IA continues to suffer losses because it is a Government-owned airline and not because of National Aviation Policy, may it be 1992, 1998, 2000 or 2015 policy. Besides no significant bilateral Air Services Agreement has been negotiated after the approval of National Aviation Policy 2015.
There is a grave misconception that a National Aviation Policy approved by the government of the day automatically authorises foreign airlines to start operations into another country at their will. Foreign airlines’ operations (traffic rights) are governed by Air Services Agreements (ASAs), which are negotiated bilaterally with each country on the principle of reciprocity as well as national/public interest. Therefore, no two bilateral air services agreements (ASAs) would be exactly the same. Some are open-skies, some are limited open-skies, and a large majority of them are restricted in terms of weekly flights, a number of airports allowed, and the number of airlines entitled to operate the agreed services. Bilateral ASAs that Pakistan has signed with over 90 countries differ from each other in the following ways:
Open-Skies Type ASAs: “Pakistan-USA”, “Pakistan-UK”, Pakistan-Switzerland”, “Pakistan-Norway”, “Pakistan-Sweden”, “Pakistan-Denmark”, “Pakistan-Spain”, and “Pakistan-Saudi Arabia”. An open-skies agreement would have no restriction on the number of weekly frequencies to be operated, no restriction on the number of airports to be operated in another country, and no restriction on the number of airlines designated by each country to operate the agreed services. All of these agreements were signed between 1998 and 2012.
Limited Open-Skies Type ASAs: “Pakistan-UAE” and “Pakistan-Singapore”. In case of “Karachi-Dubai Route”; an unlimited number of weekly flights are allowed to the designated airlines of UAE as well as Pakistan. Accordingly, airlines of Singapore and Pakistan are entitled to operate an unlimited number of flights on “Karachi-Singapore Route”. Both of these bilateral agreements were signed between 1998 and 2000.
Restricted but Somewhat Liberal Type ASAs: “Pakistan-Greece”, “Pakistan-Italy”, “Pakistan-Qatar”, “Pakistan-Oman”, “Pakistan-Kuwait”, “Pakistan-Iran”, “Pakistan-Turkey”, “Pakistan-India”, “Pakistan-China”, “Pakistan-Thailand”, “Pakistan-Malaysia”, “Pakistan-Bangladesh”, and “Pakistan-Sri Lanka”. Almost all of the ASAs were signed or enhanced before 2015.
Restricted Type ASAs: A large majority of bilateral Air Services Agreements (ASAs) that Pakistan has signed with other countries remain restricted in terms of flights, number of airports, and number of airlines entitled to operate. These countries include Central Asian Republics, African countries, some South East Asian countries, Far Eastern Countries, some European countries like France, and Canada.
The above examples prove that National Aviation Policies (NAP-1998, NAP-2000 & NAP-2015) did not have a uniform impact on the outcome of bilateral Air Services Agreement negotiations with each and every country. On the contrary, political and economic relations between two countries usually determine the outcome of a bilateral Air Services Agreement negotiations and not the stated National Aviation Policy. Other factors include the interests of traveling public, trade, and tourism between two countries.
It is a paradox that PIA never criticised open-skies bilateral Air Services Agreements that Pakistan has signed before 2002, with USA, UK, Sweden, Norway, Denmark, Spain, and Switzerland. The airlines of these countries are entitled to operate to all airports in Pakistan an unlimited number of weekly flights. They used to do so until our country became a security threat for their operations. Hopefully, as the situation improves some of these airlines like British Airways and Lufthansa would return. At present, PIA is the only beneficiary of open-skies agreements with European countries.
Bilateral open-skies agreement with Saudi Arabia signed in 2012 allowed Pakistani private airlines to compete PIA and Saudia on their most protected and therefore profitable route. Our private airlines are making windfall profits from Saudi Arabian routes in comparison to other international or domestic routes.
Bilateral Air Services Agreements with UAE and Qatar are not as liberal as are with Saudi Arabia, USA, UK, Switzerland, Spain, Sweden, Denmark, and Norway. The only exception is Karachi – Dubai route where airlines both countries UAE and Pakistan are entitled to an unlimited number of weekly frequencies. All other Pakistani routes have restricted access allowing an only limited number of weekly frequencies to the airlines of UAE (Emirates, Etihad, Flydubai and Air Arabia).
For Pakistani designated airlines the relevant clause in the MoU stipulates that “The designated airlines of Pakistan are entitled to operate an unlimited number of frequencies between points in Pakistan and points in UAE, with unrestricted 5th freedom traffic rights through any intermediate points and to any beyond points.” This means that Pakistani airlines are entitled to operate an unlimited number of weekly flights to all six airports of UAE (Abu-Dhabi, Dubai, Sharjah, Ras al Khaymah, Al Ain, and Fujairah) from all Pakistani airports. Not only that Pakistani airlines are also entitled to pick up traffic from UAE airports and carry them over to other countries like the UK, Greece, Switzerland, and USA etc. Hence, the traffic rights granted to Pakistani airlines in the bilateral air services agreement with UAE are far more favourable than UAE airlines. That Pakistani airlines are not interested or unable to exploit these traffic rights is another story.
Historically airline industry remained highly regulated between 1944 and 1978. Bilateral air services agreements known as ‘Bermuda type’ were very restrictive. These agreements protected national airlines from competition, allowing only one airline from each country to only one airport and a very limited number of weekly flights. The ticket prices were also fixed by both airlines in a manner that there was no question of any airline running into loss despite all its inefficiencies. The prices used to be so high that only elites of the society could afford to travel even on domestic routes. This however changed in 1978 when USA Congress deregulated airline industry in 1978 not only on international routes but on domestic routes as well. Until then airlines in the USA enjoyed a monopoly on domestic routes—one route one airline. The USA has since then signed over 100 bilateral open-skies agreements with other countries. So have European and Far Eastern countries.
Following deregulation in 1978 average ticket prices fell by about 50% (adjusted for inflation), because of cut-throat competition, making it possible for the middle class also to travel by air. Governments in Europe and elsewhere in developed countries quickly privatised their airlines. Third world countries like Pakistan, India and some African countries did not choose to do so. Consequently, all government-owned airlines are making huge losses everywhere in the world. The cases of Air India and PIA are in point. The accumulated losses of Air India (US$ 8 billion) and PIA (3 billion US$) are so colossal that their respective governments would never be able to privatise them without taking losses onto themselves. And we should not forget the government’s money is taxpayer’s money. The less damaging course of action would be to declare PIA bankrupt and raise it again in the private sector under the different brand name.
It may be interesting to note that our airlines are not alone in protesting against these Middle Eastern Carriers. In our neighbourhood India has signed almost as liberal bilateral air services agreement with UAE and Qatar as us. Indian airlines (eight of them including Air India) have similar grievances against UAE & Qatar airlines as do Pakistani airlines. In fact, all Indian airlines have suffered the accumulated loss of US$ 10 billion over a period of last 10 years, of which Air India alone has suffered US$ 8 billion, which it blames to the liberal traffic rights granted to the airlines of UAE and Qatar. Emirates Airlines alone operates 210 weekly flights (65,000 seats) to 11 airports in India. Other UAE airlines like Etihad Airways, Flydubai, Air Arabia, Ras al Khaimah Airlines also enjoy similar traffic rights in India albeit on the principle of reciprocity. Qatar Airways also enjoys similar liberal traffic rights in India.
The writer is a freelance columnist.