Saturday, April 7, 2018

Why is PIA Losing Money Amid Air Travel Boom in Pakistan?

What is behind the domestic and international aviation boom in India and Pakistan? Why is Pakistan doing better than India in terms of international passenger growth while badly lagging in domestic air travel?

Passenger Aircraft at Karachi International Airport
What has happened to the global airline industry since the passage of the US Deregulation Act of 1978? Why did many big airlines of yesteryears die in spite of huge growth of air travel? How did so many upstart low-cost carriers succeed while state-owned airlines failed?

Why are the domestic air fares in Pakistan three times higher than those in India for similar distances? Why does state-owned PIA control two-thirds of Pakistan's domestic market? Why isn't there more competition on domestic routes in Pakistan?

Why are state-owned airlines, including PIA and Air India, losing a lot of money, requiring massive taxpayer subsidies and still performing poorly? Why aren't these airlines run more efficiently? Are PIA jobs used for political patronage? Why does PIA fly so many empty seats rather than cut fares to expand market?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com)

https://youtu.be/hh99nMnueBA




Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Air Travel Market

Pakistan $20 Billion Tourism Industry Booming

Saving PIA, Railways and Education in Pakistan

Pakistan: Political Patronage Trumps Public Policy

Riaz Haq's Youtube Channel

1 comment:

Riaz Haq said...

India tried to sell its national airline. It got zero bids

http://money.cnn.com/2018/05/31/investing/air-india-privatization-fails/index.html

India has failed to find a buyer for its ailing national airline.
Selling Air India was one of the government's economic priorities for this year, and the failure of the auction will dampen hopes that it could privatize other state-owned companies.

Bidding for the national carrier closed Thursday without a single prospective buyer coming forward.

"As informed by the transaction adviser, no response has been received for the expression of interest floated for the strategic disinvestment of Air India," the Indian Ministry of Civil Aviation said on its official Twitter account.

The government put Air India on the auction block last year, and was offering bidders the chance to buy 76%. It wants to scale back taxpayer support for an airline that has lost money for years.

The auction deadline had already been extended in the hope that a buyer may come forward. The future of the indebted carrier is now very uncertain.

"Further course of action will be decided appropriately," the ministry said in its tweet.

Air India declined to comment, referring the matter to the ministry. Aviation ministry officials did not respond to requests for comment.

Despite its losses, and growing competition from budget carriers such as SpiceJet and IndiGo, Air India is still a major player in an aviation market that is projected to be the world's third biggest by 2026.