Why is PIA Losing Money Amid Air Travel Boom in Pakistan?

[RiazHaq]

https://www.southasiainvestor.com/2018/04/why-is-pia-losing-money-amid-air-travel.html

What is behind the domestic and international aviation boom in India and Pakistan? Why is Pakistan doing better than India in terms of international passenger growth while badly lagging in domestic air travel?


Passenger Aircraft at Karachi International Airport
What has happened to the global airline industry since the passage of the US Deregulation Act of 1978? Why did many big airlines of yesteryears die in spite of huge growth of air travel? How did so many upstart low-cost carriers succeed while state-owned airlines failed?

Why are the domestic air fares in Pakistan three times higher than those in India for similar distances? Why does state-owned PIA control two-thirds of Pakistan's domestic market? Why isn't there more competition on domestic routes in Pakistan?

Why are state-owned airlines, including PIA and Air India, losing a lot of money, requiring massive taxpayer subsidies and still performing poorly? Why aren't these airlines run more efficiently? Are PIA jobs used for political patronage? Why does PIA fly so many empty seats rather than cut fares to expand market?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com)

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Air Travel Market

Pakistan $20 Billion Tourism Industry Booming

Saving PIA, Railways and Education in Pakistan

Pakistan: Political Patronage Trumps Public Policy

Riaz Haq's Youtube Channel

PakAlumni Social Network

https://www.southasiainvestor.com/2018/04/why-is-pia-losing-money-amid-air-travel.html

 

[AZADPAKISTAN2009]

The # of travellers travelling and Profits , do not add up

Some where in the chain , their is a Leak of Money and Accounting is hiding the Leak by Corrupt practice

2012-2018 all world airline have had a BOOsted business ... due to Historic low fuel prices and abundance of world wide travel

• Offshore money hiding going on ? PIA executives or people who handle cash
  
• Corrupt Directors moving funds overseas UAE prime area of hiding funds
  
• Secondary source of hiding income UK
• Some one selling illegally aquired Legal Tickets or illegally issuing Tickets and PIA system not able to track the Ticket issued vs Profits being generated
• Excessive PIA seats , being issued to Political Families or Close friends of Powerful politicians "Free Travel on Government plane"
• May be broken system of tracking , complimentary travel vs 10 Travels per year to Saudia or UAE etc

• Something is broken in PIA and it is not the Jets and Air routes as their is demand for travel

99% It is someone internal , stashing and moving cash abroad by Hundi or some other means heck even fly the bags of cash in PIA plane to Panama

 

[Clutch]

One word ---> corruption

 

[khail007]

One word ---> corruption

Plus conflict of interest.

 

[pak-marine]

The siasi unions are sucking the national carrier dry

 

[RiazHaq]

Nearly 15 million international passengers flew in and out of Pakistan in fiscal year 2016-17. This number is about a quarter of the 59 million international passengers who flew to and from India in roughly the same period, according to data available from the aviation authorities of the two South Asian countries. India's population is about six and a half times larger than Pakistan's.

http://www.riazhaq.com/2018/04/aviation-boom-in-india-and-pakistan.html

As to the reason for India's domestic market being 16 times larger than Pakistan's, let me quote the UK's Financial Times as an explanation: "A highly competitive domestic aviation market (in India) means that a passenger looking to fly from Delhi to Mumbai on July 1 this year, for example, can pay as little as $35. In Pakistan, someone wanting to do the roughly equivalent trip from Islamabad to Karachi will probably have to fly with the government-controlled Pakistan International Airlines and pay at least $100 to do so". Given the basic price-demand elasticity, it makes sense that Pakistan's domestic airfares being three times higher than India's reduce air travel demand to a mere 3.5% of Pakistan's population versus India's 8% of its population.

 

[xyxmt]

you still dont know why PIA is loosing money. have you even been to any Pakistani airport? if not then you should try to visit one and count PIA crew Vs. others

PIA crew wins every time.

 

[Mr ambassador]

I am going to tell you why PIA is in loss .

Few people whom I know personally are hired in PIA through political source.


The worst scene is that they even dont know how to read and write English draft.

I have seen many illiterat government employees.

Murdure of merit boils the blood of deserving youths

 

[Imran Khan]

airline business has very short profit if airline make few mistakes in years profit can went in drain. while PIA commit monthly few mistakes man

 

[imiakhtar]

The truth of the matter is, outside of the trunk routes serving Karachi, there is no money to be made by airlines domestically in Pakistan. That is why the airlines which have a free reign over the routes they serve, Shaheen and Airblue, deploy most of their capacity (seats) on International routes.

PIA has to serve Peshawar, Quetta, Gilgit and numerous secondary cities/towns providing as I say, a "taxi" service to those residents. This is due to backward political pressures both regionally and nationally. This public service mandate is what causes the greatest losses to PIA and will continue to do so.

It isn't difficult and it isn't due to corruption.

 

[pzfz]

The truth of the matter is, outside of the trunk routes serving Karachi, there is no money to be made by airlines domestically in Pakistan. That is why the airlines which have a free reign over the routes they serve, Shaheen and Airblue, deploy most of their capacity (seats) on International routes.

PIA has to serve Peshawar, Quetta, Gilgit and numerous secondary cities/towns providing as I say, a "taxi" service to those residents. This is due to backward political pressures both regionally and nationally. This public service mandate is what causes the greatest losses to PIA and will continue to do so.

It isn't difficult and it isn't due to corruption.

Yup. Pakistan simply isn't a developed aviation market. On top of that it's 3 main cities are close enough to other secondary cities that those cities can be served easier thru bus/train links rather than p2p air service - Peshawar to Islamabad, Faisalabad to Lahore, Hyderabad to Karachi. Secondary cities such as Peshawar Multan Quetta don't have the markets/business to support increased frequencies. Whatever business they produce is done by fruit sellers and trinket makers and such which will always use buses and trains over the relatively expensive air route.

International travel also is not THAT profitable because people that travel to Pakistan aren't the business class types. Laborers and expats just visiting. No business meetings or consulting to be done by those that pay business class tickets. No high end tourism, just backpackers that will try to save every penny. That's also why you see most of the airlines (which aren't that many to begin with for Pakistan as no western airlines or premium east asian airlines currently fly to Pak) serve Pak with their old and dated metal and seats. No 787 or 350 or 380s. No all aisle-access business classes.

All this isn't the fault of the airlines. Pak simply has to develop its market and industries. The rest will come. There is however a market for an LCC or budget airline. No frills. Domestic and international.