ISLAMABAD, May 28: Pakistan International Airlines plans to substantially increase Haj and Umra fares because of inflation and increase in oil prices.

The airline’s managing director, Capt Mohammad Aijaz Haroon, told the Senate standing committee on defence that economic estimates for the forthcoming Haj operation had been submitted to the religious affairs ministry.

He said PIA had suffered a loss of Rs1.1 billion during last year’s Haj operation and the government had not compensated it.

He said an increase in the fares had been proposed to meet the expenses of the operation.

An official told Dawn that PIA wanted the Haj fares to be increased from Rs38,500 and Rs46,200 to Rs75,000 and Rs89,900 from the southern and northern parts of the country, respectively. The Umra fares may be increased from Rs33,540 and Rs37,550 to Rs41,340 and Rs45,350 from June 1 to June 30 and to Rs47,800 and Rs51,800 from July 1 to Oct 4.

Capt Haroon told the committee meeting, which was presided over by Senator Nisar A. Memon, that no plan to privatise the airline was on the cards.

“I have neither received any orders nor have any intention to privatise the corporation. Privatisation is the failure of a company’s management and I will not let it happen,” he said.

However, Defence Secretary Kamran Rasul said the government kept its options open for the company which was incurring a monthly loss of Rs1.5 billion.

The committee criticised the absence of Defence Minister Chaudhry Ahmed Mukhtar from the meeting. It also sought details of the perks and privileges of the PIA chairman and his predecessors.The committee decided to hold a meeting with the Civil Aviation Authority on a complaint that foreign airlines were given preference in the use of airports.

Capt Haroon said the recent extraordinary surge in fuel prices had forced the entire aviation industry to review its operational structure. He said an increase of $1 per barrel in international oil price had an impact of Rs440 million on the airline.

He said PIA had been hit hard also by devaluation of the rupee and unhealthy competition.

He said volatility in exchange rates had affected PIA’s payment schedule of fleet-related foreign exchange loans.

He said the fuel surcharge on domestic and international routes had been increased.

He said a further increase in the fuel surcharge and fares was planned which would bring in additional revenues of about Rs3 billion.

He said that in order to contain the impact of rising fuel prices the PIA had reduced use of older, fuel-inefficient fleet. The entire Boeing 747 fleet has been taken off the schedule operation and will be used only to meet the additional load of Haj and Umra.

The airline has also placed for sale two Boeing 747-200 Combi and one 747-300 aircraft because they are surplus.

The managing director said several non-viable flights had been dropped or their frequencies had been reduced.

He said PIA had re-launched its flights to Glasgow and Moscow and started additional flights to Abu Dhabi, Kathmandu, Sharjah and Dubai.

He said the airline would also capitalise on the opportunity offered by the Sialkot airport.

He said efforts were also being made to increase engineering sales and generate additional revenue from catering and other non-transport sectors.

He said the PIA management had initiated an organisational restructuring process to increase productivity and raise the employees’ morale with a significant reduction in senior management positions. He said the number of directors and general managers had been reduced from 13 and 65 to eight and 47, respectively, since May 8.

He said the number of staff at foreign stations was being rationalised to cut expenses.

In reply to a question, he said the termination letters issued to 80 flight engineers had been withdrawn and all of them had been reinstated with retrospective effect, except for nine who had accepted a package offered to them.

He told the committee that 4,000 employees of the corporation would be promoted with a total impact of Rs6 million a month. He said the PIA would prepare a new business plan within a month.