New Report Reveals Policy Decisions That Nearly Destroyed PIA

A National Assembly subcommittee has completed an investigation into the decline of Pakistan International Airlines (PIA), concluding that years of policy failures, financial constraints and inconsistent management were among the main reasons behind the national carrier’s deteriorating performance.

The report, prepared by the National Assembly Standing Committee on Privatisation’s subcommittee under the convenership of Sehar Kamran, has been submitted to the National Assembly Secretariat. It identifies several factors that contributed to PIA’s financial and operational decline and proposes policy changes to improve the airline’s competitiveness.

According to the report, heavy taxes on the purchase of new aircraft and spare parts further weakened PIA’s financial position, while Pakistan’s Open Skies Policy caused significant operational and commercial losses. It said granting foreign airlines extensive traffic rights reduced PIA’s share of the international market from around 50 percent to just 20 percent.

The report also highlighted the airline’s aging fleet, stating that only 19 of PIA’s 30 aircraft are currently operational. It added that only six of the airline’s 12 Boeing 777 aircraft remain in service, while the other six are grounded because of financial constraints. The committee further claimed that temporary arrangements for PIA’s premium London service resulted in losses of Rs. 2.88 billion.

Despite implementing a voluntary separation scheme, PIA still has 215 employees per aircraft, which the report says is significantly higher than international aviation industry benchmarks. It also blamed frequent leadership changes, poor governance and inconsistent policies between 2008 and 2018 for the airline’s continued decline.

The committee further stated that the 2020 statement by the then aviation minister regarding pilots’ licenses caused severe damage to PIA’s international operations.

According to the report, the controversy resulted in losses of around $600 million, led to the suspension of PIA’s operations in European airspace by the European Union Aviation Safety Agency (EASA), and grounded approximately 150 pilots.

The report also noted that the depreciation of the Pakistani rupee and external borrowing have pushed PIA’s total liabilities to more than Rs. 740 billion.

Among its recommendations, the subcommittee called for the formation of an inquiry commission to investigate the 2020 pilots’ license controversy and urged the government to immediately review the Open Skies Policy to ensure PIA competes on a more equal footing with foreign airlines.