PIA has turned a pre-tax profit for the first time in the first half of the current calendar year. Which is the first such profit since 2004. It had managed a profit in the last financial year, but only after tax adjustments. This might look suspiciously like fattening up the animal before sale, except for the fact that this has never been done before by the government, which may have preferred to sell off profitable assets, but which has never before ‘salted the mine’, as the saying goes. To give the impression that the asset being sold is more valuable than it is. Besides, the government could have gone around buying tickets, which is the real reason for the profits.
There have been two factors behind the improvement in results. The first is the resumption of landing rights to destinations in Europe, after a long process of convincing European aviation authorities that the matter of pilot licensing had been sorted out. That meant that the traffic of overseas Pakistanis would resume as a revenue stream. More important was the fact that the airline was freed of legacy debt, which had been assumed by the government, which meant that the previous losses, which had led to that debt, have now been borne by the taxpayer. Another factor must be the stopping of featherbedding. When PIA was routinely profitable, governments had felt that PIA meant jobs for the boys, and indiscriminate recruitments were carried out. The argument now becomes one of whether a national asset should be auctioned off. It does seem wrong to sell off a source of revenue. But then, as past bitter experience showed, the government has to bear the losses. The basic premise is that the government should get out of the business of doing business, and if it has any need for the national airline performing special tasks, like serving unprofitable routes, that can be arranged through the regulator.
The Civil Aviation Authority has had a cozy relationship with the PIA, but in an aviation environment where all airlines are in the private sector, it must develop a more aggressive approach. After PIA is privatized, it will serve as the main government agency in the aviation industry. Of course, PIA’s privatisation may not be the inevitability that it might seem. After all, the auction last year was a resounding flop, and it is only the need of the government to meet its obligations to the IMF (which include privatisation this year) which are forcing the sale.
