Sunday, April 11, 2010

Subsidizing PIA

As reported in DAWN newspaper, our national airline, PIA is seeking new finance to start new flights. This is an airline which has wasted over a hundred billion rupees of the public's money during the last four years alone. One would have to go back a long way to find PIA making a yearly net profit; it made a net loss of 13 billion rupees in 2007 which had increased to 72 billion rupees last year; this year promises no better. And since this is a public airline, it can never fail; the government stands ever ready to bail it out with billions of rupees of the public's hard-earned money, the overwhelming majority of which have never stepped foot on an airplane, and they never will.
This is the same airline which the EU grounded in 2007, banning 35 out of its then 42 airplanes because of safety concerns. PIA posted losses of 120 billion rupees from the period 2007-2009, which comes to a loss, which effectively becomes the subsidy, of more than 3 billion rupees per month. Compare this with the amounts allocated to some sectors in our budget for the year 2009-2010: 9.4 billion rupees for education, 22.5 billion rupees for higher education, 25.4 billion rupees for health, 41.3 billion rupees for the power sector, and 9 billion rupees for agriculture. This out of a total budget of 2.5 trillion rupees.
How about, instead of providing PIA with endless subsidies for providing a service that over 99% of this country's citizen's don't use, the government lets PIA fail. Then what will happen is that the airline will have to cut back to it's most profitable routes in hopes of turning a profit, and maybe it won't need a subsidy from the government. However, if the more likely scenario occurs, and the PIA is still posting a loss, which is likely, given their inept handling and the current economic situation, then PIA will have to shut down; that will be good news for Airblue and Shaheen, which is good if they are to compete with airlines from the Gulf region as they can pick up a large share of the customers which will allow them, in time, to expand their international routes as well. I doubt a lot of people would mourn the passing of the national airline. Besides, it's high time that the government gets its priorities right. Allocating 25.4 billion rupees for health, something that affects every living Pakistani, while bailing out PIA to the tunes of hundreds of billions of rupees is criminal.

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