The privatization of our national airline reminds one of the Greek legend of Penelope’s loom – a continuous exercise designed to tire suitors.
Since PIA’s creation in 1955, its history has been a triumph of experience over hope. Initially, PIA took off with enviable success, under Air Marshal Nur Khan (MD 1959-65 and chairman 1973-79) and Air Marshal Asghar Khan (president 1965-68). Their dynamic tenures were lauded as the ‘golden years of PIA’. Its hostesses wore uniforms designed by Pierre Cardin and PIA became the first non-communist airline to fly into the People’s Republic of China.
PIA taught fledgling airlines like Emirates to fly. However, over the past thirty years, PIA has become an albatross around the neck of every government. It sustained operating losses and liquidity problems, due (according to IMF) ‘to frequent pilot strikes, issues with various vendors, over-staffing, and political interference in airline management’. Some critics believed that its acronym stood for ‘Perhaps I’ll arrive’ or ‘Please inform Allah’.
Each successive government has tried to unload PIA through privatisation. They could have considered the example of that High Priestess of Privatisation – the British PM Mrs. Margaret Thatcher. She believed that the state’s role should be of a regulator, not owner.
By the 1980s, the national airline British Airways had become inefficient, insolvent and overmanned. A newly elected Mrs. Thatcher appointed Sir John King to transform it. He succeeded. From losing £140m (1981), BA made a pretax profit of £268m (1989). This was achieved ‘through performance incentives, training, and substantial severance packages for over 20,000 staff.’ [BA reduced its employees’ strength from 58,000 to 38,000.]
Here, in May 2024, the Pakistan government restructured PIA, bifurcating it into two entities: PIA Holdco and PIACL (Operating). PIA Holdco is responsible for non-core assets and liabilities – hospitality, investments and real estate (including Roosevelt Hotel in New York). PIACL (Operating Company) manages the core aviation business: air transport operations, ground handling, engineering, etc.
By this division, PIA’s negative equity was overnight reduced from PKR 698 billion to PKR 45 billion. Its employees have been reduced from 18,000 to 7,000. In 2014, its operations showed a profit of PKR 9.3 billion.
The open auction scheduled on 23rd Dec. has attracted a motley band of bidders. One is a consortium of Lucky Cement, Kohat Cement, Hub Power Holdings, and Metro Ventures Ltd. (a US firm specializing in land use/school planning). Another comprises Habib Corp. (a financial services conglomerate), its subsidiary Fatima Fertilizer, The City School (a private school network), and Lake City Holdings (a real estate firm). A third is Fauji Fertilizer Company (a military-backed conglomerate), and the fourth Airblue (a private sector airline) linked to former Prime Minister Shahid Khaqan Abbasi.
None of the bidding groups has any experience in the aviation sector. But then, neither did the sponsors of the four privately owned Pakistani airlines – Airblue, Serene Air, Air Sial, and Fly Jinnah – which are operating successfully. (Two others – Shaheen Air International and Air Indus – crash-landed under the weight of their ambitions.)
PIA’s employees wanted to submit a bid, expecting the right of first refusal. Instead, they must console themselves with the government’s unenforceable ‘expectation’ that the new owner will continue ‘safeguarding’ their jobs, pensions, gratuity, and other benefits.
Somewhat unclear is the ‘open’ auction process to be followed on 23rd Dec. Buyers can bid for between 51% and 100% of PIACL’s shares. Presumably, any successful bidder for 51% shares would get a majority ownership and management. What happens to the residual 49%? Will they go to the next highest bidder, or be shared amongst the other bidders? Or remain with the Government as the remains of the albatross?
Sir Colin Marshall (a CEO of British Airways) warned: ‘Privatization is something not to be lightly undertaken. The major problems of finance, restructuring and dealing with images in transition, are only the beginning. Beyond these are the uncharted areas of management/staff relationships, customer awareness, and responsiveness’.
British Airways had to relearn quickly that it was ‘a service business, not just an airline’. Today’s passengers have become more discerning and demanding. They have experience of international airports that offer integrated check-in, pleasant lounges, numbered boarding, etc.
Our ‘international’ airports are a replay of World War I – Sauve qui peut. Passengers have to queue for entry, fight for parking spaces, skirmish with porters, and struggle with damaged baggage trolleys. Boarding passengers embark as bruised as their luggage.
The new owners of PIACL (it commands 70% of the market) along with other airlines will have the clout to negotiate more forcefully with the Pakistan Airports Authority, which administers our airports. Without a coordinated improvement in on-ground airport facilities, travel on any of our airlines will only prolong the punishment suffered by paying passengers.
F. S. AIJAZUDDIN
Published in Dawn, December 11th, 2025
Presented on this site by kind permission of the author
