ISLAMABAD - Minister In-charge of the Aviation Division on Friday told the Senate that PIA suffered a loss of Rs 54 billion from January to December 2019 against a loss of Rs 67 billion that the airliner suffered in the year 2018.

The losses remained Rs 13 billion less than the year 2018, thanks to the steps taken by the government to make PIA a profitable organization. Federal Minister Ghulam Sarwar Khan in a written reply told the House that the accounts of PIACL for 2019 were un-audited. However, according to the summary of losses incurred by PIA during the year 2018 and 2019, the government has been able to check the losses to a great extent.

The minister said PIA is passing through a dire financial state but the present government was very keen to make it self-reliant.

“Efforts are underway to improve the financial health of the Corporation by reducing its losses/ deficit through various means and modes,” he told the House.

He said the major reason behind the PIA’s losses is the increased financial cost due to the inherited loans of previous governments and rising markups and debt servicing besides a significant increase in fuel prices and devaluation of currency.

The issue of losses is being addressed at two levels; enhancing revenues and curtailment of costs. Revenue side is being addressed by improving market share through realigning sales team, manning stations on merit, aggressive sales promotion, improvement in product and services, focusing on revenue generation through ancillary sources, mounting new flights and expanding on existing productive routes such as KSA and Gulf. 

The cost curtailment side is being addressed through austerity measures and cutting down on unnecessary administrative expenses, discipline and accountability in functions to tap leakages and wastage, cutting down loss making routes and other ventures, route rationalization and shifting operational facilities suitable to PIA flight operations.

Consequently, the minister added, all performance indicators such as revenue, seat factor, yield and revenue per available seat are all showing tremendous growth as compared with previous years and while considerable reduction in operating and administrative costs are achieved for the same period.

The Senate was further informed that the open skies policy cost the national exchequer Rs 107 billion in a single year. “PIA’s financial crisis had started with the advent of the Open Skies policy adopted in 90s and subsequent grant of liberal rights particularly to UAE and Gulf states. Approximately Rs 107 billion were lost by the Pakistan national exchequer during the year 2017 as a consequence of allowing open skies/liberal traffic rights arrangement to airlines of Gulf, UAE, Turkey and Sri Lanka.

All these passengers were the right of airlines of Pakistan, whose earnings otherwise would have contributed to Pakistan’s economy”, Federal Minister for aviation Ghulam Sarwar Khan told the House during question hour.