ISLAMABAD, July 19: Pakistan International Airlines (PIA) has recently started charging $5 per ticket as surcharge to cover losses incurred due to default by travel agents.

PIA official Kamran Hassan on Wednesday told Public Accounts Committee (PAC) that the airline intended to create a revolving fund of $5 million through levying this surcharge.

The national flag carrier’s management took this innovative decision after a number of its agents in different countries defaulted inflicting huge losses to the airline.

But the underlying fact, as mentioned by Auditor General Mr Yunus Khan, remained that PIA appoints unknown agents on basis of nepotism and favouritism, which eventually result in default. The auditor also brought out the hard fact that PIA is hardly listed with any of the renowned travel agents worldwide.

The airline decided to pass on this burden to the passengers.

The rationale, as given by PIA management, behind this decision is to be more aggressive in the market, to safeguard its interests and to broaden its selling base.

Mr Hassan believes that the burden passed on to the passengers did not matter much for them.

Some of the cases of default by the travel agents brought before the PAC included non-recovery of $80,244 receivable against credit sales from private agents in Rome, loss due to non- realization of Rs11.535 million from agents in Frankfurt, loss of Sri Lankan Rs1.946 million due to default by agents, non- recovery of outstanding $13,970 receivable against credit sales from travel agents in Dhaka and loss due to non-recovery of Rs0.445 million from agents in Amsterdam.

In most of the cases, credit was given to agents beyond their bank guarantees and the PIA officials concerned failed to properly pursue recoveries and initiate recoveries in time.

The PIA officials hardly looked to be willing to concede laxity on their part rather they tried to cover it up as risk associated with being aggressive in the market.

The airline management now says that it has put in place new criteria for selection of agents.

PAC asked PIA to provide a copy of the new criteria to the committee.