05/06/2014
The Pakistan International Airlines (PIA) has started showing signs of improvement, thanks to an ‘overhaul’ plan chalked out by the new management under the guidance of Special Assistant to Prime Minister on Aviation Shujaat Azeem to bring the national flag carrier at par with other international airlines.
PIA has not only turned into a profitable organisation but also improved a lot on flight punctuality, service standards and aircraft inductions. The airline has attained an operating profit of Rs 1.67 billion in the first quarter (January 1 to March 31) of this fiscal against a loss of Rs 5.66 billion during the corresponding period last year.
According to results of the first quarter, the total revenue stood at Rs 28 billion, against Rs 25 billion during the same period last year.
With stringent cost curtailment measures in place, the total operational expenditure remained Rs 26.29 billion, against Rs 30.64 billion during the last year. The total expenditure including the financial cost and taxes stood at Rs 30 billion, against Rs 33.64 billion during the corresponding period last year. The net loss after paying financial costs and taxes stood at Rs 1.98 billion, against Rs 8.62 billion during the last year, thus showing a remarkable decline of almost 77% in losses. The loss per share dropped from Rs 2.86 to Rs 0.56.
Costs curtailment is one of the major initiatives taken by the new management to improve the state of affairs at the PIA. The airline has saved Rs 1.25 billion per month on fuel costs by reducing the speed of the aircraft and induction of latest fuel-efficient aircraft. The airline also applied fuel tankering policy, ie purchasing fuel from stations where prices are low. The fuel costs, which constituted 56% of the total expenses, have now been brought down to 48% and are expected to reduce further with the induction of more latest fuel-efficient aircraft.
In catering section, the food costs have been reduced by hiring the services of well-reputed catering service provider, modification in the menu and better utilisation of raw material at PIA flight kitchens. These measures have resulted in over Rs 50 million savings per month.
In marketing area, the loss-making routes have been closed, such as Amsterdam, Frankfurt, Hong Kong and Bangkok. The off-line stations closed include: Sydney, Glasgow and Yanbu. The frequency of flights to profitable destinations such as Kuala Lumpur (five flights per week) and Toronto (four flights per week) has been increased. The average number of PIA flights per day has been increased to 110 from previous 90 through better flight scheduling and aircraft utilisation. More than 120 excess employees have been rationalised at foreign stations. These measures have saved PIA an amount of Rs 200 million per month.
The aircraft induction process, which was previously kept in cold storage, has been revived. As soon as the PIA gets delivery of latest fuel-efficient aircraft, the flight punctuality and capacity constraints will be eliminated, allowing room for increasing flights on profitable routes and adding new destinations.
As part of revival strategy, PIA is in the process of acquisition of modern and fuel-efficient fleet. It will not only address the issue of capacity constraints but also enhance the brand image by giving better frequency and connectivity to the passengers. Process for acquisition of 11 narrow-body, four wide-body and four turbo props has been initiated in a transparent manner. For the first time in country’s history, tenders were opened in the presence of journalists and the ceremony was telecasted live on the electronic media.
In the engineering department, the warranties of spare parts were utilized. The airline is in the process of renewing its Part 145 certification. The engineering department has been instructed to maintain its strict safety standards even if it delays a flight. A separate division in engineering department has been set up to cater to third-party aircraft maintenance, which will bring additional revenue to the airline.
The airline baggage policy has been reviewed and revised as per international trends and based on capacity of the aircraft.
Hotel costs of PIA crew layover have also been reviewed and cost-effective hotels have been selected.
Employees are being given compulsory trainings in all areas. Efforts are being made to improve customer services at PIA booking offices and airport check-in counters.
Surprise visits to all airports are being made by the higher management to keep a check on the performance of various departments and agencies including PIA, ASF, CAA, FIA, Customs and the ANF. Surprise checks are also conducted of the PIA aircraft to check cleanliness on board, toilets, and discipline of the cabin crew.
De-briefs written by pilots after each flight are monitored on daily basis.
A policy of zero tolerance against corruption has been introduced and is being implemented effectively.
ILS CAT 3 being installed at the Lahore airport which will enable flights to land even in thick fog with zero visibility, thus save millions of rupees in terms of fuels costs and the time.
Checking counters of ASF, ANF and Customs have been rearranged so that passengers are facilitated and checked in one go instead of getting checked thrice. The customer confidence in the airline is achieving momentum now, which is evident from numerous positive customer feedback forms received. The complaints by customers are being reviewed to bring in further improvements in the service standards.
If this trend continues, there is no doubt that PIA will be a totally profitable venture in a couple of years, and will relive to its slogan: ‘Great People To Fly With’.
