A parliamentary fact-finding committee has identified the expansion of Gulf airlines and Pakistan’s Open Sky Policy as key factors behind the decline of Pakistan International Airlines (PIA), reducing its market share from 50% to 20%. A report submitted to the National Assembly Standing Committee on Privatisation highlighted that Gulf carriers exceeded the scope of bilateral air service agreements, undercutting PIA’s competitiveness.
The report further pointed to frequent management changes and financial mismanagement as major contributors to PIA’s downfall. It recommended the formation of an Inquiry Commission to investigate former Aviation Minister Chaudhry Ghulam Sarwar, whose controversial statement about PIA pilots allegedly led to a $600 million revenue loss over four years.
The committee found that international airlines now operate over 100 weekly flights under the Open Sky Policy, while PIA struggles with an outdated fleet, financial shortfalls, and high taxes on aircraft expansion. PIA’s liabilities have surpassed Rs740 billion, covering vendor dues, fuel charges, and government-backed loans.
While the Open Sky Policy aimed to increase competition and service quality, it inadvertently favored international carriers, particularly Gulf airlines benefiting from government subsidies. The report noted loopholes in bilateral agreements that failed to cap the number of foreign passengers or airlines operating in Pakistan.
The committee highlighted how the sixth freedom of air, allowing Gulf carriers to transport passengers between Pakistan and third countries via their home bases, further eroded PIA’s market position. Over the past decade, Emirates, Qatar Airways, Turkish Airlines, and Etihad Airways have significantly increased their Pakistan operations, while PIA’s passenger count has dropped 26% since 2000 despite population growth.
Efforts to privatise PIA have also stalled. Secretary Privatisation Commission Usman Bajwa told the committee that $4.3 million had already been paid to financial advisor Ernst & Young for the privatisation process, with another $2.6 million due after a second attempt. However, he could not confirm when an Expression of Interest would be issued to invite bidders.
PIA’s operational challenges are compounded by a shrinking fleet, with only 19 of its 32 aircraft currently in service. Six out of 12 Boeing 777s remain grounded due to financial constraints. To mitigate the shortage, the airline opted for wet-leased aircraft, but this resulted in losses, including Rs2.9 billion from the failed Islamabad-London Premier Service.
The committee observed that the Golden Handshake Policy, intended to downsize the workforce, led to the loss of experienced engineers and technical staff, many of whom were hired by competitor airlines. PIA’s employee-to-aircraft ratio stands at 215, exceeding the industry average of 200.
The fact-finding committee recommended stable leadership, fleet expansion, financial restructuring, and aviation policy reforms to revitalize PIA. It urged a review of the Open Sky Policy to create a level playing field and stressed the need for transparent governance in any future privatisation plans. The report also called for restoring key international routes and regaining passenger confidence through service improvements.
