WHEN the Pakistan International Airlines (PIA) was hit by a licence scandal three years ago, it seemed nothing could be worse. But then came the recent crisis, sparked by Pakistan State Oil’s (PSO) refusal to supply fuel to the national airline due to payment issues. The weeks-long ordeal led to the cancellation of hundreds of flights, pushing the PIA to the verge of collapse.

During the crisis, the already debt-ridden flag carrier was estimated to have suffered financial losses of about Rs300 million daily. However, what perhaps hurt the airline more is the shattered confidence of many travellers, many of whom will think twice before booking a PIA ticket again.

Apart from travellers, the airline’s crew and other staff members also had to go through financial losses and mental stress. They never saw something like that in the past and now they are uncertain about their future.

The PIA’s recent descent came after the government said in August it would privatise the airline as part of a fiscal discipline plan agreed under an International Monetary Fund bailout.

As govt seeks to privatise flag carrier, recent crisis led by fuel supply issues sparks concerns

This has made some stakeholders question whether the national airline is being prepared for “a loot sale” through a deliberate campaign. The government’s plans have also ignited concerns among PIA staff, who are worried about their job security and benefits.

These fears have been compounded by the challenges faced in reacquiring two Airbus A320 aircraft from a Malaysian leasing company, negotiations for which have been fraught with contractual and condition disagreements.

Click to see more

However, PIA management remains hopeful that a resolution is imminent, with a $26m payment poised to recover the aircraft. The addition of these planes, coupled with the repair of seven others currently out of service, could significantly bolster PIA’s operational capacity and financial resilience. The airline currently operates 20 aircraft.

Besides, PIA recently received Rs18 in loan from commercial banks and its management is trying to get an additional Rs24bn in funding to avoid the repeat of a fuel-related catastrophe in the near future.

The PIA’s financial position further improved after they received an outstanding Rs550m from the religious ministry and another heavy amount from the defence ministry.

An aviation expert said the PIA won’t need bank loans or other forms of credit if its outstanding debts, running in billions of rupees, are settled by the government.

Furthermore, the airline may not need more loans if the three hotels it owns in New York, Paris and Jeddah are sold at market prices.

Click to see more

The airline has accumulated billions of dollars in losses and liabilities, which the caretaker government says it can no longer fund.

The ongoing crisis has spotlighted the urgent need for professional aviation management to navigate the complexities of the modern industry.

Safdar Anjum, General Secretary of PIA’s Senior Staff Association, asserts that professional leadership, free from political interference, is essential to revitalise the once-pioneering airline and to restore passenger confidence shaken by recent events.

PPP Senator Raza Rabbani has also opposed PIA’s privatisation in all its forms, saying: “It seems questionable that PIA planes were functioning normally when the fuel supply was abruptly halted and then resumed. There should be an investigation into the precise events.”

He sought an inquiry into the PSO’s refusal to supply fuel. “Through a deliberate campaign … PIA is being prepared for a loot sale.”

Senator Dr Afnanullah Khan of PML-N supported the national flag carrier’s privatisation but stressed that it should continue to operate to attract a better bid.

“The PIA represents Pakistan all over the world, so it should remain operational,” he told Dawn.

As the airline grapples with an annual loss of Rs71 billion, largely attributable to the EU flight ban stemming from licensing concerns, experts agree that the path forward is lined with both caution and optimism, marking yet another chapter in the storied legacy of an airline that once soared as a regional leader.

Published in Dawn, November 10th, 2023