Saeed moves to get PIA out of dismal pits
LAHORE– PIA MD Chaudhry Ahmed Saeed has taken up the challenge to kick-start the Airlines’ sagging image and restore it to a financially viable commercial enterprise. While the Managing Director has enforced discipline, the Chairman has brought about a much needed coordination between PIA and CAA. The vast multitude of problems, most of which are self-inflicted, require bold decisions by a team of middle aged educated professionals, who would adopt non-traditional innovative techniques, to get PIA out of the dismal pits to which it has fallen.
The ills that afflict PIA cannot be remedied by those who have played their innings and were at the helm when these problems accumulated. The airline was engulfed in a grave financial crisis due to mismanagement, financial indiscipline and lack of commercial marketing strategy. PIA which had survived the 1971 debacle due to sheer business acumen of Rafique Saigol, finally went into a decline due to a corrupt and incompetent team.
The national airline never survived the loss incurred when DC10s were sold to Canadian Pacific through Page Avjet and in exchange PIA ended up with four old Boeing 747 aircraft. All the top executives of PIA’s engineering, finance and corporate planning departments were hand in glove with AVM Azeem in this controversial deal, in which PIA incurred a loss of US$ 14 to 20 million. General Zia appointed his brother-in-law as General Manager America and from that day to onwards the trans-Atlantic operation has gone into a loss. Meanwhile, PIA had acquired hotels in New York, Riyadh and Paris in partnership with a Saudi Arabian investor. The financial deal negotiated by PIA’s top Finance executives was so much to the disadvantage of PIA that the airline had to pump in a lot of capital with no change in equity in favour of PIA.
What PIA needs is a strong and honest management, which can steer it out of troubled waters, enforce financial discipline and assume a purely commercial outlook. Singapore Airlines has in the last two decades become not only the leading commercial airline of Asia, but the best in the world aviation. All this is due to a dedicated team of professionals led by a Chairman who has a free hand and a government which does not interfere. As the story goes around SIA Chairman’s son as travelling on a non-revenue dependent flight pass. All passengers were checked in and airplane ready to depart, when a CIP (commercial important revenue passenger) reported late and wanted to travel without any check-in baggage. The duty traffic supervisor offloaded the Chairman’s son and gave his seat to CIP.
The next day when the matter was highlighted, the Chairman gave a letter of appreciation to duty station manager and also recommended him for promotion. The present MD of PIA is also reported to travel in an unassuming manner and does not desire to be the focus of staff’s attention.
However, the same cannot be said about his senior-most executives. One of them was reported to be travelling on PK-722 of 22nd September from New York via Manchester to Karachi. He was seated on a bulkhead seat 1A and the seat adjacent to his (1C) was left unoccupied on specific instructions.
At Manchester an Arabic speaking revenue passenger was by mistake allocated seat 1C. Lo and behold this angered the PIA executive and in order to avoid his wrath, the staff begged the passenger to occupy another seat in club class. Any individual with such archaic arrogance, cannot be expected to help restore PIA to its past glory.
Commensurate with financial crisis that bogged PIA, the salary of its staff was reduced without a similar symbolic cut in salaries of senior executive, some of whom were paid three-year house rent in advance in addition to millions of rupees for purchase of new cars and renovation. There was a cosmetic reshuffle of schedules only to be reversed after four months and that only after huge losses incurred in terms of rise in operating costs.
There is a feeling of despondency amongst the staff, especially the pilots, who are so perturbed, because they feel that they are being intentionally harassed. They blame their association for having mishandled the situation by frequent disruption of flight schedules. It is not the salary cut that bothers them, but their misconceived perception of an arrogant management bent upon ridiculing them. Such perceptions, however vague their basis, assume force of reality when the vast majority of workforce believe it to be true. This is where the executives of PIA have failed.
Whatever surgical operation the management wanted to perform, should have been swift and short in duration, followed by confidence building measures, a phased and prolonged schedule of punitive measures, can be counter productive. The airline’s fuel cost and operating expenditure have risen sharply, thereby offsetting the advantage gained by cost cutting measures, which though not very drastic, were projected as such. An organisation which has a huge debt of over Rs 30 billion was justified in cutting costs and an across the board salary cut.
All national airlines in Asia and Europe enjoy a monopoly over ground handling, to offset the burden of operation on socio-economic routes, because of guaranteed revenues such services provide. PIA is the sole Pakistani airline that not only operates on socio economic routes but also picks up the tab for discounted confirmed travel facilities for various categories including the armed forces. Yet it is being deprived of badly needed revenues, which ground handling generates. Due to fierce competition and rising fuel costs, even airlines like Emirates survive on the basis of revenues generated by D’nata, which is the sole ground handling agency at Dubai and is a subsidiary of Emirates Airlines.
When Swissair declared bankruptcy it was discovered that it was surviving on basis of revenue generated by ground handling, catering and hotel business. In any case ground handling is part and parcel of core airline business. With ground handling being taken away from PIA, the chances of its economic revival will become more bleak. PIA will end up raising fares for passenger and cargo payloads, and will ultimately be driven into oblivion by market forces.
After the collapse of General Zia’s regime a representative government was restored. There was a demand for direct flights from northern hubs. However, PIA resisted this change and continued to maintain the status quo. Meanwhile, under mounting pressure the government first waited for PIA to take the initiative but when it refused to budge in on one pretext or another, the government finally succumbed to and gave permission to foreign airlines to operate from northern hubs. There was absolutely no co-ordination between CAA and PIA, and because of this ‘The Open Sky policy’ was ushered in such a haphazard manner that legitimate interests of the national airline were jeopardised, when bilateral agreements were done away with.
PIA had a monopoly over its ethnic clientele, which was now being shared by foreign carriers. There was no marketing strategy involved, the onus for losing its share of ethnic market, lay squarely on shoulders of PIA marketing department which failed to provide the client with a point of departure and arrival convenient to revenue passenger. To begin with the northern hubs were opened to regional carriers. Meanwhile, the collapse of the former Soviet Union had opened the gateways to more economical and shorter routes to Europe and America. This led to a closedown of operations from Karachi by major foreign airlines who now sought permission to shift their operations to Lahore and Islamabad. While the foreign airlines moved in to capture the vast passenger and revenue cargo market, PIA continued to resist this change and at the same time it was not willing to provide the required service itself.
Continued interference by political and autocratic regimes in appointments and promotions have deprived PIA of human resources which are vital for any organisation. Those who were pioneers of aviation in Pakistan have either retired or fallen victim to schemes like golden handshake initiated by Khaqan Abbasi or fallen victim to palace antiques aimed at ousting individuals who threaten to expose those within the management. Rumours like retirement of employees who have reached the age of 57 or 56 years only tend to demotivate the workforce. There is a worldwide trend in aviation industry, that tends to do away with traditional conservative marketing practises in an age where online internet sales of passenger tickets and revenue cargo today has assumed a sizeable proportion of total sales.
Low cost airlines promote their product by a motivated group of employees who man the check-in counters and flight crew that provides courteous service on board the flight. PIA also has a fixed client profile, which is 98 per cent ethnic Pakistanis who are expatriates working abroad in Gulf, Mid-East, Europe and USA. PIA flights operate only to destinations where there is a sizeable group of Pakistanis living at that station or in its immediate vicinity. All that is required is to provide them with a reliable and affordable service direct to a destination of their choice and one which is convenient to them.
PIA has an advantage over other airlines as long as it provides direct non-stop flights from northern hubs to Europe or one stop flights to USA and Canada, without a change of aircraft. These passengers only require a courteous staff at check-in counters and good service on board along with a fast delivery of baggage at destinations. Unfortunately Pakistan’s civil aviation authority has failed to provide the minimal basic infrastructure at Islamabad, Lahore and Peshawar, which today provide over 80 per cent of revenue passenger traffic.