Crisis in Pakistan of Pia

Topics: Pakistan International Airlines, Karachi, Boeing Pages: 8 (1839 words) Published: January 15, 2013
The Crisis of the Pakistan International Airlines P.I.A

Presented by

• M. Sultan ul Haq
• M. Umair
• Hafeez Hasnain
• Ifqar Majeed

Riphah School of Leadership.

Letter of Transmittal

We, the students of BBA semester 4, of Riphah School of Leadership is allowed to work on the Topic.

The Crisis of the Pakistan International Airlines P.I.A

Supervisor’s Signature

Ms Arooj Malik.


We all like to thank Ms Arooj Malik to guide us and thought us very sincerely so that we are able to make this report.


This research is done to identify the reasons for the crisis of the PIA. An airline which was once the pride of Pakistan and the favorite of expatriates all over Europe has today been placed under scrutiny. The research is also been done to create awareness among the nation to retrieve its lost status. This report also reveals the reasons which caused the organization heavy losses.

Pakistan International Airline (PIA):

Pakistan International Airlines Corporation (PIA) was the national flag carrier of the Islamic Republic of Pakistan. Founded in 1954, PIA operated both scheduled passenger and cargo services. The firm was 57% state-owned, with the remaining 43% held by private investors internal to Pakistan. PIA had been Pakistan’s only airline for over 40 years, but in 1993 Aero Asia International Ltd. was born. By 1996, however, it had captured little of the domestic or Pakistan international market (only 5% of Aero Asia’s sales were international). Two other recent entrants into the domestic market, Bhoja Airlines Pvt. LTD and Shaheen Air, had captured little of the market. The International Air Transport Association’s (IATA) latest projections indicated that passenger and cargo traffic would double in Asia by the year 2010. Asia was expected to surpass Europe and North America in both size of fleets and passenger/cargo hauled. PIA was experiencing some of this growth, but its aging fleet was resulting in losses. Increasing numbers of flights were either delayed or canceled as a result of maintenance problems. Although a larger and larger proportion of the population was traveling by air, given the choice of taking a PIA or foreign carrier, passenger traffic was opting for the latter. It was imperative that PIA modernize its fleet. In addition to PIA’s traditional passenger and cargo services, a growing proportion of sales was arising from the yearly Islamic Haj (pilgrimage) traffic to Mecca and Medina in Saudia Arabia. Demand had always been strong, but increasing numbers of Pakistani citizens were obtaining visas for the pilgrimage, as Saudi Arabia had recently shuffled the allocation of Haj visas among nations and Pakistan had benefited. PIA was a direct beneficiary of the increased visa allocation. PIA had originally planned to purchase new commercial aircraft to replace and add to their existing fleet. The fleet modernization program, however, was put on hold due to higher priorities within the Pakistan government in Islamabad. These priorities were established after a review by the IMF of the government’s spending plan. Much to PIA’s discomfort, the austerity plan proposed by the IMF did not include funds for modernization. PIA had been counting on this fleet modernization and had postponed the incorporation of some Federal Aviation Administration (FAA) safety directives. With the cancellation of the fleet modernization program, PIA now had to move fast to ensure compliance with FAA safety mandates, or face being locked out of some of its most profitable gates. If PIA did not have some of these safety systems and quieter engines installed on their aircraft by June 30, 1998, they would be barred from U.S. airspace. PIA was in a predicament. It knew exactly...
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