Pakistan International Airlines: A Crisis-Hit Flag Carrier

Written by Harshitha Paderu

October 25, 2023

Business | Travel

History

Launched as Orient Air by private investors, Pakistan’s government established the Pakistan International Airlines Corporation through the merger of Orient Airways during the 1950s. It became one of the best airlines in the region, and the largest in the country to operate a fleet of more than 30 aircraft. The airline operated nearly 50 flights daily, servicing 20 domestic destinations and 27 international destinations across Asia, Europe, the Middle East and North America.

Bans by the EU, UK and US

On 30 June 2020, the European Union Aviation Safety Agency (EASA) banned PIA from flying in European airspace for six months from 01 July 2020 due to safety and regulatory concerns. The EU ban was later extended to several more months until March 2023, following multiple safety failings.

By 9 July 2020, the United States and the United Kingdom banned the airline because of concerns about its ingenuine pilot licensing. Pakistani pilots in Vietnam and Malaysia were also grounded on a temporary basis. 

Present

Lately, Pakistan International Airlines (PIA) has been facing a significant financial crisis coupled with a series of operational challenges. 

PIA had been grappling with massive financial losses, primarily due to mismanagement and an inefficient operational structure. The airline had been consistently posting financial losses for several years. PIA’s fleet of aircraft was aging, which led to higher maintenance costs, increased fuel consumption, and a less competitive position in the market. 

The bans by the EU, US and UK had a severe impact on the airline’s international operations and reputation. The airline faced stiff competition from other international carriers, and its inability to modernize its fleet and improve services made it less competitive in the market.

To address these issues and revive the national carrier, the Pakistani government initiated several restructuring plans, including seeking foreign investment, privatization, and fleet modernization. However, these efforts were met with various challenges, and the situation remains complex and challenging. 

Cash-crunch

Amid Pakistan’s ongoing economic problems, the government argues it cannot subsidize loss-making entities. 

By August 2023, PIA confirmed that 11 aircraft had been grounded due to a lack of funds to buy spare parts as the national flag carrier was facing serious financial challenges, including dependency on foreign currency. 

Recently, Pakistan State Oil (PSO) stopped the supply of fuel to the national flag carrier over the issue of non-payment of dues. Ever since, flight operations have been severely affected due to the suspension of the fuel supply. It was reported that negotiations between the PIA management and PSO remain ongoing. 

Flight Disruptions

On 22 October, with 77 out of 81 scheduled flights cancelled, the airline continued to experience extreme difficulties maintaining its day-to-day operations with severe flight delays or large-scale cancellations. 

On 24 October, out of the 53 international and 27 domestic flights scheduled for the day, the airline had to cancel 50 flights, which included 27 international and 23 domestic flights due to the unavailability of fuel. 

The majority of the domestic cancellations impacted flights to and from major Pakistani cities like Karachi, Lahore, Faisalabad, Islamabad, Gwadar, Gilgit,  Sialkot, Peshawar, Skardu, Sukkur and Multan. 

While most of the international cancellations affected flights between Pakistan and the Middle East including, the UAE – Sharjah, Dubai, Abu Dhabi; Saudi Arabia – Riyadh, Dammam, Jeddah; Oman – Muscat. 

Conclusion

Pakistan International Airlines (PIA) is teetering on the brink of a complete shutdown, having cancelled more than 300 flights within the last 10 days. The crippling situation has been worsened by a severe fuel shortage and an ongoing financial crisis. PIA spokesperson Abdullah Khan commented that there were “slim chances of a full restoration of flight operations”. 

Plan your trips accordingly. Check with the airline or your travel agent to determine if your travel plans are affected. Stay updated about the status of disruptions.

Expect and prepare for residual delays at airports. Follow the advice of local airport authorities. If impacted by cancellations, know your compensation rights. Reschedule your travel plans or use alternate airlines to minimize inconvenience.

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