LAHORE - Pakistan is losing up to $8 billion every year as foreign airlines are taking more than 50 percent passenger load to international destination which could have been given to the local carriers.

The major beneficiaries of the country’s flawed aviation policy are three airlines belonging to three Gulf States.

Sources in Civil Aviation Authority (CAA) confided to The Nation that from Karachi alone the capacity mounted by foreign carriers for UAE is approx 5,000 seats daily, out of which Emirates airline has 50 percent market share with daily seven flights to Dubai from Karachi.

The total loss Pakistan is suffering on Karachi-UAE sector is approx to $725 million. If we include other stations i.e. Lahore, Islamabad, Peshawar, Faisalabad, Multan and Sialkot, the average yearly depletion of Foreign Exchange of the country is around 6 to 8 billion dollars yearly.

Yearly capacity floated by foreign carriers from Karachi to UAE is approx 1,825,000 seats.

Assuming 75 percent seat utilisation by these carriers throughout the year, we get 1,368,750 seats which are utilised annually from Karachi station, an aviation expert said. Now assuming that 60 percent of these utilised seats is availed for UAE, we get 821,250 seats. This leaves around 547,500 (40 percent) seats for foreign destinations beyond UAE, like UK, Europe, USA, the expert said.

On an average if tickets are sold for Rs25,000 for Karachi-Dubai flight, the dollar value amount comes to $200 million. Similarly, on average if tickets are sold for Rs100,000 for beyond-UAE flights, the dollar value amount comes to $525 million.

This brings foreign exchange reserves depletion as all foreign operators convert their sales in dollars to remit the earning to their countries.

It is all Pakistani traffic which travels on these foreign carriers, so it’s our passengers who are compelled to use foreign carrier since there is no adequate capacity mounted by local players.

If these carriers are restricted to operate as per 50 percent traffic rights then loss of foreign exchange reserves will be reduced significantly. Moreover, aviation infrastructure would see expansion and aviation industry would create direct job benefits for the people of Pakistan. Approximately 100,000 to 150,000 new jobs would be created.

A retired aviation officer seeking anonymity said that the national aviation policy is extremely damaging for the industry. He said that the age restriction of the aircraft has resulted in heavy capital investment in the business which does not make the business viable as Return on Investments are poor.

Due to security issues, aircraft owners are reluctant to lease their aircraft in this region. Even if they agree the lease cost and security deposits are extremely high which makes the cost of operations too high. Competition on the other hand is extremely tough as all foreign carriers are well entrenched and there is no security threat in their regions.

Moreover Carriers like Eithad, Qatar, Emirates are supported by their governments and since they have oil based economy their fuel is subsidised. Fuel in aviation industry constitutes approximately 35 to 40 percent of the overall operating cost.

Another aviation expert said that restriction on aircraft age should immediately be abolished. There should absolutely be no compromise on the safety standards however if an aircraft is airworthy it should be allowed to fly, he added.

He further suggested the government immediately control the foreign carriers and reduce the traffic rights. Concessions should be granted to the local carriers in the form of reduced taxes, duties, parking and aeronautical charges. The regulatory authority should ensure a level playing field for the operators and strict control on traffic rights should be implemented. Traffic rights should be granted to foreign operators under the compliance of “Bilateral Air Services Agreement” only.

A PIA officer said that no foreign carrier should be given additional traffic rights and the regulatory authority should ensure and safeguard the interest of the local carriers.

Those foreign carriers who are operating frequencies in addition to the Bilateral Aviation Safety Agreement (Basa), commercial agreements should be initiated and royalty to the local carriers be provided.

There should be no compromise on safety standards and all private operators should follow the industry benchmarks, he said. For the development of aviation infrastructure offices and proper allocation of space be provided to the local carriers at the airport and its vicinity.

Once a level playing field is set the regulatory authority can invite open competition, but initially the national carrier interest has to be safeguarded, the officer suggested.

Over and above, he said, if any additional rights are given to foreign operators, local operators should be given royalty per passenger. Local banks could play a role of guarantors, he concluded.