Why is PIA Losing Money Amid Air Travel Boom in Pakistan?

What is behind the domestic and international aviation boom in India and Pakistan? Why is Pakistan doing better than India in terms of international passenger growth while badly lagging in domestic air travel?

Passenger Aircraft at Karachi International Airport
What has happened to the global airline industry since the passage of the US Deregulation Act of 1978? Why did many big airlines of yesteryears die in spite of huge growth of air travel? How did so many upstart low-cost carriers succeed while state-owned airlines failed?

Why are the domestic air fares in Pakistan three times higher than those in India for similar distances? Why does state-owned PIA control two-thirds of Pakistan's domestic market? Why isn't there more competition on domestic routes in Pakistan?

Why are state-owned airlines, including PIA and Air India, losing a lot of money, requiring massive taxpayer subsidies and still performing poorly? Why aren't these airlines run more efficiently? Are PIA jobs used for political patronage? Why does PIA fly so many empty seats rather than cut fares to expand market?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com)

https://youtu.be/hh99nMnueBA




Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Air Travel Market

Pakistan $20 Billion Tourism Industry Booming

Saving PIA, Railways and Education in Pakistan

Pakistan: Political Patronage Trumps Public Policy

Riaz Haq's Youtube Channel

Comments

Riaz Haq said…
Pakistan International Airlines refis Roosevelt Hotel with $105M loan
Government-owned company has long sought to sell the property

https://therealdeal.com/2018/04/19/pakistan-international-airlines-refis-roosevelt-hotel-with-105m-loan/

The Pakistan International Airlines has leased or owned the Roosevelt Hotel since 1979 and has several times since sought to get rid of it. And sans sale, the overseas owners refinanced the debt on the property, records filed with the city Thursday show, with a $105 million loan from JPMorgan Chase.

JPMorgan Chase’s refinancing replaced $140 million in previous debt on the hotel issued by Wilmington Trust, a subsidiary of M&T Bank.

PIA did not immediately respond to requests for comment and JPMorgan Chase declined to comment.

Built in 1924, the 600,000-square-foot hotel, located at 45 East 45th Street in the recently rezoned swath of Midtown East, is not landmarked and is a prime target for demolition and office tower construction, making the site worth hundreds of millions of dollars. So what’s held up a sale? Politics in Islamabad.

In December, Pakistani Prime Minister Shahid Khaqan Abbasi rejected a selloff plan for the Roosevelt, according to the Express Tribune, an English-language paper in the country. PIA, a government controlled company, had come up with the plan as part of a larger strategy for paying off roughly $5.3 billion in debt.

“Apart from being a valuable property, the hotel also carries cultural significance for Pakistan,” Abbasi said in rejecting the PIA plan.

PIA last put the hotel on the market in 2007, asking $1 billion. In August, The Real Deal reported that an investment group led by hotelier Shahal Khan was interested in acquiring the hotel. Khan is also making a bid for the Plaza Hotel on Fifth Avenue.

Riaz Haq said…
India tried to sell its national airline. It got zero bids

http://money.cnn.com/2018/05/31/investing/air-india-privatization-fails/index.html

India has failed to find a buyer for its ailing national airline.
Selling Air India was one of the government's economic priorities for this year, and the failure of the auction will dampen hopes that it could privatize other state-owned companies.

Bidding for the national carrier closed Thursday without a single prospective buyer coming forward.

"As informed by the transaction adviser, no response has been received for the expression of interest floated for the strategic disinvestment of Air India," the Indian Ministry of Civil Aviation said on its official Twitter account.

The government put Air India on the auction block last year, and was offering bidders the chance to buy 76%. It wants to scale back taxpayer support for an airline that has lost money for years.

The auction deadline had already been extended in the hope that a buyer may come forward. The future of the indebted carrier is now very uncertain.

"Further course of action will be decided appropriately," the ministry said in its tweet.

Air India declined to comment, referring the matter to the ministry. Aviation ministry officials did not respond to requests for comment.

Despite its losses, and growing competition from budget carriers such as SpiceJet and IndiGo, Air India is still a major player in an aviation market that is projected to be the world's third biggest by 2026.
Riaz Haq said…
#Pakistan about to become #tourism's next big thing. In 2015, #Pakistan welcomed 563,000 overseas arrivals. That figure grew to 965,000 in 2016, 1.6m in 2017 and 1.9m last year. #security #economy https://tribune.com.pk/story/1946713/1-pakistan-become-tourisms-next-big-thing/#

The image of Pakistan as an unsafe country for tourists is gradually changing and now many countries around the world see the potential for tourism in Pakistan, Telegraph reported on Monday.

According to the publication, Pakistan was once one of the highlights of the classic ‘hippie trail’ or ‘overland’ route from Europe to the Far East, a rite of passage for disillusioned Western youth. Peshawar and Lahore were considered not only safe – but also fine places to kick back for a few days in a budget hostel.

Prime Minister Imran Khan is committed to kickstarting tourism to help raise money for a welfare state. His policy has so far extended to tweeting pictures of the country’s beaches and snow-capped mountains, hosting a two-day tourism summit last week, and, most significantly, cutting the red tape and entry requirements that have the potential to put off visitors.

As of this month, residents of five countries – the UK, China, Turkey, Malaysia and the UAE – can take advantage of a new online e-visa system, while most restrictions on movement within the country have been abolished.

Jane Westwood of Wild Frontiers, one of the few UK operators to offer tours of Pakistan, welcomed the changes. “The old visa system was very convoluted,” she said. “Both travellers and tour operators needed to file numerous supporting documents and the whole process took two weeks or more – now it can be wrapped up in a matter of hours. It is also significantly cheaper, from £134 down to the equivalent of $60 [£46].”

She also praised the loosening of the No Objection Certificate (NOC) system, under which travellers needed special permission to visit certain parts of Pakistan. These have been scrapped for all but a few border regions, opening up parts of Kashmir, Chitral and Gilgit-Baltistan.


“It’s a beautiful country, and one of the most welcoming,” said Westwood, who has visited twice. “The mountain scenery is staggering, and it’s perfect for trekking, but there are fascinating cities too. Islamabad is leafy and green, with wide boulevards; Lahore has a remarkable Old City, gardens, museums and forts – a real combination of old and new. Then there’s the Kalasha Valleys, which have a unique pagan culture, with traditional lifestyles, dress and festivals.”

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