PIA Blames High Oil Prices and Rupee’s Depreciation for Rs. 2 Billion Loss

Due to increase in oil prices and depreciation of rupee, operating cost of Pakistan International Airline (PIA) has increased. Due to this, the airline is incurring a loss of Rs 2 billion per month, said Secretary Aviation and acting Chief Executive Officer (CEO) PIA Saqib Aziz.

“The accumulative loans/guarantees of the national airlines crossed Rs 400 billion and due to financial crunch, PIA has yet to pay salary to employees”, said Secretary Aviation while briefing the Senate Standing Committee on Aviation which met with Mushahid Ullah Khan in the chair here on Wednesday.

Aziz said that the government has taken notice of officials’ involvement in smuggling and money laundering at airports and constituted a high level committee to probe the matter and present recommendations for controlling such activities. The committee is chaired by Secretary Interior while Secretary Aviation, CBR and ASF officials are the members of the committee.

The committee was further informed that PIA did not comply with Stock Exchange by submitting un-audited accounts. The airline also did not call an Annual General Meeting (AGM) and was put on default notice. However, the airline will submit audited accounts in the upcoming board meeting and would call AGM in November.

The committee was further informed that currently PIA has a fleet of 33 aircraft, with 5 of them being grounded for general maintenance. PIA has around 16500 employees with 450 per aircraft ratio. It also continues to spend around 18 percent of its revenue on its employees.

The committee expressed annoyance while hearing that a telephone exchange is yet to be set up at the New Islamabad International Airport (IIAP). They were informed that Civil Aviation Authority has established a campus area network at the IIAP and installed an EPABX with 10,000 lines to cater the operational requirements of PCAA as well as all the stake holders working at the airport. Presently Public Telephone facility is not available at Islamabad International Airport.

The committee expressed annoyance over no alternatives, while PIA changed its passenger management software, leading to problems in bookings. The committee was informed that PIA has successfully migrated from SABRE to the next generation Passenger Services System (PSS) on 12th September 2018. This is a much awaited technology up-gradation, as PIA has been using the old system since last 18 years.

During the initial few days PIACL faced some small disruptions due to change of equipment and the issues related to training of staff. However, both the issues have been addressed and the results are encouraging. On the whole, the change has been very successful without even a single flight cancellation, major disruption or system shutdown.

The committee was informed that Sabre Inc. took all possible measures to disrupt PIA migration; they even refused to provide PIACL the data – which is the property of PIA. They refused to integrate major Global Distribution Systems (GDS) – SABRE International and SABRE Pakistan (Abacus), and declined to facilitate integration with partner/ code share airlines which are hosted on SABRE. To make matters even worse, SABRE Inc. took PIACL to courts on baseless allegations and threatened it, with the sole intent to jeopardize PIA business. Also with the non-cooperation on integration with their GDSs, SABRE has breached their other two agreements with PIA which had minimum segment bindings and exclusivity in domestic market. However, PIACL managed to get its data from their system and were able to fully transfer the data-to its new system seamlessly.

This change will not only renew technology, save cost in terms of PSS & GDS, but will open further possibilities to open up direct sales channels, additional & innovative services & facilities for PIA passengers.

The committee directed the Civil Aviation for a fact finding committee to find the officials involved in money laundering, smuggling and other immoral activities.