Privatisation Plans: Pakistan International Airlines
Privatisation plans
Saturday, September 14, 2013
From Print Edition
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The national carrier, PIA, will be privatised – reflecting the fact that, over the years, governments failed to control its decline. It has been losing Rs3.3 billion a month and the government’s hope is that the losses will be stemmed by handing over 26 percent of the shares and management control to a private entity. To make this a viable option, Prime Minister Nawaz Sharif has directed the PIA management to undertake a cleanup task so that buyers would step forward. It must be noted that airlines around the world are losing money right now because of the high international price of oil. On top of that PIA has additional issues like maintaining the highest ratio of employees to aircraft of any airline in the world. In this climate there may not be many buyers forthcoming unless they are provided all kinds of benefits and assurances. Previous administrations, like that of Pervez Musharraf, tried to sell off PIA and found there were no takers. Given the scandals that stemmed from past privatisation exercises, it is a good sign that the PM has stressed transparency and openness in the conduct of the process. This should be a priority and we hope the mechanism that is worked out will ensure this. The last thing we need is any allegations of wrongdoing or favouritism. Indeed from this point on the affairs of PIA need to be closely watched so that the path leading up to the selling of shares is not riddled with controversy or doubt. If the most likely purchasers emerge from the ruling party or their tycoon friends a disaster could be in the making. If somehow a monopoly occurs over air travel in the country, it would reek of political favouritism and patronage rather than doing what is in the best interests of consumers. The higher courts may eventually again be dragged in.
Beyond these issues is the broader question of what impact privatisation has on the economy
Saturday, September 14, 2013
From Print Edition
4 1 0 3
The national carrier, PIA, will be privatised – reflecting the fact that, over the years, governments failed to control its decline. It has been losing Rs3.3 billion a month and the government’s hope is that the losses will be stemmed by handing over 26 percent of the shares and management control to a private entity. To make this a viable option, Prime Minister Nawaz Sharif has directed the PIA management to undertake a cleanup task so that buyers would step forward. It must be noted that airlines around the world are losing money right now because of the high international price of oil. On top of that PIA has additional issues like maintaining the highest ratio of employees to aircraft of any airline in the world. In this climate there may not be many buyers forthcoming unless they are provided all kinds of benefits and assurances. Previous administrations, like that of Pervez Musharraf, tried to sell off PIA and found there were no takers. Given the scandals that stemmed from past privatisation exercises, it is a good sign that the PM has stressed transparency and openness in the conduct of the process. This should be a priority and we hope the mechanism that is worked out will ensure this. The last thing we need is any allegations of wrongdoing or favouritism. Indeed from this point on the affairs of PIA need to be closely watched so that the path leading up to the selling of shares is not riddled with controversy or doubt. If the most likely purchasers emerge from the ruling party or their tycoon friends a disaster could be in the making. If somehow a monopoly occurs over air travel in the country, it would reek of political favouritism and patronage rather than doing what is in the best interests of consumers. The higher courts may eventually again be dragged in.
Beyond these issues is the broader question of what impact privatisation has on the economy