News Analysis |
Amidst promises of high profits emerging from the China-Pakistan Economic Corridor (CPEC), Pakistan International Airlines (PIA) is looking to start direct flights from Islamabad to Gwadar as the national carrier strives to gain air traffic and reduce its losses.
The national carrier in the doldrums faced more than Rs. 319.1 billion in accumulated losses by the end of March 2017, but is now looking to remove loss-making routes from its agenda, while adding new and what it cites to be profitable destinations to its schedule.
Flights to Dubai and Toronto are also incurring losses, but the airline is confident that the routes could be made profitable. Cyan also said Toronto is going to become a connecting flights’ destination for PIA to North America.
“We would connect Islamabad and Gwadar by the end of this year (December 2018)”. PIA Chief Executive Officer Musharraf Rasool Cyan told a local publication “Being the national carrier, we feel the responsibility for improving connectivity through Pakistan.”
Gwadar’s development is the flagship project under CPEC, and its port, set to be completed this year – links China to the Arabian Sea. Given its importance to both China and Pakistan, direct flights will give PIA a much-needed boost in its endeavor to reduce losses. It also recently suspended flights to New York, which it said caused a loss of Rs. 1.5 billion per year.
Read more: Why is Chabahar Port no match for Gwadar?
In addition, the new Islamabad airport, which is due to start operations in the first half of 2018, is set to give PIA an edge, believes its CEO Cyan. Cyan said the new Islamabad airport could be the new hub Pakistan desperately needs as it looks to boost tourism after losses due to terrorism, and a precarious security situation turned away local as well as foreign tourists.
On the other hand, it is considering suspending or reducing the number of flights on some routes. The reduction in flight frequency could be seen on the route to Muscat and Kuwait.
“We want to make (the new) Islamabad airport a hub,” Cyan said, adding the airport would cater to passengers travelling from Europe, Africa as well as China and Asia Pacific countries. “If we find it appropriate, we would improve connectivity (through code sharing) with other airlines,” he said.
The PIA chief executive said the national carrier, for long a burden on Pakistan’s fiscal operations, would play a major role in determining the success of the new Islamabad airport. “It has been observed that airports and airlines are grown side-by-side … PIA would remain the key airline for Islamabad, which would remain only a terminal destination for foreign airlines,” he said.
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These days, PIA is developing its office and booth at the airport with a recently extended credit line of Rs. 13.5 billion from commercial banks and backed by state sovereign guarantee. The credit line is partly being used to meet working capital requirements and engines overhauling, he added.
Cyan said PIA would fly on new international routes in 2018, including Al-Qassim in Saudi Arabia, Guangzhou in China and one more destination in the region, which may be Mashhad in Iran.
The national-flag carrier would also fly to DG Khan from Islamabad and Lahore and vice-versa in 2018. Besides, it would increase the frequency of its flights to Multan, Zhob and Turbat. PIA flies to around 109-110 destinations around the world every day, including domestic ones. Right now, PIA is managing a fleet of 36 aircraft, which it plans to expand to 44 in the next three years.
PIA CEO said fleet management would also be improved by upgrading software at the engineering department. The software would help reduce the time of keeping faulty aircraft grounded for repair and maintenance.
Read more: Can India turn Chabahar from a gift into a curse?
Last year, its faulty aircraft remained grounded for a combined total of 443 days, causing a revenue loss of Rs. 3.5 billion. “If they had been operating, PIA had earned additional revenue of Rs. 3.5 billion in 2017,” he said.
Given its importance to both China and Pakistan, direct flights will give PIA a much-needed boost in its endeavor to reduce losses.
The optimist new forerunner recently said that the company has carried out analysis of which routes are causing the most losses, while studying potential ones where a market could be gained. Cyan said PIA would fly on new international routes in 2018, including Al-Qassim in Saudi Arabia, Guangzhou in China and one more destination in the region, which may be Mashhad in Iran.
On the other hand, it is considering suspending or reducing the number of flights on some routes. The reduction in flight frequency could be seen on the route to Muscat and Kuwait.
Read more: Is CPEC detrimental for Indo-Pak ties?
Flights to Dubai and Toronto are also incurring losses, but the airline is confident that the routes could be made profitable. Cyan also said Toronto is going to become a connecting flights’ destination for PIA to North America.