Why PIA Is In A Financial Crisis
Pakistan International Airline (PIA) is facing shortage of revenue and is not recovering from past few years. If we compare PIA with other airlines, the basic reason for the losses is staff overburden, corruption, political interference and poor governance. In this analysis, we are comparing PIA with other international airlines.
According to PIA authorities, there is a total of 29 aircrafts and 14,500 employees in the airline. In comparison, Emirates has 269 aircrafts and 62,356 employees, Turkish airlines – 329 aircrafts and 31,000 employees, which is 94 per aircraft, and the Qatar airways – 240 aircrafts and employees are 46,000 which is 191 employees per aircraft. The Etihad airways has 102 aircrafts and total employees of 21,530, which is 211 employees per aircraft on average. On the other side, PIA has an average 500 employees per aircraft.
Service gaps, corruption, and governance issues
The services provided by PIA are also poor relatively; missing/lost luggage, delay in flights and passengers having to wait to receive the luggage or catching the flight – this scenario is very common with PIA.
Corruption is rampant everywhere, in the developed countries also, but not in scale and scope like in developing countries. Hence, corruption inhibits the growth of PIA, and there are many cases as highlighted on media concerning senior management, on buying of aircraft, fake degrees, and frauds etc. – these mega scandals are unheard in Turkish airlines, Etihad, Qatar airways, and others. Political interference in the public enterprises is common which causes incompetence, malpractice. In PIA, the incompetent, unskilled and inefficient personnel entered which became debt instead of liability, thereby affecting the performance and hurting the repute of the national flag carrier. In contrast, the other airlines have low or no political interference.
In addition, the governance structure of the national airline is very poor. According to annual and news reports from 2002-16, there is a lot of mismanagement, conflicts between management and union, overstaffing, inadequate number of aircrafts in the fleet, discriminatory human resource policies and staff involvement in smuggling. PIA has consistently shown discouraging performance despite various equity injections and bailout packages while the governance performance of the Turkish airline, Qatar airways etc. are appreciable. (see Annual audit reports from 2016).
PIA and Covid-19
Covid-19 affected every sector of the economy and also the airline sector especially PIA, already under stress due to many factors. The other countries banned international flights during the peak of covid-19 and it was affected more as compared to local airlines; PIA as an international airline was at the receiving end of international travel bans. According to reports, PIA receives major share of revenue from London and Hajj flights. However, previous year, London and Hajj flights were not operational due to covid-19 due to which it incurred huge losses.
To sum up, transport especially air plays a vital role in the economic development of a country. The PIA has suffered from staff overburden, political interference, corruption and poor governance. Therefore, to improve the performance of PIA, we need to learn from other competitive international airlines. It should reduce the number of employees, have hard and fast regulation to control corruption and attain autonomy and freedom from politics. The reforms in governance structure and the management is imperative. The PIA must have a plan B in case of an uneven situation like covid-19 to ease the negative impact.