The great air race
Almost 20 months and one Government later, the powers-that-be have taken the advice of THE NATION (April 25, 1989) in “A CASE FOR MORE AIRLINES”, asking for applications that may result in more than one airline in the private sector. For Pakistan’s economy to open up, exploiting the potential of air dynamism is a must. To our excellence in some disciplines viz, hockey, banking and squash, one can add aviation. Our pilots and aviation engineering staff have standards far above the ordinary, true for both the military (PAF) and civilian (PIA) sectors. The failure to break up PIA’s public sector monopoly has stunted natural aviation growth in Pakistan. We have never been able to recapture the “Nur Khan” years pre-1965, PIA has thereafter run on the momentum of that period, brief interim spurts directly proportional to the performance of Chief Executives.
Nawaz Sharif Government’s new initiative in attempting to break the logjam created by PIA’s monolith in the domestic aviation industry is a wise move. Wherever aviation industry has been de-regulated in the world, visible benefits have been in improved services to the general public. The de-regulation of the aviation industry in the US created a virtual plethora of regional and nation-wide Airlines. The competition reduced the cost of air travel with commensurate improvement in service, innovations like Peoples Airlines “No Frills” to Braniff’s “Total Luxury in the Air” offered a wide range in quality and frequent choice of flights to the public, enhancing the average American’s air-mindedness. The invisible effect was force-multiplying commercial and industrial activity as distances became measured in return time at competitive prices.
The proliferation of Airlines registered fears about aviation safety, the frequency of flights making for crowded airspace. State-of-the-art technology has aided the Federal Aviation Agency (FAA) in maintaining quality Air Traffic Control (ATC) standards. Whereas it may not be possible to duplicate western standards totally, our technological proficiency needs upgrading to be relatively commensurate to international standards. Once the first flush of the aviation bonanza in US due to the deregulation was over, the competition ensured that many airlines either merged to survive or had to close down. To give total service to the discerning average customer, many larger airlines took over smaller airlines serving Feeder routes, between main commercial cities the “Shuttle” became an instant industry success. Hour after hour, almost around the clock, aircraft shuttle between places like New York and Washington, New York and Boston, Boston and Washington, etc. Arriving at the Departure Gate upto 5 mins before boarding, you buy your ticket and walk onto the aircraft with your carry-on luggage. The hassle of booking one’s ticket in advance, reaching the Boarding Counter at least 45 minutes before the flight, etc is thus avoided, serving to increase business and professional efficiency.
From being Pakistan’s Corporate pride, PIA is presently in Corporate shambles. The Airline still functions relatively smoothly but hardly as efficiently or cost effective as a modern airline should be. Its decline can be traced to bureaucratic meddling and to political cronyism, complicated by erratic management lacking the guts to stand upto either. PIA has an excellent cockpit and engineering staff, the performance of its cabin crew and ground staff is intermittent, mostly dependant upon the capability and work-ethic of the Supervisors or the individuals themselves. Bad Corporate practices have ensured that Services which could be contracted out e.g. cleaning, transport, security, catering, etc have all been made an in-house PIA capability thereby increasing recurring overheads and reducing efficiency. True, the mitigating circumstances were the lack of a Services industry in Pakistan, developed only during the last decade or so, the port city of Karachi having some capability mainly dedicated to the servicing of ships. The personnel of these departments in PIA have become an albatross tied to the profitability of the Airline. Add to this the unqualified personnel taken in by droves because of political or administrative connections for non-existent or even specially created posts, the overheads have piled up and multiplied. The troubles have been force-multiplied by the use of the “Nur Khan” formula i.e. importing senior serving Air Force officers to head the Airline. Capable and dedicated officers, transplanting their administrative acumen and ability into Corporate and commercial life has not been fair and has had erratic success. Some people can become businessmen, some cannot, PIA is after all a commercial entity. An outstanding success as PIA’s executive head the first time around, even Nur Khan could not emulate his previous performance during his subsequent stint. If a constant policy had been followed of choosing able business managers, from within the Airline preferably and from outside, if necessary, PIA’s present slide could have been reversed. Privatisation of PIA while maintaining public sector control to co-exist is a confused solution. The Government is doing the right thing by bringing in private sector to compete with PIA.
As many as 16 Corporate entities have applied for permission to open private Airlines. The Utopian formula of allowing all 16 to establish Airlines operating over any domestic route that they should choose would not be totally incorrect, the public sector maintaining control over (1) staggering time slots for operational reasons (2) ensuring that the aircraft used are safe for public use (3) the senior personnel proposed for operating the Airline have adequate experience and (4) that minimal or no extra demand is made on existing public utilities like Airfields, etc or for infra-structure to support them. The handicap of our precarious foreign exchange (FE) position could be overcome if the intending entrepreneurs avail non-repatriable FE funds raised outside the country to purchase necessary aircraft and equipment, etc. However, Third World countries have to apply some restrictions in allowing unfettered economic freedom, even the most developed countries maintain effective control over aviation by not allowing unrestricted proliferation.
The Government should appoint three different Committees to study the applications. The charter of the Finance Committee should be to study the financial side of the application inasfar as (1) the financial credibility of the Sponsors, individually and as a Group (2) their Corporate performance including the payment of taxes by them (3) their ability to raise the necessary funds by themselves or through financial institutions and (4) the Corporate capability of the financial managers for the proposed Airline. The Second (Technical) Committee’s charter should be to independently analyse the operational side of the application studying (1) the previous experience, if any, of the Sponsors in aviation, whether civil or military (2) the proposed aviation management team and their aviation experience (3) the operational and commercial plan of the Sponsors (4) the Curriculum-Vitae of their proposed top operational crew i.e. the cockpit and engineering staff. Once these two Committees have independently given their reports, the Evaluation Committee should collate the reports of both the Committees and give recommendations based on a joint evaluation. The Evaluation Committee should have no powers to change the findings of the other two Committees though they can (and should) point out glaring discrepancies, their role should be restricted to simple evaluation of the TWO reports. The head of the Finance Committee should preferably be a retired reputable and experienced senior Banker, with Members being Chartered Accountants, Bankers, Income Tax Practitioners, etc. A Member should be co-opted from the Income Tax Department. The Technical Committee should be headed by a Retired Chief of Air Staff (CAS) and should include as Members senior retired PAF and PIA management and operational personnel who should certify that they have no interest whatsoever with any of the proposed private airlines. The Evaluation Committee should be headed by a retired Judge of the High Court and should include as Members, politicians and technocrats with no obvious vested interest. All three Committees should each have a serving middle-level bureaucrat as Secretary. This would allow for a fair assessment to be made of the applications without allowing any vested interest affecting the final decision (or seeming to). Shahbaz Sharif’s rumoured involvement with the Mansha (National) Group that has taken over MCB has become a controversial allegation that is anathema for the Nawaz Sharif Government. It is rumoured that in the present great air race Al Baraka Investment of Saudi Arabia made the actual application on behalf of REDCO, that may be a fig leaf which may not cover much.
Most of the contenders have a strong financial background, only Shaheen Foundation, Schon Air, Army Welfare Trust, Punjnad Aviation, Aga Khan Investments, have aviation experience of any kind, some purely in the military field, some in civil charters, etc, making for short list. The Government should choose more than one airline to operate on any domestic sector that the private Airline may opt for. Market forces should be allowed to dictate the eventual survivor over any route, with due subsidy to PIA in operating over unprofitable routes purely for socio-economic reasons. If a private airline must come into competition to PIA, the nation’s interest would be best served by keeping the choice of airline/s fair.
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