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…
#Pakistan #Airline With 14,000 Staff for 30 Planes to Cut Half Its Workforce. Even before #Covid restrictions, #PIA was banned from key markets including the #US and #Europe. And it missed out on peak travel periods like the annual #Hajj pilgrimage. https://www.bloomberg.com/news/articles/2021-04-27/half-of-jobs-to-be-cut-as-pakistan-s-airline-fights-to-survive


Even airlines in good financial health have been left reeling because of the coronavirus, which has caused dozens to collapse and thousands of job losses globally. In its latest outlook last week, the International Air Transport Association said carriers worldwide will lose about $48 billion in 2021 as virus flareups and mutations extend the timeline for a restart of global air travel.

PIA had 30 aircraft as of Sept. 30, including 12 Boeing Co. 777s and 11 Airbus SE A320s. Hussain didn’t specify what changes would be made to the fleet, which also includes ATR aircraft, but he said the size would be “kept under 30” and include more fuel-efficient planes. PIA will no longer serve destinations such as Tokyo and Manila, Hussain said.

Pakistan vowed to cut jobs and sell non-core assets after a series of bailouts, including one of 3.2 billion rupees in June so the airline could meet interest payments. About 2,000 employees have taken voluntary redundancy already, according to the airline. Meanwhile, non-core operations such as catering and engineering will be outsourced, said Hussain, a former central bank governor.

Other assets are also being assessed, including the Roosevelt Hotel in New York, which the airline acquired during its loftier days as a symbol of Pakistani prestige. The hotel was closed last year and may be sold or redeveloped.


Riaz Haq said…
#Pakistan's Alvir Airways gets operating license, eyes ERJ (#Brazil-made Embraer regional jets).
It plans to operate from 3 hubs (#Karachi, #Lahore, & #Islamabad) to 3 destinations (#Gwadar, #Skardu, & #Turbat) - to promote #tourism & regional air access. https://www.ch-aviation.com/portal/news/105836-pakistans-alvir-airways-granted-an-ol-eyes-erjs

Pakistani startup Alvir Airways (Karachi Int'l) has been granted a Tourism Promotion and Regional Integration (TPRI) operating license by the Pakistan Civil Aviation Authority (PCAA), according to a statement issued by the regulator.

Under the National Aviation Policy of 2019, the license is valid for five years until June 2026, read the statement issued by PCAA spokesman Saad Bin Ayub.

According to the PCAA, Alvir Airways intends to acquire two unspecified Embraer jets for the startup of operations and will add more of the type in time.

The airline plans to operate from three hubs in Pakistan, namely Karachi Int'l, Lahore Int'l, and Islamabad Quaid-e-Azam Int'l to three destinations - Gwadar, Skardu, and Turbat - to promote tourism and regional air access. Alvir Airways will be pitched against PIA - Pakistan International Airlines (PK, Islamabad Quaid-e-Azam Int'l) which currently holds 100% of the market share in terms of weekly seat capacity at Gwadar, Skardu, and Turbat, according to the ch-aviation capacities module. PIA serves Skardu twice weekly from Faisalabad, daily from Islamabad, 3x weekly from each of Karachi and Lahore, and weekly from Sialkot, the ch-aviation schedules module reveals. PIA also serves Gwadar 4x weekly from Karachi; and Turbat weekly from Islamabad and thrice-weekly from Karachi.

The PCAA said Alvir Airways was granted the license in line with a vision by Prime Minister Imran Khan to promote tourism and regional connectivity. It was presented by PCAA Director-General Khaqan Murtaza and other dignitaries to Alvin Airways Chief Executive Officer Tehseen Awan, Managing Director Syeda Huma Batool, and Chief Operating Officer Shahzaib Mahmood at the regulator's head-office in Karachi on July 12, 2021.

Speaking at the event, Awan said that Alvir Airways would start domestic flights in the first phase before purchasing more aircraft. He said the company aimed to provide employment in the aviation sector and become a major player in the Pakistan aviation industry.

The company has begun recruiting staff on its website, which, however at this stage, gives no further insight into its corporate set-up.

Neither the company, nor Awan were immediately available for comment. Awan currently holds the position of managing director of Vetworld, an animal health company, according to his LinkedIn profile.

Riaz Haq said…
Bilal I Gilani
@bilalgilani
In one decade PIA has lost 25% of its fleet

2 / 3 rd of available seat and passengers who got on to a PIA

Yet we continue to put tax money to save this

https://twitter.com/bilalgilani/status/1535718850351837187?s=20&t=nVYXWQluw1S7eb_fMXdzJg
Riaz Haq said…
A new runway at Faisalabad International Airport will be completed by October this year, enabling Boeing 777 aircraft to land, said Airport Manager Muhammad Anwar Zia.


Addressing Faisalabad Chamber of Commerce and Industry (FCCI) here on Thursday, he added that the air cargo complex was also under construction and 75% of the work was expected to be completed before the runway becomes operational.

Zia expressed satisfaction over the available passenger load and air cargo and said that 102 domestic and international flights were successfully operating from Faisalabad airport.

Zia expressed satisfaction over the available passenger load and air cargo and said that 102 domestic and international flights were successfully operating from Faisalabad airport.

He said the old runway could only accommodate small planes, which prompted authorities to construct a new runway for wide-bodied aircraft, in view of the projected increase of passengers and air cargo from the city and its catchment areas.

---------------

The new runway will be completed by October this year, enabling Boeing 777 to land at Faisalabad International Airport.

This was stated by airport manager Muhammad Anwar Zia at a meeting with FCCI officials on Thursday.

He said the air cargo complex was also under construction and 75 per cent of the work would be completed before the runway becomes operational.

He expressed satisfaction over the available passenger load and air cargo and said the airport was in a deficit of Rs220 million when he was posted here.

“It is now earning a profit of Rs2 billion,” he said and added that presently 102 domestic and international flights are operating from this airport facility in a month. He said that only small planes could land on the old runway, prompting authorities to construct a new runway.

He said a study was conducted to evaluate the passenger load before contacting international airlines. At that time the available passenger load was only 70,000 which jumped to 500,000 and is now expected to cross the mark of 800,000 within the next few years. He said that in a similar pattern, we must calculate the available tonnage of air cargo so that the airlines could be convinced to launch a dedicated air cargo service from this port.

He asked the FCCI to share data on air cargo so that a comprehensive study could be finalised. Four planes can be parked at a time and more facilities will also be arranged after calculating the passengers and air cargo shipments, he said.

https://www.dawn.com/news/1696356/faisalabad-airport-to-get-new-runway

Riaz Haq said…
Revving up in low gear: The paradoxes in India's transport sector

https://www.business-standard.com/article/opinion/revving-up-with-brakes-on-the-paradoxes-in-india-s-transport-sector-122070800816_1.html

No Indian airline makes money, railways' passenger traffic is stagnant, and roads have a revenue imbalance problem, but investments in all three are like never before, notes T N Ninan

India’s transport sector offers a strange mosaic of stagnant traffic trends, poor or negative returns, and yet unprecedented levels of investment for the future. After years of vast sums being ploughed into all forms of transport, the next two or three years could see the results of that investment in the form of transformational change in the air, on highways and expressways, and in the railways. Here’s hoping.

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