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PIA Losses Surge on High Fuel Costs; Preferential Treatment to ME Carriers

KARACHI — Pakistan International Airlines (PIA) incurred heavy losses due to high fuel costs early this year and previous government’s ill-advised decisions to offer concessions to Middle East carriers, a top official said.

Captain Ejaz Haroon, Managing Director, PIA, said the national carrier recorded nearly Rs75 billion losses so far this year.

In an exclusive interview to Khaleej Times, he said the Pakistan government should direct the country’s aviation ministry to stop offering preferential treatment to Middle East carriers.

“The new management of PIA is confident that national airline will back into black if the oil prices remain firm at $50-70 and the government not to allow its airports becoming dumping grounds for other international carriers,”said Haroon.

He said currently PIA is in the midst of financial difficulties but the new management is confident to improve the airline’s balance sheet for the next quarter and even show profit due to higher yields and lower oil prices.

“We are confident that PIA, after making losses of Rs38 billion in January-September 2008, will be able to turn around things in the next quarter,” added Haroon.

“The airline recorded Rs23 billion losses in first three quarters only due to depreciation of Pak rupee,” he claimed.

The PIA chief said the present management was making concerted efforts to cut costs through increase in revenue, reduce unnecessary expenditure, outsourcing loss-making businesses and introduce new profitable routes.

The aviation experts over the years have blamed the decline in PIA’s fortunes — once rated one of the best airlines in the world — on too much government interference in carrier’s management by inducting non-professional persons at the top level.

“This assertion might be right to some extent especially in the past. However, I can assure that the government has no role in the day to day running of the airline,” he said.

“In fact the government is very supportive in all our endeavours to restore the airline to its previous status,” he said.

On the issue of phasing out of 19 aged Airbus A310s and Boeing 737 with replacement by new aircraft, he revealed that the management was working out on a plan to replace these aircraft from 2009.

“We need to replace these ageing aircraft to meet the demands of today,” he added. Capt. Haroon also disclosed that from March 2009 PIA will start Islamabad-Barcelona twice weekly Boeing-777 service with Dubai as one stop.

“Dublin is another new destination for which we are waiting confirmation while we will increase Leeds flights from two to thrice weekly,” he added.