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February 28, 2021

Pakistan Unveils New Aviation Policy, Airport Terminals to be Outsourced to World Operators

After a gap of 15 years, Pakistan has introduced a new aviation policy that seeks to liberalize its air market and includes plans to outsource terminals at major airports to international operators.

Under the “National Aviation Policy, 2015,” launched by Prime Minister Nawaz Sharif on March 20, Pakistan will pursue “bilateral open skies policy” with other countries on reciprocal basis. In addition to direct and convenient connections to the local traffic, liberal arrangements will encourage movement of international air traffic through Pakistani airports.

The world aviation industry supports 58.1 million jobs with over 25,000 commercial aircraft in service, according to the policy document citing a report by AviationBenefits, a global association that represents all sectors of the air transport industry.

The world’s 6th most populous country, the domestic passenger traffic in Pakistan marginally grew to 6.72 million between 2010-2013 – an average 1.8% growth per annum – , while international passenger traffic rose to 9.56 million in the same period, showing about 5% percent per year, according to the official document.

Noting that protectionism and restricted market access suppressed the growth potential of Pakistan’s aviation sector, the new policy makers hope that new measures will accord greater business freedom and better customer satisfaction.

“We are hoping that in the next budget which is just two months away, we will be announcing incentives for the aviation sector in line with the new policy,” Finance Minister Ishaq Dar said while approving the policy which strongly advocates no taxes and duties on investment in aviation sector. The previous aviation policy was approved in 2000.

Fleet registration in Pakistan by all operators will be mandatory. Foreign airlines will be allowed to take up to 49 percent equity stakes in domestic carriers. Under the new policy, minimum fleet size for domestic operators will be three airworthy aircraft, and five such aircraft for international operations.

Private sector will be encouraged to construct or operator new and existing airports, airstrips and cargo complexes on BOO, BOT basis, or any “suitable management arrangement”. The private sector will be allowed to construct new commercial airports.

The airport’s terminal side shall be outsourced to world class operators through competitive bidding. Consultants would be hired for outsourcing such facilities at airports.

Two stat-of-the-art cargo villages will be established, one in the country’s north and the other in the South to encourage cargo traffic through Pakistani airports. These villages would have multi-model transport, cargo terminals, cold storage centers, automatic storage and retrieval systems, mechanized transport of cargo, dedicated express cargo terminals with airside and city side openings.

The available land at the international airports in Lahore and Karachi will be given to private companies through competitive bidding to develop perishable facility, cold chain facility and a common facility for housing banks, freight forwarders and shipping agencies etc.

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