Update on Subsidizing PIA

I sent the previous post as a letter to DAWN, which they published, to which a reply was published soon after by the Managing Director of PIA. This is what he has to say:

This is apropos of Ahmad Sultan’s letter ‘PIA: govt needs to set its priorities right’ (March 21). Mr Sultan is unaware of the facts and has based his analysis on his misunderstanding of PIA’s financials.
For instance, PIA has not received any subsidy from the government since the present management assumed charge in 2008 – unlike the other organisations and departments -- nor have we asked the government to give us financial assistance to start new flights.
PIA suffered a loss of PKR 39.72bn in 2008 which was mainly due to abnormal increase in international fuel prices, which were over 34 per cent higher on a year-on-year basis and 24 per cent devaluation of the Pak rupee against the US dollar. The impact of these two items alone explains the reasons for the incremental loss in 2008.
With just a little research, it will be learnt that these high fuel prices impacted the whole aviation industry and had led to bankruptcy for several airlines.
The total industry losses in 2008 as per the IATA report are $16.8bn. These factors are beyond control of the airline although several measures have been taken to mitigate the loss.
The airline has reduced its losses by over 84 per cent in 2009 versus 2008. This is very a significant achievement given the ongoing recession in the international markets
Regarding the contention that PIA’s fleet is not cleared to operate in Europe, we are pleased to state that all such aircraft that PIA intends to use to fly to Europe have all the requisite clearances.
The overall technical reliability of PIA stands at 95 per cent and 99.5 per cent for Haj operations.
This great accomplishment was achieved by PIA’s highly skilled engineering staff.
Granted, we have our challenges of past accumulated debts, and of rebuilding this great national institution to return to the glorious past.
We at PIA are committed to keep the flag up and that we appreciate our customers to continue to guide us with their valuable constructive suggestions in meeting your expectation of being the great people to fly with.

CAPT MUHAMMAD AIJAZ HAROON
Managing Director, PIA
Karachi

I responded to his response in a letter that DAWN did not publish. Here is my response:

In this newspaper's article titled 'PIA seeks finance to start new flights', it was said that "The PIA management said that there were three options for improving its liquidity which include financial injection by the government." To me, this sounds like the Airline is asking for a government injection of money in absence of which things would be very difficult indeed. If that is not the case, then it is this newspaper's fault for publishing a report outlining events that, according to Mr. Haroon never happened. Mr. Haroon says that I have based my analysis on a misunderstanding of PIA's finances. Is it not a fact that the airline has lost money every year since at least 2007, which by the way was before the economic crisis that Mr. Haroon refers to happened?The author goes on to say that most of the loss is attributable to rising oil prices and the devaluation of the rupee. In light of this, I would like to ask him two questions: Are oil prices going down? The answer is that they are not; oil peaked at $86.84 only yesterday, this being an 18 month high price. While this is substantially less than the $140 all time high-price, the fact is that, by PIA's own prediction they will lose money this year too, and oil prices will only increase as the economic recovery gathers steam. Secondly, is the rupee devaluation going to stop anytime soon? All indications point to the contrary being true. In any case, it is not going to appreciate any great amount, which might curtail PIA losses. The article also says that "the respective governments have approved bailout package for Air India and Japan Airlines as the year 2009 has been the worst year in the aviation history." This was the point of my letter. If PIA had not been a public airline, it too would have failed. While the fact that the present administration has not taken any subsidies is appreciable, were PIA ever close to the point of bankruptcy, the government will act as it must: as a lender of last resort. This statement also doesn't hide the fact that PIA has, from 2007-2009, posted losses of 120 billion rupees. Where does the money to make up for this loss come from? Surely it comes from the government, which has bailed out PIA in the period before this new administration in any case. My point was merely that PIA provides a service that less than 1 percent of this country uses, yet gets bailed out to the tune of hundreds of billions of rupees, while the government sees fit to allocate Rs25.4 billion to health, something which affects 100 percent of Pakistanis. Surely this paradox isn't lost on Mr. Haroon?

This is the article I refer to:

http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/business/13+pia-seeks-finance-to-start-new-flights-230-za-06

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.

Religious Minorities in Pakistan

Not many Pakistanis know the names Dinshah Mehta or Jal Patel. They can be said to have played a very crucial part in the formation of this country, yet we are ignorant about them. These two gentlemen were doctors in Bombay, whose patients included one Mr. Jinnah. In 1946, an x-ray was taken of Jinnah, which unmistakably revealed signs of tuberculosis. Had his doctors decided to break doctor-patient confidentiality, and released these findings for all of India to see, it is very possible, indeed probable that Pakistan might never have come into being. They were both Hindus, yet they never acted in any untoward way. Another Hindu, who most of us do know is Justice Rana Bhagwandas, who took his place as acting Chief Justice in the enforced absence of Justice Iftikhar Mohammad Chaudhry, and presided over the court which restored the Chief Justice to his rightful position.
Dr. Abdus Salam hails from the Ahmadi community of Pakistan, and is a name Pakistani Muslims would really like to forget, for,as we keep reminding ourselves, he was not a Muslim, yet he remains the only Nobel Laureate this country has ever produced (for work done entirely outside of this country, mind you). People from the Parsi community include Bapsi Sidwa, a brilliant author, and Ardeshir Cowasjee, a columnist for this newspaper, not to mention the latter's father, who established the Cowasjee group, a shipping agency. (Former) Christians include Mohammad Yousaf, who used to be Yousaf Youhana before Inzimam-ul-Haq turned the cricket team into a missionary group.
In sum, these and no doubt many other people of these communities, our minorities, have done a lot to serve Pakistan, almost as much as our Muslims have, who are in any case more visible for their role in events resulting in death and destruction. Yet they live as second class citizens, at the mercy of mad mullahs and mad self-styled 'security analysts' and even madder Alims who can't wait to use their pulpits as a stage to give the call for murder without any reason or provocation. It is beyond me how Zaid Hamid and Liaquat Hussain can say the things they do and yet remain untouched by the state. Have they broken no law? Or are they simply immune to it? How these people have not already been arrested, convicted and executed is beyond comprehension. A while back, a brutal multiple murder took place while the victims were returning from work. Their crime? They belonged to a religious minority. And yet we continue to live in denial. They were somebody's son, somebody's father, somebody's husband, somebody's brother, but we do not care.
In Naudero on New Years Eve of 2007, there was a cry from the crowd by an average Pakistani, right before the reading of Benazir's will: Pakistan na khappay. I remember that voice today, because this is not a Pakistan I want to live in. Today, I am ashamed of being associated in any way with this country, where the majority sits silently and does nothing, where an extremist strain of thought has hijacked the country's most fundamental ideals, as a result of which it is becoming increasingly difficult for religious minorities to live in peace. Make no mistake, they don't reside here by choice.
All that is needed for evil to triumph is for good men to do nothing. And when we do nothing, we are complicit in this evil, we enable it, indeed encourage it with our lack of opposition. I feel like I have lost my country, but the truth is I never had it to begin with.