Air India lessons

There are lessons how PIA can be privatized

India has shown the world it is possible. The buyback of Air India by the Tata Group shows that an airline can be privatized if the government has the requisite political will. The $2.4 billion sale has particular relevance to Pakistan because its flag carrier, PIA, has also been up for sale for some years. The problems faced by the two are not quite identical, but there is enough commonality for the Pakistan government to learn. Air India was not really profitable even before the covid-19 pandemic that more or less destroyed the aviation industry. PIA was also losing money, and various attempts to make it profitable, including importing new management, backfired. The losses suffered by both airlines led to them becoming heavily indebted, which then became another hurdle in the way of privatization. The Air India example is instructive, with the Tata Group agreeing to take on a quarter of Air India’s debt of INR 615 billion.

Another hurdle PIA has is rampant trade unionism combined with a ‘jobs for the boys’ policy followed by all past governments. No investor wants to take on such a large number of employees who cannot pull their weight in a private company. The government has no real option with PIA except to privatise it. It has tried all sorts of bright ideas, with the net result that PIA is a burden on the public exchequer.

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PIA does not have an obvious buyer like the Tata Group, which was the owner from which Air India was nationalised half a century ago, but the Air Sial experience indicates the path ahead. Air Sial was founded by the same consortium of businessmen who started Sialkot Airport as the country’s first private airport. It seems that what is needed is something that PIA has lacked, especially in recent years: professional management which regards aviation as an industry in which the primary responsibility of a business is to turn a profit.

The Editorial Department of Pakistan Today can be contacted at: [email protected]


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