Five new airlines are expected to enter the Pakistani aviation industry over the next twelve months, which will increase competition in the context of an open air policy. While this could reduce passenger numbers, the financially weak Pakistan International faces new challenges airlines (PIA).
Askari Air, Air Siyal, Go Green, Liberty Air and Afeef Zara Airways will enter Pakistan’s airspace to capture part of the growing aviation market.
“The country’s air traffic has increased 40% to 20 million passengers over the past five years,” said Shahzad Dada, Chief Executive Officer of Standard Chartered Pakistan, at the recent launch of the Emirates Standard Chartered Credit Card.
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According to a forecast by the International Air Transport Association (IATA), an association of airlines in the world, the current growth rate of the Pakistani aviation industry is expected to be around 9% a year, which could last until 2020.
These figures show us that the open-sky policy has proved beneficial to the country and its people, “said Mohammed Afsar Malik, former director of the Civil Aviation Authority (CAA), who played a key role in shaping the National Aviation policy , 2015.
Most of the upcoming airlines will target distant destinations such as Gwadar, Turbat, Panjgur, Khuzdar, Dalbandin, Zhob, Rawalakot, Skardu, Chitral, Gilgit, Bannu, Parachinar and Muzaffarabad.
Of these, Gwadar, Gilgit-Baltistan and Turbat were able to make direct profits from their tourism potential and work on projects of the China-Pakistan Economic Corridor (CPEC). For these remote regions, the new airlines will bring aircraft suitable for small airports.
The national airline PIA has used these routes so far as it is the only provider to meet the needs of these regions in the aviation sector. PIA, which has been assisted by Emirates Airline of the United Arab Emirates with two crewed aircraft, is now facing financial difficulties causing losses of more than 300 billion rupees. According to Malik, Pakistan’s domestic air traffic increased by 10%, which is six percentage points higher than the increase in international air traffic by 4%.
Although the market size in Pakistan is increasing, the share of domestic airlines is shrinking. In the financial year 2016/17 they carried 42% of the passengers, compared to 58% of the international airlines.
“Airlines are in the race to attract customers through tariff reduction, and if the market had not been free, the plane ticket received for Rs 10,000 would have cost around Rs 30,000,” Malik said. “The competition is good for the civil service.”
However, PIA does not seem to buy the idea.
“Private airlines, especially foreign airlines, have mainly resorted to price cuts instead of going more towards customer satisfaction in terms of comfort and enhanced services,” commented PIA spokesman in an e-mail response to a request.
Separately, a Shaheen Air spokesman said in an email “about every player in the airline chain including airports, aircraft manufacturers, jet engine manufacturers, travel agencies and service companies is bringing in healthy profits.” Yet it is one of the lingering ironies that companies actually use to passengers Moving from one place to another, which are a crucial link in the chain, have difficulty reaching the breakeven point. ”
He suggested that the government rethink its open skies policy as foreign carriers could invade the Pakistani market without restriction. “The authorities should develop a new concept called fair skies policy, with local carriers having a fair share in the market with foreign ones,” he said.
The industry did not oppose liberalization of the market, but it should be designed in such a way that industry players would not be harmed as they already had a low profit margin of less than 3%, he said. “Industry, including PIA, produces a combined net loss annually.”
The Emirates of the UAE and Etihad Airways, as well as Qatar Airways and other Gulf carriers, are having a tough time for Pakistani domestic airlines, who believe that it is difficult to compete with these foreign airlines as they are funded or operated by the state.
“Even US airlines are complaining about the Middle East airlines, but the point is that the customer benefits and the market grows, it all depends on the lens through which you see the situation,” Malik said.
He defended the open skies policy, pointing out that the whole world was following politics and leading the example of Europe, which opened its aviation market in 1978 and achieved decent results. Multan is a good example to judge the political outcome, as its traffic growth has increased five times compared to the time before the open skies policy was introduced.
At least six foreign airlines fly to Multan. Now, local businessmen do not have to travel to other cities to take a flight, and perishable goods are easily exported. PIA, which once had 48 aircraft in its fleet, shrank to just 18 pieces. Now the fleet has risen to 35 again.
PIA is not an airline, but an employment office for political parties that put their workers there to win votes, said Yahya Polani, former chairman of the Pakistani travel agency. Shaheen Air and Airblue each have about 22 aircraft, but they only have about 2,000 employees compared to PIA more than 15,000.
PIA has a ratio of 450 employees per aircraft, while Emirates employs 150 people per aircraft. “Who will win, so the policy of the open sky is the order of the day,” Polani said.
Thailand, Turkey, Malaysia and Dubai together have a population of 250 million and have more than 1,000 aircraft in total, while Pakistan has a population of about 210 million, but its airlines have a fleet of only about 80 aircraft.
“It is obvious that we will see big challenges when these foreign airlines enter our market, but the good thing is that intense competition is customer-friendly, which is the goal,” said Polani. He suggested that Pakistan could increase its air traffic with the help of tourism, as Malaysia won $ 28 to $ 30 billion from tourist hauling, Thailand harbored 33 million foreigners and raised $ 48 billion, and Indonesia hosted 1.5 million tourists. Pakistan does not even attract a million tourists, even though the country has big attractions.