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December 9, 2018

Pakistan’s PIA Boosts Ageing Fleet Amid Growing Competition

Islamabad – Pakistan’s national flag carrier, PIA, is all set to induct as many as 15 aircraft on dry lease to keep the loss-making airline afloat amid plans by the government to liberalize its air market.

PIA has arranged 10 A-320 and 5 ATR-72 aircraft on dry lease, according to the Aviation Division’s proposal submitted to the Economic Coordination Committee – the country’s highest decision making body – which approved the release of $35.96 million for the deal on April 30.

The government in December had approved $52 million for PIA to induct new aircrafts and at the time approved release of the first tranche of $16.44 million, with the balance amount released this week.

Approving the funding, the committee noted that while induction of new fleet was a good step, “quality of services needed a major improvement”, according to an April 30 official statement.  PIA is on the list of several state-owned assets the government plans to sell to reduce its liability toward sick unit which eat billions of rupees every year.

The capital injection into the ailing airliner comes a month after the U.S. Exim Bank and the Islamic Development Bank agreed to extend financing facility totaling $120 million to be used for overhauling engines of PIA planes.

Pakistan’s fragile economy is showing signs of improvements and is forecast by the International Monetary Fund to grow by about 4 percent in the fiscal year ending June 30. The South Asia’s second biggest economy has succeeded in achieving stability but needs to continue implementing reforms to stay the course, IMF says.

New funding will help PIA prepare for a tough competition that the country’s new aviation policy envisages. Unveiled in March after the gap of 15 years, the policy seeks to liberalize its air market and have plans to outsource terminals at major airports to international operators.

The world aviation industry supports 58.1 million jobs with over 25,000 commercial aircraft I service, according to AviationBenefits, a global association that represents all sectors of the airport transport industry.

The world’s sixth most populous country, the domestic passenger traffic in Pakistan marginally grew to 6.72 million between 201-2014 – an average 1.8 percent growth per annum – while international passenger traffic rose to 9.56 million in the same period, showing about 5 percent increase per annum, according to the “National Aviation Policy, 2015.

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