Malik takes on PIA
challenge By Syed Fazl-e-Haider
KARACHI - Pakistan's defense secretary,
Lieutenant General (retd) Asif Yasin Malik, was
appointed by Prime Minister Raja Pervaiz Ashraf as
the new chairman of Pakistan International
Airlines (PIA) on Wednesday following the
resignation after barely four months in the job of
Rao Qamar Suleman from the post in September.
Malik will have a challenging task to deal
with the financial mess and managerial issues
hitting the state-owned airline, requiring
difficult and politically sensitive decisions to
put it back on track.
Controlling
widespread corruption in the loss-making airline
will be the main challenge for the new chairman.
Today, the country is paying the price for the
prestige of having an international air
carrier, which relies
heavily on bank loans and government’s bailout
packages.
In spite of the depths to which
the airline has fallen, there were many aspirants
for the post of PIA chairman.
"There were
big names on the premier’s table for the
chairmanship and managing director positions but
the prime minister has chosen Malik as he is the
one who could handle the corrupt elements in the
corporation with an iron hand," The Express
Tribune reported, citing an unnamed source at the
prime minister's secretariat as saying.
Malik, who belonged to Punjab regiment,
retired from the army in December 2011. In April
2010, he took over as corps commander Peshawar,
the capital of Khyber Pakhtoonkhwa province. As
operational chief of Pakistan army, he directly
supervised military offensives launched in the
northwestern tribal area. Malik has also served as
deputy director general of Inter-Services
Intelligence (ISI).
Suleman, a former
Pakistan Air Force chief, resigned as PIA chairman
on September 18 on health grounds, but there were
reports in local media claiming that he was
compelled to step down. His resignation came as a
disappointment for the airline. He had been
appointed chairman as recently as May 22 this year
after the Pakistan People's Party-led coalition
government removed the then defense minister,
Chaudhry Ahmed Mukhtar, from the position of PIA
chairman.
Suleman was introducing reforms
to cut losses, which was not appreciated by a
particular lobby, The News reported, citing
Captain Suhail Baloch, president of Pakistan
Airlines Pilots' Association. Suleman ensured
merit in the airline and took action unprecedented
in the history of the airline, including the
sacking of PIA's deputy managing director, Salim
Sayani, who had joined PIA in 2009 on a contract
basis and was drawing US$50,000 per month.
Last year, PIA grounded its nine aircraft
for want of spare parts. The grounding was the
result of a controversial business deal the PIA
signed in October 2011 with Transworld Aviation, a
Dubai-based US firm, which failed to supply spare
parts to the PIA at a time when more than 109,000
Hajj pilgrims were to travel with the airline.
Last month, Transparency International
Pakistan (TIP) requested the Chief Justice of the
Supreme Court, Iftikhar Muhammad Chaudhry, to take
notice of a host of issues prevalent in PIA,
including the purchase of aircraft at very high
prices and a loss of 410 million rupees (US$4.3
million) suffered by the airline because of
cancellation of 1,200 flights between August and
November last year.
It was alleged that
PIA had taken three engines on lease for $300 per
hour each while its own engines, which are ready
for installation in Singapore and Amman, were not
being brought back. It was also alleged that PIA
had acquired two jumbo jets recently but several
grounded aircraft could have been repaired for use
by spending the same amount of money.
The
key issues facing PIA in financial and
administrative terms include the erosion of market
position, a high fuel price, organizational issues
and a heavily burdened balance sheet. The major
reasons behind PIA's worsened financial position
have been ineffective marketing, an inability to
pass through high oil prices, a failure in hedging
oil prices, the use of old planes, an oversized
establishment, an ailing corporate culture,
negative equity and huge debt-servicing bill.
Last year, the Cabinet Committee on
Restructuring of Public Sector Enterprises
finalized a 20 billion rupee bailout plan for PIA
under a restructuring plan for revival of national
carrier. The plan was expected to bridge the
widening gap between expenditures and income.
Former prime minister Yousuf Raza Gilani, however,
refused to inject 20 billion rupees into PIA
without a clear roadmap for the national carrier's
financial and administrative restructuring.
Gilani constituted a committee under the
chairmanship of Finance Minister Hafeez Sheikh and
directed it to submit a report outlining a roadmap
for the PIA to the Prime Minister.
A Dawn
editorial said,
PIA has almost three times as many
employees per plane than the profitable airlines
in other parts of the world. And with an old
fleet to contend with, the maintenance and
operation costs tend to skyrocket ... Running a
modern airline requires a nimble management that
is professional and capable, which is not
hostage to a mafia-style employee cohort and has
the revenues or assets to finance its own
expansion plans. PIA has none of that. In fact,
as things stand, running PIA amounts to a
massive transfer from the poor to the rich as
taxpayers subsidize rich travelers. Quite
simply, the state should not be in the business
of flying commercial passengers and cargo around
the world.
Travelling industry pays 1
billion rupees in taxes to the government and more
than 700 travel agencies are at present
operational in Pakistan. Critics say that despite
the country's dismal law and order problem, the
absence of any policy at government level to
promote the aviation industry has exacerbated the
woes of the flagging industry, as only 18 out of
42 airport are functional and just nine are
equipped to cater to international traffic.
The country has been wiped off from the
radar of some of the leading foreign carriers
since the it became a frontline state in the war
on terror in 2002. The country has been declared
unsafe zone to travel by many countries. Singapore
Airlines in February rolled back its operation
there, British Airways stopped flights in 2008
just months after the German airline Lufthansa
curtailed flights to Karachi.
Syed
Fazl-e-Haider
(http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author
of many books, including The Economic
Development of Balochistan (2004). He can be
contacted at sfazlehaider05@yahoo.com.
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