KARACHI: The premium aeronautical agency in the world, IATA Consultancy, has submitted a comprehensive business plan for Pakistan International Airlines (PIA) for 2022 to 2026 to the Minister of Finance and Minister of Aviation.
The preparation of the business plan was commissioned by the Ministry of Finance last year following the report by the former Special Assistant to the Prime Minister (SAPM) on public enterprise reforms, Dr Ishrat Husain, to the Prime Minister and the Federal Cabinet.
Dr. Husain’s report, which was also referred to as a comprehensive restructuring plan for PIA with the objective of not only turning PIA back to profitability, but also converting it into an agile business unit, focused on its core businesses.
As the plan involved a financial restructuring of hundreds of billions of rupees, officials at the head of the Ministry of Finance and the Planning Commission demanded a business plan prepared by an international consultant for PIA before committing to any are huge.
The consulting services of the International Air Transport Agency (IATA) have been engaged for this purpose, which after a year of hard work has drawn up a five-year plan for the transformation of the company’s activities with the current year 2022 as reference year and going until 2026.
The key assumptions of the business plan include financial restructuring, independent decision-making, reorganization of corporate structure, core business restrictions, financial discipline, HR streamlining cost control, destination review, a fleet planning exercise and network expansion; thus increasing the spread of the PIA network and increasing the number of passengers.
PIA’s fleet is expected to grow from 29 to 49 by 2026, comprising 16 widebody, 27 narrowbody and six turboprop aircraft.
The fleet will be used to expand on current productive routes in the UK, Saudi Arabia, UAE and Gulf States, as well as identified markets of Baku, Hong Kong, Istanbul, Kuwait, Tehran, Urumqi and Singapore. .
As a result, PIA passengers would increase from 5.2 million passengers/year to 9 million passengers/year and revenues would reach $1.7 billion/year by 2026.
PIA with these initiatives will break even by 2025. The assets of the national airline will also grow from the current $1.196 billion to $2.183 billion.
PIA, which currently operates 359 return flights/week, will operate 581 return flights at the end of the program.
The outlook also takes into account global aviation scenarios and challenges, more specifically Covid-19 pandemic-related travel restrictions and reduced demand, as well as macro-environmental/economic challenges the country is facing. confronted.
However, the plan was conditional on certain factors, the most important of which is the commitment of the Pakistani government to undertake the financial restructuring of PIA for debt inherited from its balance sheets and which exceeds the airline’s service capacity. .
It will also ease the burden on its cash flow, allowing it to undertake product improvement initiatives, essential for its long-term livelihood. The plan also urges the government to ensure compliance with the national aviation policy in its true spirit, providing a level playing field for Pakistani carriers, who often find themselves at a disadvantage in their own country.
Furthermore, IATA Consultancy is of the opinion that PIA can be managed according to the rules of private management, which also concern procurement practices.
It also suggests that external influence on company affairs can be reduced and constant public scrutiny can be reduced, as it not only hinders the core responsibilities of leaders, but also creates a negative brand image for the company. company, resulting in its corporate reputation. and revenue streams.