Friday, April 6, 2018

Aviation Boom in India and Pakistan

Aviation market in South Asia is among the fastest growing in the world. It is soaring in terms of both domestic and international travel. Last year, the Indian commercial aviation market grew to 176 million passengers and Pakistan's reached 22 million. A total of 22 million passengers (7.2 million domestic, 14.6 million international) flew commercial airlines in Pakistan in 2016-17, up 5.11% from 20.7 million (6.95 million domestic, 13.76 million international) in 2015-16, according to Civil Aviation Authority (CAA). While Pakistan's international aviation market as a percentage of its population is bigger than India's, the Indian domestic market is far outpacing Pakistan's mainly due to greater competition and significantly lower airfares.

Pakistan International Aviation Market in 2016-17. Data Source: CAAP
International Travel:  

Nearly 15 million international passengers flew in and out of Pakistan in fiscal year 2016-17. This number is about a quarter of the 59 million international passengers who flew to and from India in roughly the same period, according to data available from the aviation authorities of the two South Asian countries. India's population is about six and a half times larger than Pakistan's.

Pakistan's state-owned PIA carries 3.2 million international passengers giving it only 22% market in the country's international aviation market. Other major international carriers flying in and out of Pakistan are Emirates (2.2 million),  Shaheen (1.57 million), Air Blue (1.4 million), Saudi Arabian and Qatar (1.1 million each).

Domestic Aviation:

The difference in domestic air traffic between the two countries is far bigger compared to the ratio for international traffic. India has seen its domestic air travel market soar to 117 million passengers versus Pakistan's 7.2 million in 2017.  India's combined aviation market for both domestic and international travel is 176 million versus Pakistan's 22 million passengers. 
Pakistan Domestic Aviation Market in 2016-17. Data Source: CAAP

The other difference in terms of domestic markets of the two nations is that the state-owned Pakistan International Airlines (PIA) enjoys massive 67.2% market share while the state-owned Air India has only 14.2% India's domestic market share and the rest of the market is divided among IndiGo (38.2%), Jet Airways(15.4%), Spice Jet(13.8%) and other smaller domestic airlines.

In Pakistan,  Shaheen (1.17 million), Air Blue (797,628) and Serene (386,970) have the remainder of the domestic market.

Fares and Competition:

As to the reason for India's domestic market being 16 times larger than Pakistan's, let me quote the UK's Financial Times as an explanation:  "A highly competitive domestic aviation market (in India) means that a passenger looking to fly from Delhi to Mumbai on July 1 this year, for example, can pay as little as $35. In Pakistan, someone wanting to do the roughly equivalent trip from Islamabad to Karachi will probably have to fly with the government-controlled Pakistan International Airlines and pay at least $100 to do so".

 Given the basic price-demand elasticity, it makes sense that Pakistan's domestic airfares being three times higher than India's reduce air travel demand to a mere 3.5% of Pakistan's population versus India's 8% of its population.

Level of Service:

Higher airfares in Pakistan do get you better service, according to Kiran Stacey of Financial Times. Here's how he sees it:

"Flying in Pakistan is unlike anywhere else I have been — and the polar opposite to flying in India, where I live. Departing from any of the three major Pakistani cities is the closest a modern traveller is likely to get to experiencing what flying was like in the 1950s. Checking in is effortless and there are no queues at security. At Islamabad airport, you do not even have to go to your gate: you can sit in the cafĂ© until your flight is called and then leave via a downstairs door that takes you straight on to the tarmac and a waiting minibus. Just hours earlier, I had suffered the regular indignity of catching a flight from Delhi airport. It took 20 minutes of disorganised queueing to check in, and another 30 to get through security. Getting on the aeroplane, as usual, reminded me of warfare at the Sino-Indian border, where troops are unarmed and so fight by jostling each other using only their torsos".

Highly Competitive Business:

Commercial aviation business has become much more cut-throat in recent years. It all began to fundamentally change with the passage of the 1978 US Airline Deregulation Act that made it easier for low-cost airlines to enter the market.  Regulations mandating minimum fares no long applied.

Since then, many other countries, including emerging economies, have adopted legislation similar to the US airline law.  Some of the big name airlines of yesteryears like Pan Am, TWA and Eastern Airlines have died. Number of airline passengers across the world has increased dramatically as air fares have plummeted.

State-Owned Airlines: 

Deregulation has forced state-owned airlines around the world  to either shut down or seek big government subsidies to stay in business. Running a successful airline business now requires different management skill sets and efficiencies in the current deregulated and highly competitive environment.

Part of it is technology driven transformation that enables minimizing staff and aircraft time on the ground, higher fuel efficiency and dynamic pricing based on demand. Unfortunately, state-owned airlines are finding it extremely difficult to operate in this environment.  Most of them, including PIA and Air India, incur huge losses year after year and require substantial tax-payer subsidies.

Empty Seats Flying on Karachi-Lahore PIA Flight. Credit: Monis Rahman 
I saw an example of poor management of Pakistan International Airline (PIA) a few days ago when a friend posted a picture of nearly empty cabin on a PIA flight from Karachi to Lahore. There were rows and rows of empty seats which is a rare occurrence in the airline business these days. Efficient airlines use yield management software to cut fares dynamically until their flights reach capacity.  Flying even one empty seat is seen as a problem by professional airline managers.

The other serious issue facing PIA and many other state-owned airlines is that their staffs are not recruited based on merit. It is reported that even the senior managers lacks professional experience of running a commercial airline. Instead, the PIA jobs are doled out as part of the political patronage system that gives favors to the supporters of the ruling politicians.


Aviation markets in South Asia are growing rapidly in terms of both domestic and international travel. Last year, Indian air travel market grew to 176 million passengers while Pakistan's reached 22 million. While Pakistan's international aviation market as a percentage of its population is bigger than India's, the Indian domestic market is far outpacing Pakistan's mainly due to greater competition and significantly lower airfares.

Pakistan needs to take a page from the Indian playbook to increase competition and lower prices in the aviation market. This will expand the market, create jobs and make air travel more affordable in the country.

Here's Viewpoint From Overseas host Faraz Darvesh discussing the subject with Misbah Azam and Riaz Haq (


Omer F. said...

It may be bcz of geography and kind of population density. I shuttle btw Faisalabad and Peshawar and there is no flight in btw bcz no demand of it.

Riaz Haq said...

Omer: "It may be bcz of geography and kind of population density. I shuttle btw Faisalabad and Peshawar and there is no flight in btw bcz no demand of it."

Pakistan's 3.5% vs India's 8% population flying may well be partly the physical size of 2 countries accounting for some of difference between India & Pakistan. But I do think the bigger reason for it is Pakistan's domestic air fares being 3X higher than India's for same distance

Andy said...

Additionally, India has many rail corridors throughout tier 1 and tier 2 cities. For example, Shatbdi Express from Ahmedabad to Mumbai, 500km is about 6 hours and very comfortable hassle free in business. I learned that many locals especially families use these corridors because it is cheaper for families than air travel.

-Andy Davidsen

Z Basha Jr said...

With the opening of new Islamabad airport..we are poised to take off..Musharraf's dream come true..

Anonymous said...

" But I do think the bigger reason for it is Pakistan's domestic air fares being 3X higher than India's for same distance"

That is also true for price of car , motorcycle, prescription drugs and practically every middle class item, except may be home rents etc. It is due to economies of scale and the sad part is that it is self full-filling.

Anonymous said...

Not really Pakistan does not have the variety of Indian car market but some cars like Toyota corolla are at par or cheaper in Pakistan than in India.

Chanderhaas said...

India's Civilian Aviation Market Fiscal Year 2017 was 242 million of which 54 million is international. Non transit passengers flying to Nepal and Sri Lanka are classified as domestic.

Riaz Haq said...

Pakistan International Airlines refis Roosevelt Hotel with $105M loan
Government-owned company has long sought to sell the property

The Pakistan International Airlines has leased or owned the Roosevelt Hotel since 1979 and has several times since sought to get rid of it. And sans sale, the overseas owners refinanced the debt on the property, records filed with the city Thursday show, with a $105 million loan from JPMorgan Chase.

JPMorgan Chase’s refinancing replaced $140 million in previous debt on the hotel issued by Wilmington Trust, a subsidiary of M&T Bank.

PIA did not immediately respond to requests for comment and JPMorgan Chase declined to comment.

Built in 1924, the 600,000-square-foot hotel, located at 45 East 45th Street in the recently rezoned swath of Midtown East, is not landmarked and is a prime target for demolition and office tower construction, making the site worth hundreds of millions of dollars. So what’s held up a sale? Politics in Islamabad.

In December, Pakistani Prime Minister Shahid Khaqan Abbasi rejected a selloff plan for the Roosevelt, according to the Express Tribune, an English-language paper in the country. PIA, a government controlled company, had come up with the plan as part of a larger strategy for paying off roughly $5.3 billion in debt.

“Apart from being a valuable property, the hotel also carries cultural significance for Pakistan,” Abbasi said in rejecting the PIA plan.

PIA last put the hotel on the market in 2007, asking $1 billion. In August, The Real Deal reported that an investment group led by hotelier Shahal Khan was interested in acquiring the hotel. Khan is also making a bid for the Plaza Hotel on Fifth Avenue.

Riaz Haq said...

New #IslamabadAirport opens, to handle up to 25m flyers a year. #Pakistan #Islamabad #airports

The new airport is capable of serving nine million passengers and 50,000 metric tonnes of cargo annually; expansion plans target servicing about 25 million passengers by 2025.

“The current annual turnover of passengers at the Benazir Bhutto International Airport is about 4.5 million.
The number of passengers is growing by 14 per cent annually as compared to national air passenger growth rate of less than four per cent,” Civil Aviation Authority (CAA) Deputy Director General Amir Mehboob was quoted by the Tribute as saying.

The airport comes with a bill of more than Rs100 billion ($861.5m; or Dh3.15 billion), and is connected to both Rawalpindi and Islamabad.

First pictures: New Islamabad airport opens, to handle up to 25m flyers a year
Rs100 billion airport connects both Rawalpindi and Islamabad; boosts capacity to 25 million passengers a year

25m passengers
The new airport is capable of serving nine million passengers and 50,000 metric tonnes of cargo annually; expansion plans target servicing about 25 million passengers by 2025.

“The current annual turnover of passengers at the Benazir Bhutto International Airport is about 4.5 million.
The number of passengers is growing by 14 per cent annually as compared to national air passenger growth rate of less than four per cent,” Civil Aviation Authority (CAA) Deputy Director General Amir Mehboob was quoted by the Tribute as saying.

The airport comes with a bill of more than Rs100 billion ($861.5m; or Dh3.15 billion), and is connected to both Rawalpindi and Islamabad.

The airport’s 4 levels
Level 1 - international and domestic passengers’ arrival area, baggage collection and airline offices.
Level 2 - domestic arrivals and departure lounges, visitors’ gallery and immigration counters.
Level 3 - international and domestic check-ins and international departure.
Level 4 - state lounges and commercially important persons lounges

The airport has contemporary design inspired by traditional Islamic geometric patterns. Environmentally-sustainable design strategies have been employed with the use of day light and sun shading to reduce energy use.
The interior texture of granite flooring has been used to ensure dust-free air quality.

The new airport is expected to be boon for both airlines and passengers and help lessen the bottlenecks in commercial aviation in the Pakistani capital.
Around 1,200 Airport Security Force deployed at 85 security towers to ensure safety at the airport with advanced security management systems and two bomb pit facilities.

With the launch of new airport, Pakistan is all set to welcome foreign tourists who primarily come to visit the scenic northern areas or to participate in religious festivals.
Pakistan Tourism Development Corporation (PTDC) has announced to establish a modern Tourist Information Centre at the new airport, said PTDC managing director Chaudhry Abdul Ghafoor Khan.
Pakistan is not only rich in Islamic heritage but also a gateway to sacred sites for other religions especially Buddhists and Sikhs.

Many holy sites for Sikhs such as the birthplace of the founder of Sikh religion in Nankana Saheb district, and Gurdwara (monastery) Punja sahib are in Pakistan.
Similarly, the monastery Takht-i-Bhai (Throne of Origins) and the 3,000-year-old Taxila of the Gandhara Valley Civilisation are revered sites for Buddhists and attract pilgrims from China, Korea, Thailand, Malaysia, Japan and Sri Lanka.

Riaz Haq said...

New #IslamabadAirport opens, to handle up to 25m flyers a year. #Pakistan #Islamabad #airports

2 runways, each 3.5-km long
90 check-in counters
28-aircraft parking apron
15 air-conditioned jetties (passenger boarding bridges)
2 jetties for Airbus A380
15 remote bays
Cargo apron for parking of 3 aircraft
Main and emergency runways
Aircraft maintenance apron
Four-level terminal building
Parking facility for 2,000 vehicles
9 exit and entry gates
28 escalators
six service lifts
24 elevators
4 inclined travellators (moving walkways)
10 horizontal travellators (moving walkways)
5 luggage conveyor belts
15 bays with separate waiting lounges
Device charging stations
Fingerprint recognition systems
Four-star transit hotel
Convention centre
Duty-free shops
Food court
A mini-cinema
Children’s play area
Cargo terminal
Fuel farm
Air traffic control complex
Fire station rescue facilities
18 water tube-wells
3 water dams

Operators at new airport
Pakistani Airlines
Shaheen Air
Air Blue
Serene Air

International Airlines
Air Arabia
Air China
China Southern
Gulf Air
Kuwait Airways
Oman Air
Safi Airways
Thai Airways
Turkish Airlines

Riaz Haq said...

The Struggle to Send Home Pakistan’s Dead
When Pakistan’s national airline suspended U.S. flights, the immigrant community struggled to send their dead home.

... amid the street party scenes, wedged between the stalls heaving with sweets and succulent and spicy kebabs, another stall was showcased and getting a great deal of attention from local merrymakers: A funeral home’s stall.

Its presence on the streets during this holiday might seem jarring, even unseemly, to visitors unfamiliar with Little Pakistan. But not for local residents, virtually all of them Muslim and low-income, who are acutely aware that their struggles don’t end with death, but in some cases become manifold challenges for family and friends left behind.

As with other stalls, people stopped at this somber one too; asking a litany of well-informed questions, from the lowest rates for body embalming to the cost of being driven to the mosque where the funeral prayer would take place and then to the airport for the final journey home. The Pakistanis who stopped at the stall did not recoil because members of this financially struggling immigrant community regard burial in their homeland and making dignified arrangements for that time as a necessity; a part of life.

Not only is there the strong emotional pull to be buried as quickly as possible on native soil for religious and cultural reasons; for years, the practice of the deceased being flown back to Pakistan was the least expensive option. While an American burial was out of reach for many low-income immigrants, returning a dead body on a direct flight to Pakistan was free. Fourteen years ago, Pakistan’s national airline began transporting the country’s dead back to their homeland free of cost.

But last fall, the Pakistani airline abruptly ended its flights to the United States, saying it had become too costly. The decision has left local Pakistanis in a desperate bind when tragedy strikes.

In this South Asian New York neighborhood of mostly daily wage earners, some undocumented and with limited English proficiency, there is often comfort found in living lives under the radar. But the community now finds itself facing the issue of repatriating their loved ones in an ad hoc, haphazard manner rather than in the cohesive way of a more organized immigrant community.

For 14 years, the Pakistani immigrants in New York City only had to gather money for body embalming and the basic funeral services of getting picked up from the hospital or home, driven to the funeral home and finally to the airport. Pakistan International Airlines (PIA), the national carrier of Pakistan, transported the bodies of the country’s deceased citizens back to Pakistan free of cost. But on October 28, 2017, PIA flew its last flight from John F. Kennedy Airport, leaving the immigrants in New York beset with worry and fear of what to do when a loved one who wished to be buried in Pakistan dies.

From now on, aside from the approximately $1,500 to $1,800 dollars needed for the funeral services and embalming, a process mandatory for a body being transported to another country, the immigrants will also have to scramble to find money for the air travel. PIA operated a direct flight from New York to Lahore, which meant that a body would reach its loved ones in 12 hours; the other international airlines that go to Pakistan all have layovers at their respective base cities.

Bazah Roohi, founder of the American Council of Minority Women and a humanitarian worker in Little Pakistan, has seen how the airline had a tremendous impact on the financially struggling Pakistani population, making a difficult time easier.

“We could inform PIA officials a night before a body had to be transported,” said Roohi. “But now, we don’t know what the protocol will be and what more we will need to do in an already desperate situation.”

Riaz Haq said...

It gleams, it glistens, it positively glows. It's Islamabad's new airport!

The new Pakistan international airport cost more than double the original budget, and its construction was repeatedly stalled for years amid rumors of financial irregularities. It was built miles away from anything, including the capital Islamabad, with no public transport available. Until last month, it still had inadequate drinking water, and some aviation systems still needed tests, postponing its inauguration yet again.

None of that seemed to matter this week, when the mammoth, ultramodern, $105 million facility finally opened in rural Punjab province. The first arriving flight from Karachi touched down Tuesday morning, under an arc of spray from twin firetrucks, and the pilot waved the national flag from the cockpit.

On Thursday, families waiting for flights oohed and aahed at the vast marble floors and glass walls and took selfies in a landscaped picnic park. Plane crews shook hands with baggage managers. Arriving passengers grinned at glitches, such as being left mistakenly outside a locked terminal door, that would normally have had them fuming.

“This is so beautiful and new. It’s like a dream — no pollution, so much space,” marveled Abdul Rahim, 40, a United Nations employee who had just arrived on a flight from Kabul that would previously have landed at the small, aging terminal in Rawalpindi city that served the capital area for decades.

“It will be good for repairing Pakistan’s image,” he predicted.

Pakistan, a vast but impoverished country, has long been isolated abroad as a dangerous haven for Islamist insurgents and starved for positive recognition. Its few bragging points included a 170-mile highway and the testing of a nuclear device, popularly known here as the “Islamic bomb” but greeted far less kindly by the world community.

This time, virtually everyone is hoping the impressive new Islamabad International Airport, a four-level complex with a smorgasbord of consumer amenities and high-tech passenger services, will be Pakistan’s ticket to revived global prestige and access, offering an attractive gateway to a scenic, mountainous country that has suffered a steep drop in foreign visitors during the past two decades of conflict.

The airport is the nation’s largest, able to accommodate 9 million passengers a year and potentially expand to almost triple that capacity, officials said. It is also the first airport in Pakistan that can accommodate the double-decker Airbus A-380, the world’s largest passenger plane.

“Peace has returned to Pakistan after years of terrorism, and now more tourists are coming. What we needed was an international airport, with high-tech facilities equipped to cater to their needs,” said Chaudhry Abdul Ghafoor, director of the national tourism development corporation. “Now that we have that, many international airlines will start their services here and we estimate that millions of tourists will begin visiting every year.”

The ambitious expansion comes as Pakistan International Airlines, the country’s once-thriving national carrier, has become mired in financial difficulties and mismanagement and now possesses only 32 registered aircraft. Its future is uncertain, and various proposals to privatize or sell it have been inconclusive.

Officials are banking that the airport, built in a barren rural area about 25 miles from the capital, will spawn a profitable hub of domestic commercial and residential development as well as travel services and hotels, creating thousands of jobs. Signs along the nearby highway offer shares in future condo and mall complexes with names like “Airport Enclave” and “Runway View.”

Riaz Haq said...

Pakistan PM opens long-delayed new airport in capital Islamabad

Pakistani Prime Minister (PM) Shahid Khaqan Abbasi on Tuesday inaugurated the long-delayed new airport in the capital, Islamabad, replacing the cramped Benazir Bhutto airport often criticized by travellers.

A Pakistan International Airlines pilot waved a green and white Pakistani flag out of his cockpit window after landing the carrier’s first commercial flight at the New International Islamabad Airport.

With a sleek glass-front entrance, spacious check-in areas and jetway bridges for boarding, the Y-shaped airport promises an end to the congestion that has frustrated air travel in the past.

“This airport rightly reflects what has happened in Pakistan in the last five years,” said Abbasi.

Abbasi’s ruling Pakistan Muslim League-Nawaz (PML-N) party had been eager to open the new airport before national polls, likely in July, as it touts big-ticket infrastructure as sign of economic progress in the South Asian nation of 208 million people.

Abbasi’s government is spending billions of dollars on upgrading Pakistan’s transport infrastructure and ending energy blackouts, with freshly paved motorways as well as dams and power plants popping up across the country.

Abbasi, who has a pilot’s license and is a founder of a Pakistani budget airline, said new airports in the cities of Multan, Faisalabad, Quetta and Peshawar were in the final stages.

The new Islamabad airport, which has the capacity to handle 15 million passengers annually and space for further expansion, was first suggested in the 1980s and has been more than a decade in the making.

The delays have become a running joke with many Pakistanis, who mock the frequent announcements that the new airport would open soon and subsequent clarifications of further delays. The airport’s most recent delay was last month.

“Nothing is impossible but this project definitely seemed impossible,” quipped Abbasi, in reference to his government inheriting the project in 2013.

The new airport is about 15 km (nine miles) from the capital. Benazir Bhutto airport was in the nearby city of Rawalpindi and attached to a military base.

International travellers often complained about chaotic scenes at the airport and in 2014 it was voted the worst in the world by the “Guide to Sleeping in Airports” website, prompting widespread criticism of the airport in Pakistani media.

The new airport started full operation on Thursday.

Riaz Haq said...

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

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.