the prime minister.

While the entry of a new player will definitely provide intending passengers better fares and service, it will slash the revenue of the other airlines because of increased competition and capacity. Yet the old players did not shy from extending good wishes for the new entrant.

“We welcome development of the local aviation industry and wish AirSial all the best,” PIA spokesman Abdullah H. Khan said while talking to Dawn. “Competition is healthy as it improves products and services for the consumers,” he said.

Similar views were shared by Airblue that sees AirSial’s plan to commence commercial flight operation as a ‘bold step’.

“We welcome the new entrant in the market and wish them well. The aviation industry across the world and especially Pakistan is passing through a time never really seen before. To enter the industry is a bold step indeed,” said Raheel Ahmed, Airblue’s deputy managing director. “Competition in any field is good for the consumers. It improves the overall standard of service.”

Fleet size

The combined fleet size of Pakistan’s three airlines is less than 50 aircraft, whereas Emirates, the flag carrier of the UAE, possesses a fleet of 255 passenger aircraft alone and Air India, the flag carrier of our eastern neighbour, operates 172 aircraft.

The PIA spokesman said the airline had a fleet of 30 aircraft including 12 Boeing 777s, 11 Airbus A-320s and seven ATRs. Airblue has a fleet of 10 aircraft, all Airbus A320 and A321, while Serene Air has five aircraft including four Boeing 737-800 and one Airbus A330-200.

In the financial year 2018-19, a total of 3,002,554 passengers in the country used Airblue, PIA, Serene Air and SAI (whose operations were suspended by the CAA in August 2018 for failing to pay over Rs1.5 billion arrears).

PIA got the lion’s share as 1,795,877 passengers travelled through the national flag carrier, followed by Serene Air (875,536), Airblue (314,485) and SAI (16,656). A total of 18,470 PIA flights took off and landed on various country’s airports during 2018-19 followed by Serene Air’s 5,686 flight take-off and landings, Airblue’s 1,991 and SAI’s 155.

Aviation experts have been urging the government to rationalise heavy taxes on air tickets in order to make air travel affordable for more people. And restrictions imposed in the wake of coronavirus pandemic have already impacted the fragile industry badly.

As IATA director general Alexandre de Juniac had recently said that airlines “will have to continue to draw on their reserves until at least the fourth quarter of 2021”, there are slim chances that the local aviation industry flourish in the short term without government patronage.

Published in Dawn, December 10th, 2020

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