PIA needs to cut costs for survival

LAHORE - The PIAC Board of Director (BoD) has turned down proposed budget for 2014 and given approval only for First Quarter Budget of 2014 with directives to submit within 40 days a Strategic Business Plan with set targets for revenue generation and plans to achieve those targets. The Board emphasised upon complete documentation of all revenues, costs, procurements and disbursement plan. Meanwhile Un-audited Financial Statement of last Quarter of 2013 based on projections was presented to board which shows Annual Un-audited Loss from Jan to December 31, 2013 of over Rs. 40 billion, as compared to Rs. 33.18 billion from Jan to Dec of 2012. The Rs. 40 billion loss incurred in 2013 is almost equal to PIA’s Total Accumulated Loss of Rs. 42 billion from its inception to March 2008, when PPP-led coalition appointed Capt Aijaz Haroon to head this organisation. Aijaz Haroon appointed Saleem Siyani, a US national as DMD Engineering with a fabulous Tax Free Salary of $20,000 per month paid in Dubai, with justification that he will increase revenues, cost operating costs and raise revenues through Technical Services Marketing by providing maintenance and overhauling of engines etc of other airlines and a more effective cost saving procurement of technical spares.
 What happened was absolutely reverse, with total losses as on 30 Sept 2013 rising to Rs 183.277 billion, which according to un-audited Last Quarter statement will hike to Rs191.3 billion. Last Quarter Un-audited Loss from 1st October to 31 December, based on projections is Rs 8 billion, which will be audited by external auditors before final approval. PIA Operating and Administrative costs have risen, while fuel costs have decreased with lower utilisation of aircrafts and almost half fleet grounded. Aviation marketing specialists are of the opinion that if PIA has to survive in the market, it will have to drastically cut costs, instead of raising fares, otherwise it will risk further loss of passengers. As it is on domestic sectors like Karachi to Quetta/ Karachi to Peshawar, the seat factor has dipped to as low as 30pc, because while PIA charges a fare of Rs.8,500, other domestic airlines are charging Rs Rs.5,000. Similarly if PIA has to compete with regional airlines like Emirates etc, who have captured share of national airline, by offering better in-flight cuisine, more competitive and reliable schedules. PIA must concentrate on cutting costs, going lean on its surplus employees, instead of cutting on passenger comfort and services such as replacing full American Breakfast in its Club class on international sectors with Continental breakfast. It can order a forensic audit of employee academic records, birth certificates and domiciles submitted at time of induction. In case any of these is fake, the employee can be terminated according to PIA Administration Manual, following a simple procedure laid down and approved by BoD.
PIA also needs a total change of the mediocrity, that dominates its Executive corridors and cancels all contracts of surplus employees hired during previous five years, who have not been regularised, nor are required. It should restore salaries to level existed in 2010 through mandatory salary reductions, failing which retrenchment is only option.
It was also made clear in board meeting that no employee reaching the age of 57 would be sent on mandatory retirement in the airlines. Action would be taken against the officers facing disciplinary cases and against those whose educational credentials would be proved fake.

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