Pakistan International Airlines (PIA) lost its market share drastically both on domestic and international routes between 2008 and 2017 as the number of its passengers declined. This was revealed in a special audit report on the accounts of the PIA submitted in Supreme Court of Pakistan. The report suggested that 5.6 million passengers travelled by the PIA in 2008, but this number fell to 5.48m in 2016, while the market grew manifold during this period. The audit team observed a number of irregularities in the leasing of aircraft that increased after 2007. Those responsible did no due diligence/preparation of feasibilities showing no commercial, financial and engineering viabilities.
Earlier, another report submitted by the Auditor General of Pakistan had blamed the absence of professional and experienced leadership for the present state of affairs of the national carrier, regretting that “it was being run like a non-business entity”.
This latest audit report stated that other airlines flying to Pakistan like Emirates, Qatar, Etihad and Turkish took advantage of the aviation policy 2015 and increased their flights from different locations. PIA’s revenue increased 2.5 per cent from Rs88.8bn in 2008 to Rs91.2bn in 2017. During the same period, expenditure went up by 8.89pc to Rs136bn from Rs125bn.
In 2008 the airline sustained a net loss of Rs36.2bn that increased to a loss of Rs44.9bn in 2017. The airline is losing money due to huge fixed costs under the head of a salary, finance cost and exchange loss. The report says that with losses mounting the airline management never undertook any austerity measures to cut the costs because they knew that in the end, the government will infuse more equity to bail out the airline.
All the feasibilities during the past 10 years are devoid of outputs projected in them, the report added that obsession for Airbus A320 and ATR-72 aircraft had been noticed since 2013-17 without realisation of the airline’s commercial interest. Only A320 has been preferred in all procurements when other aircraft like A330 and A319 were offered at very good rates, the report said.
Likewise, ATR-72 aircraft was purchased beyond the existing need, hence the airline was overburdened with billions of rupees of expenditure without a single penny of profit from ATRs.
Ironically, the PIA did not have maintenance and overall capabilities for Airbus A320 and ATR inducted between 2014 and 2015, including in-house engine repair/overhaul capabilities. The airline inducted 11 A320 and ATR-72 aircraft, but due to the absence of such capabilities expenses of maintenance and overhaul and engine rentals have increased beyond Rs16bn, the report said.
Apart from revenue on passengers, the cargo has dropped dramatically due to the leasing of narrow-body aircraft. The PIA earned cargo revenue of Rs5.4bn in 2008, which fell to Rs3.6bn in 2016, as compared to 20pc of total revenue as per industry practice.