Source: DAWN - December 06, 2006 Wednesday Ziqa'ad 14, 1427

KARACHI, Dec 5: PIA’s financial woes are expected to aggravate further by at least Rs500 million to Rs1.5 billion per month owing to a rise in rentals of leased aircraft and an increase in instalment payments of newly acquired aircraft.

The national flag carrier, according to sources, was already facing a financial crunch as its total liabilities exceeded by over Rs22 billion.

They said PIA paid over $22.5 million to MNG, a Turkey-based concern, in 2005 for cargo freighter uplift by five weekly flights to Luton (UK), Frankfurt and Hahn (Germany). From January to September 2006, the airline’s total revenue from cargo was Rs5.796 billion, but the revenue generated by the chartered MNG totalled Rs1.274 billion, the sources said.

They said the airline paid $17.02 million as freight charges. If PIA were to account for cost of fuel, over-flying, parking and cargo handling charges and surface transportation by trucks from Luton to Heathrow, the Rs235 million revenue after deducting just leased freight charges would translate into a gross net loss of over Rs300 million.

A source in PIA’s cargo section told Dawn that the airline carried 63,511 tons of cargo from January to September 2006. “The total cargo carried by MNG during January to Sept 2006 was a mere 9,786 tons,” he added.

An official of PIA’s press and public relations department declined to comment when this correspondent asked what the airline had to say in the matter.The sources said the airline not only failed to capitalise on its own national cargo market, the bulk of which was being carried by foreign airlines, but also failed to avail the opportunity of transporting vast quantities of air cargo from China.

According to the sources, PIA's high-yield sectors are the Gulf, Saudi Arabia and China, followed by the UK, Norway, etc. The return economy class fare for Islamabad to Beijing, a five-hour journey, is $1,100, which is the same as return economy fare to the US and Canada, they said. The airline, it seems, attaches more importance to prestige low-yield routes than high-yield ones -- a luxury it can hardly afford given its ever-increasing losses.

Sources said PIA recently leased a Boeing 777 from Malaysia for two months and 10 days, paying a lump sum of $5.5 million, to operate four Manchester flights a week. They said that the first flight was delayed by over two hours due to technical defects and added that the airline would foot the bill for fuel, crew’s stay in a hotel, landing charges, etc. Since the leased Boeing 777 had different engines, the crew concerned had to undergo special training in Kuala Lumpur while the aircraft remained unutilised -- a sad reflection on the professional competence of the airline’s corporate planning department.

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