A recent decision by the European Commission to ban some PIA flights underscores the need for the airline to put its house in order as quickly as it should
These are not particularly good times for the Pakistan International Airlines (PIA), the national flag career. On the one hand, the airline is incurring huge financial losses and on the other hand the European Commission (EC) has slapped a ban on some of its flights to Europe because it has failed to keep all its fleet airworthy.
The EC had announced last month that the PIA"s two B747-200B Combis and three B747-300s aeroplanes were no longer permitted to fly to the European countries. Also, the airline"s three B747-300s and five A310-300s aircrafts were given only conditional permission for flights to all the 25 member countries of the European Union. The reasons that the EC had given for its decision included recurring technical problems and bad conditions of the planes. The other airlines facing a similar ban include Kenya"s DAS Air Cargo and Uganda"s Dairo Air Services as well as all 27 companies certified in Kyrgyzstan. The EC said it would keep a close eye on a number of carriers, including PIA, operating frequent passenger flights into Europe.
The EU has also added the PIA, along with some other smaller airlines, to its watch list due to poor maintenance of its aircraft. The Transport Commissioner of the EC, Jacques Barrot, said in a statement in the last week of October that the airlines being monitored included Pulkovo Aviation, which is certified in Russia, Pakistan International Airlines (PIA), Ghana"s Johnsons Air, and Ajet (former Helios Airways) certified in Cyprus. The monitoring by the EC watchdogs may follow total ban on these airlines.
A Helios Airways plane crash last year had killed 121 people and the airline was accused by a Greek investigator of carrying out deficient technical checks, something which Ajet disputes. A plane operated by Pulkovo crashed in Ukraine in August this year, killing all 170 people on board. A PIA Fokker plane had met a fatal accident in Multan on July 10 this year, resulting in the death of 45 people.
But the similarities between PIA and other carriers end here. As compared to other airlines being banned and watched by the EC, PIA is considered an important and large carrier. Also, any action against PIA is bound to have a negative impact on Pakistan"s image abroad.
According to airlines sources, the EC restrictions have forced change in the schedule of about 80 flights. In September and October alone 38 other flights were either cancelled or their itineraries had to change.
The PIA management says its B-747 aircraft are already undergoing maintenance to make them compatible with the EU"s refurbishment requirement and soon these aircraft will be put back on the European routes. A statement by PIA claims that the recent rescheduling of PIA"s UK operations is temporary and caused by some requirements which have now become mandatory for the EU operations.
But the management claims that the EU ban is not prompted by a deterioration in the airline"s fleet. "The European Commission has raised its standards, despite the fact the PIA is already observing international standards," says Imran Ghaznavi, PIA"s general manager for brand management and communication. Talking to The News on Sunday, Ghaznavi claims that minor things like dust on the floors of planes or on their seat covers have also been put by the EC on air safety criteria. "We are certainly improving our service and there will be no disturbance in traffic to European countries," he says.
According to Ghaznavi, PIA has already developed an "Action Plan" to meet specific EU requirements. "This plan was presented to the EU officials in Brussels on October 20, 2006. The EU Civil Aviation has shown a positive feedback on PIA"s quick response to fix the problem."
Research analysts, however, feel that reduction in the European traffic cannot have much of an effect on the overall revenue of the airline because PIA is earning a lot from its Gulf and American operations due to its monopoly on these routes. The European traffic comes only second on the airline"s priority list, according to Atif Malik, a research analyst at Jehangir Siddiqui (JS) Research. "Any ban by the European countries may not have a big impact on the profitability of PIA as its major revenue comes form domestic, Gulf and North American routes," he says. "There is no immediate threat to PIA on the European routes because it has replaced its older aircraft plying these routes." But he warned the airline may be headed for more financial trouble as a result of the ban because its overall financial losses are too heavy to sustain.
But some sources inside PIA reveal that the condition of the aircraft leaves a lot to be desired as a result of mismanagement at the top echelons of the airline. "There is a drastic shortage of engineers and other staff. The airline"s engineering department does not even have proper tools and equipment to maintain its fleet," one PIA official says, requesting anonymity. He claims in a recent ramp inspection by Safety Assessment of Foreign Aircraft (SAFA), UK, it was found that PIA aircraft were not maintaining their standards even for domestic flights. It was after these revelations that PIA"s general manager for flight safety issued a check-list to be observed for each aircraft.
The airline sources claim that the shortage of technical staff has caused a crisis like situation in the engineering side of the airline. "Unqualified and non-technical management and demotivated engineers are a big threat to the reputation of the airline," says one of them. wanting not to be named.
The lack of enthusiasm seems to be jeopardising the future of PIA. According to PIA"s half yearly report issued in June 2006, the airline suffered an after tax loss of Rs 6.144 billion as compared to loss of Rs 2.07 billion in the corresponding period in 2005.
The losses were incurred, as the report mentions, due to an unprecedented increase of Rs 5.2 billion in oil prices during the half year that ended June 30, 2006. Though the total revenue of the airline recorded a growth from Rs 13.8 billion (in April-June 2005) to Rs 16.7 billion (in April-June 2006) showing a 21 per cent increase, the airline"s financial cost went up due to additional borrowing of $266 million and $67.7 million respectively for the purchase of two Boeing 777LR aircraft, inducted in the fleet in early 2006, and the acquisition of additional 49 per cent stakes in PIA Investments Limited, the report states.
Some critics of the airline blame the management for incurring heavy administration costs which ultimately increase PIA"s overall expenses. The sorry state of affairs at the airline is making many of its engineers and technical staff to leave the airline or join other airlines, particularly Emirates.
PIA management claims that it has plans to deal with the situation. A modernisation plan has already been approved by the airline board. Under this plan, PIA will induct nine brand new aircraft by June 2007. This step alone will reduce the average age of PIA fleet from 21 years to 11 years, the management points out.
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