IATA Consultancy presents PIA Business Plan 2022-26

KARACHI: The world’s premium aviation agency, IATA Consultancy, has submitted a comprehensive business plan for the Pakistan International Airlines (PIA) for 2022 to 2026 to the Minister of Finance and Minister of Aviation.

The business plan preparation was commissioned by the Ministry of Finance last year consequent to the report by the former special assistant to the prime minister (SAPM) on public enterprises reforms Dr Ishrat Husain to the prime minister and the Federal Cabinet.

Dr Husain’s report, which was also termed a complete restructuring plan for PIA with the objective not only to turnaround PIA towards profitability but also converting it into an agile business unit, focused on its core operations.

As the plan involved financial restructuring of hundreds of billions of rupees, the officials at the helms of the Finance Ministry and the Planning Commission demanded a Business Plan prepared by an international consultant for PIA before committing to the huge amounts.

The International Air Transport Agency’s (IATA) consultancy services were hired for that purpose, which after a year of spade work has developed a five-year corporate business transformation plan with the current year 2022 as the base year and going all the way to 2026.

The key postulates of the business plan encompasses financial restructuring, independent decision making, re-organisation of the company structure, restrictions to core business, financial discipline, HR rationalisation cost controls, review destinations, a fleet planning exercise and network expansion; thereby, increasing PIA’s network spread and passenger uplift.

PIA’s fleet is expected to grow from the current 29 to 49 by 2026, comprising 16 wide body, 27 narrow body and six turbo propeller aircraft.

The fleet will be used to expand on the current productive routes of the UK, Saudi Arabia, the UAE and the Gulf states, as well as will be operated on identified markets of Baku, Hong Kong, Istanbul, Kuwait, Tehran, Urumqi and Singapore.

Resultantly, the PIA passengers would grow from 5.2 million passengers/annum to 9 million passengers/annum and revenues to grow to $1.7 billion/annum by 2026.

PIA with these initiatives will achieve breakeven by 2025. The assets of the national flag carrier will also increase from the current $1.196 billion to $2.183 billion.

PIA, which is currently operating 359 round trip flights/week, will be operating 581 round trip flights at the end of the programme.

The outlook also takes into account the global aviation scenarios and challenges, most specifically the Covid-19 pandemic-related travel restrictions and reduced demand, and the macro environmental/economical challenges faced by the country.

However, the plan has been made conditional to certain factors, most important of which is the commitment by the government of Pakistan to undertake the financial restructuring of PIA for the legacy debt on its balance-sheets and which are beyond the serviceable capacity of the airline.

This will also ease the burden on its cash flows, enabling it to undertake product improvements initiatives, critical for its long-term sustenance. The plan also urges the government to ensure compliance to the National Aviation Policy in its true spirit, providing a level-playing field to the Pakistani carriers, which often find themselves at a disadvantage in their own country.

Additionally, IATA Consultancy is of the view that PIA may be run under the private management rules, also pertaining to the procurement practices.

It also suggests that external influence on the company matters may be curtailed and the consistent public scrutiny may be scaled back as it not only hinders with the critical corporate responsibilities of the managers but also creates a negative PR for the company, resulting in its corporate repute and revenue streams.