Senate panel calls for overhaul of PIA’s internal structure

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Article Source: https://tribune.com.pk/story/1346878/financial-turbulence-senate-panel-calls-overhaul-pias-internal-structure/

By Riazul Haq

Faulting corruption, political intervention and poor governance for the decline in Pakistan International Airlines’ fortunes, a three-member Senate panel has recommended a full overhaul of the air carrier’s internal structure.

The panel also blamed successive governments for not exercising the political will needed to pull the airline out of its troubles. It also cited frequent changes in top leadership and induction of cronies lacking strategic vision and ability to make a credible business plan as reasons for the current state of affairs at PIA.

The Senate’s Special Committee on Performance of the PIA – comprising Muzafar Hussain Shah, Farhatullah Babar and Lt Gen (retd) Abdul Qayyum – has offered these findings in a report compiled on the basis of in-depth interviews and meetings with current and former PIA officers.

In its six-page comprehensive report – available with The Express Tribune – the panel has recommended several solutions for the overhaul of the PIA’s internal structure for its rescue and revival. The report is likely to be laid out for discussion before the Senate next week.

PIA has been in the news for the last few years due to its financial losses, increasing debt, flight delays, mismanagement, waning image and plane crashes.

The airline, which posted a Rs2 billion profit way back in 2004, has lost over Rs103 billion during the tenure of the current PML-N regime while official figures state that the debt on the national flag carrier has crossed the Rs200 billion figure which was Rs162 billion in 2012.

Analysing these issues, the report claimed that PIA has been going through a leadership crisis. It says the airline has no permanent chief executive officer (CEO) while the acting CEO has complained of undue interference by the government and the PIA’s board of directors (BoD) in administrative matters.

Talking to The Express Tribune, Senator Babar said during meetings with the panel the acting CEO Bernd Hildenbrand appeared upset due to lack of complete powers. “I am told I should not interfere in these matters [related to certain officers and issues],” he quoted Hildenbrand as saying.

The report claims that unsuitable selection has given birth to formation of an imbalanced and non- professional BoD, some of whose members are totally unaware of the concept of aviation and finance.

It says the PIA was politicised by successive governments which inducted in it thousands of unqualified and unsuitable employees. It laments that behind every union there is some political party and most of these unions are resorting to blackmail. “They pressurise senior management and want to have their say in every posting and promotion,” it notes.

Non utilisation of resources also appears to be one of the issues as the committee notes that three of the directors have been drawing more than Rs300,000 salary per month and have not been assigned any work for months.

“Corruption is rampant in purchase of spares parts, allocating of space for freight, purchase of tickets, in enrolments and postings and in catering and engineering departments. Salaries structure is on the higher side in some senior management cases as compared to the input,” it says.

Recommendations

The report suggests immediate dissolution of the current BoD on account of inefficiency. It says a new BoD – including civil aviation experts, legal experts, Civil Aviation Authority’s former director generals, financial wizards, HR professionals and professionals with know-how of the system – should be appointed.

“The board should elect its own chairman. The government should immediately appoint a permanent CEO. The board should only deal with conceptual aspects and broad policy matters and devolve operational and management authority to a permanent CEO, who should have freehand in handpicking his team of experts with all powers of hiring and firing of employees on merit,” it says.

The government must constitute a board of financial experts under the chairmanship of the State Bank of Pakistan’s former president Dr Ishrat Hussain to propose financial restructuring of the PIA. Hussain has supervised such restructuring of the Pakistan Steel Mills in 2002-2003.

“For revenue enhancement, the management must plan fleet expansion, network integrity, route rationalisation, network expansion, system automation, cargo revenue and ancillary revenue earning,” the report suggests.

Cost reduction should be ensured through financial discipline, debt restructuring, offloading aging fleet, contract renegotiation and automated crew roster. The airline should carry out a value chain analysis to determine loss making sectors.

It also suggests that the aviation policy needs to be revisited with input from PIA. “Till the policy is revised, the government should discontinue forthwith permission for additional destinations to foreign airlines as the government must protect the legitimate interests of the airline,” it says.