PIA-Restructure, Reform or Privatise: The Way Ahead

PIA: Privatisation a must to cut losses, increase jobs and improve

On February 29, 2016, Policy Research Institute of Market Economy (PRIME), with the support of Friedrich Naumann Foundation for Freedom., has organised a seminar in Islamabad, titled, ” PIA-Restructure, Reform or Privatise: The Way Ahead”.

At a seminar, the speakers have unanimously called for outright privatization of PIA to cut losses, increase jobs and improve the service quality while ensuring effective regulation, more transparency and minimum political intervention.

Speaking on the occasion, Muhammad Zubair, Minister of State and Chairman Privatization Commission revealed that since last thirty years, PIA has never reported a profit except for couple of years, and its performance evaluation systems are completely absent.

Recalling the golden age of PIA as a leading airline of the world, Muhammad Zubair remarked that then management enjoyed complete autonomy which led to superior performance. It is no more possible in a democratic set up, which to its credit, has existed side by side with an increasingly independent judiciary. Reform and restructure will not work because unless political interference is not taken out, the quality will not improve. Privatization will bring difficulties in the short run but this step will be beneficial in the long run. He said that employees should be looking for growth, not just retention of the same job which is why job growth is more important than job retention. If the organization is not growing, the employees will naturally not grow. He said that it is not fair to hold the entire nation ransom for a few thousands employees with a liability of Rs. 300 billion!

Muhammad Zubair revealed that there is not a single penny in PIA’s employees gratuity fund forcing the corporation to borrow from banks to pay its employees upon retirement.

At the seminar, Dr. Idrees Khawaja, Associate Professor at PIDE, expressed that although privatization is necessary, it should be understood that this is done for the right reasons. PIA should be privatized simply because government is incapable of running it, not because it is a burden on the national exchequer. There are numerous other activities and ministries that are a burden and they need to be made more efficient not just privatized. He also stressed that there is a need for a regulatory authority which can minimize the potential exploitation that usually accompanies privatization.

Mr. Ali Salman, Executive Director of PRIME Institute shared a few examples of privatization of airlines in other countries such as the British Airways, Air Senegal in Africa and Qantas in Australia. He said that the case for PIA is not very different from these airlines. Since many of these are doing quite well, it can be hoped that PIA will face a similar fate although he highlighted that there will be a phase of trial and error which we should be ready for. The world over, state led airlines have faced financial difficulties, over- politicization, highly unionized employees, delay in re-equipment which reduces quality and ultimately poor service both on and off the ground.

SEMINAR in MEDIA

March 1, 2016: PM undecided over Pakistan Airways’ futureThe Express Tribune

March 01, 2016: How to turn around PIA: give me powers of private sector MD: ZubairBusiness Recorder

 

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