LAHORE - Though British Airways operation in Pakistan is a good omen but at the same time it will decrease market share of already losses stricken PIA, said an aviation expert on Thursday.
British Airways suspended its flights from Islamabad to UK in 2008 following the terrorist attack on Marriot Hotel where their crew used to stay. Prior to this security problem British Home Department had in writing threatened to cancel all flights from Islamabad and rest of Pakistan to destinations in UK because of organized human smuggling originating from Gujrat. UK authorities had alleged that human smuggling was being carried in connivance with FIA Immigration that was allegedly being patronized by powerful politicians from there. The Marriot terrorist attack was the last nail in the coffin.
Now when British Airways is going to resume its operation to and from Pakistan next year it will further shrink the revenue of national carrier due to poor aviation policies of the country.
Bilateral agreements between countries usually grant 3rd, 4th and 5th freedom traffic rights which allow an airline of a country to operate flights from country of origin of an airline to another country as final destination and back on a reciprocal basis. Countries either do not allow airlines of another country 6th freedom traffic which allows the airline to carry passengers from another to their own country and then proceed from there to another country or put a cap on number of such revenue passengers for example Emirates or Qatar carrying revenue passengers.
Almost 50% of total international revenue traffic sales of tickets by all airlines which operate from Pakistan, both foreign and Pakistani is transacted in hard foreign exchange by our expatriates located all over the world. While other foreign airlines like Emirates, Qatar, BA, Milando etc On-Line Web Sales using Credit Cards constitute over 60% of all revenue receipts which are directly credited to their airline accounts, PIA’s online Web sales with payments by credit card constitute a meager 1.5% of its total sales. Even tickets sold by foreign airlines in Pakistan are preferably done using Credit Cards and revenue directly remitted to their own countries with added advantage that these airlines do not have to pay service charges to Global Distribution Services (GDS) such as SABRE etc. Almost $ 800 million are being annually remitted by all foreign airlines from their sales of tickets in Pakistan, through their travel agents or airlines sales offices located here, because they have appointed local banks based in their respective countries and revenues are credited directly to their own accounts. PIA Finance and marketing has failed to appoint a local Pakistani bank as facilitator to collect revenues earned globally through sale of tickets on its network. All PIA ticket sales are being done for decades through GDS and service charges are paid whenever a Boarding Card is issued for each sector on which the passenger has travelled. PIA’s share of Total International Passenger Market which is over 13.5 million per annum has shrunk from its previous share of 11 million to under 6 million and rest is carried by foreign airlines. Had PIA increased its Online Web Sales to 60% it could have saved almost $6 million that it paid to SABRE as service charges annually? PIA will now br paying service charges to HITIT.
With resumption of direct flights by British Airways, the national airline no longer has monopoly it enjoyed ever since suspension by BA of their flight operations to Pakistan. It should be noted that BA is not interested in operating flights to Karachi because bulk of Pakistani expatriate traffic originates from northern hubs and secondly the air-routes from Karachi via GULF and Iranian airspace are longer and navigations charges are more as compared to shorter and less costly navigation charges on routes overflying former Soviet Union.
PIA must focus on offering more direct flights from Islamabad and northern hubs for destination in UK, Europe, USA, Far-East etc if it wants to retain its already decreased passenger clientele which has been captured by foreign airlines which offer more competitive affordable and convenient flights from airports of choice where the traffic originates. It is Law of Supply And Demand which determines market share on routes where passengers have a choice of airlines. PIA can no longer force passengers to travel from Islamabad or Lahore to Karachi to fill their under load direct flights to UK.
Bilateral Air Traffic agreements must specifically put a cap on carrying 6th Freedom Traffic from Pakistan. For instance PIA has not been allowed to operate flights via Heathrow London to New-York etc with traffic rights to pick passengers from London to USA and vice versa on return flight in spite of efforts to get this permission for over 40 years. Similar changes will have to be modified in existing Air Traffic Agreements with airlines based in Gulf, Qatar, Turkey, Far East etc by restricting number of saleable revenue passenger traffic carried by these foreign airlines on flights from Pakistan to destinations in GULF etc via their home base and onward flights to other destinations. Bilateral Air Traffic Agreements need to be renegotiated or modified if local Pakistani aviation industry is to survive and also to restrict over $800 million that is remitted annually from Pakistan through their sale of tickets within our country. British Airway because of no capping of passenger carried under 6th Freedom of Air can now benefit from additional traffic by carrying passengers from Pakistan by offering convenient connection for destinations in Europe, USA etc especially now that PIA flights have either been suspended or frequency decreased. For instance PIA should restart flights from Peshawar and Lahore to Malaysia because bulk of traffic originates from northern hubs.