Pakistan is the second-largest economy in South Asia, with over 220 million inhabitants and a constantly growing middle class. The economic structure has changed dramatically over the past few decades. In contrast to other sectors, the service sector has increased strongly. Despite manifold challenges over the last two decades, the economy is moving progressively on a higher and sustainable growth path.
However, due to a large set of challenges, the Pakistani aviation sector can be described as ‘the large sleeping giant‘, which needs to wake up from the pandemic effects and immediately grab the opportunities for a better future.
In September, I had the honour to be part of a high-level business delegation from the UAE and Germany visiting the Government of Pakistan and other authorities; with the aim of advising the country on future-proofing its sectors, including aviation. The delegation trip to Karachi and Islamabad was a real eye-opener.
Prior to the pandemic, the air transport sector of Pakistan was forecasted to grow by over 180 percent in the next 20 years.
In 2019, over 500,000 direct and indirect jobs in Pakistan were created by the air transport sector. Today, 1.3 percent of the GDP of Pakistan is supported by inputs to the aviation sector and foreign tourists arriving by air. In 2019 85 percent of all international departure seats from Pakistan were to destinations in the Middle East – especially Dubai with 2.3 million departures.
The fate of the Pakistani airline industry is destined to change for the post-pandemic era. To date, the Pakistani aviation sector has been dealing with a large set of specific challenges: Political instability, security situations, inadequate infrastructure, poor safety culture, inconsistency in state policy, inconsistent tax laws, weak economic growth, poor access to investments and funds, lack of structural reforms and unsupportive economic policies.
Snapshot of Current Aviation Environment in Pakistan
Across the globe, travelling by plane usually costs more than either a bus or train ride for a domestic commute. However it does not legitimise what passengers in Pakistan are charged for domestic flights, in the wake of feeble local competition.
A one-way trip from Karachi to Islamabad cost roughly $45, translating into $0.064 per mile for a domestic flight in Pakistan. An inexpensive Delhi-Mumbai ticket is priced at $55 and around $0.049 per mile by looking over to India. It clearly shows that the difference in fare on a per-mile basis elucidates the industrial mess in Pakistan for a decade.
Despite the recent new market entrants like Fly Jinnah, the market is still limited. After the exit of the privately-owned carrier Shaheen Air back in 2018, Pakistan International Airlines (PIA) has been the primary beneficiary in the domestic market to date. Pakistan has been an oligopolistic airline industry where Serene Air and Air Blue, as privately-owned airlines, compete against each other and the national carrier PIA. Last year, another airline company entered the Pakistani domestic market: AirSial.
Despite Pakistan being the fifth most populous country across the globe, the country’s domestic market performs poorly in terms of available domestic seats divided by the population – Pakistan has about 0.03 seats per person, in comparison with India (0.16), Nepal (0.11) and Bangladesh (0.04).
There is plenty of room to grow when it comes to the total market share of low-cost carriers in Pakistan. Their share is much smaller than some of Pakistan’s neighbour countries like India. In pre-Covid-19 times (2019) there were fewer than 1.3 million low-cost seats departing from Pakistan. This represents 12.6 percent of the total capacity offered in the Pakistani market. In contrast to the country’s current low-cost market, low-cost carriers in India account for about 34 percent of all international seats.
Given the relatively low penetration of low-cost carriers into the Pakistani market to date, various opportunities exist – for instance on services from the Gulf (UAE, Bahrain, Saudi Arabia, Qatar, Oman, Kuwait). Before the pandemic, only three of Pakistan’s top 10 international routes by capacity offered had the presence of at least one low-cost carrier.
The route between Pakistan and the Gulf, with highest low-cost share by capacity offered, is Dubai–Karachi with 21 percent. The low-cost share on most of the routes between Pakistan and the Gulf cities are surprisingly below six percent.
PIA’s struggle
In view of PIA‘s poor safety records, the airline must ensure that its quality of staffing and fleet airworthiness comply with the safety standards; thus satisfying the international regulators such as the EASA, ICAO and the FAA.
The national carrier has been impaired by a chronic lack of profitability due to operational inefficiencies. To be financially sustainable in the post pandemic era, the loss-making carrier must increase revenue, decrease cost and restructure its balance sheet. All these initiatives will help restore confidence among potential customers, restart flight operations on routes presently closed/banned and enhance code-sharing agreements with other airlines to increase overall revenue.
Conclusion
Factors like the high proportion of young people in the population (15-33 years: 63 percent) the growing middle class, the real GDP growth of 3.9 percent in 2020-21 and the government’s increasing awareness about the importance of the aviation industry to a country lay out the foundations for a better future.
Despite the bottlenecks, the investment climate there has improved in the recent years. If we look at the current macro-environment of the Pakistani airlines and airports, structural reforms and economic policy readjustments will be essential to wake up the large sleeping giant. For instance, the Pakistani government has to rationalise the heavy taxes on air tickets in order to make air travel more affordable for the Pakistani people. Air Arabia‘s recent JV with the conglomerate Lakson Group is paving the way for a better, sustainable future for the country’s aviation sector.
shaheen air is still in market i know they have close their all routs but they still owns two a320.200…..and a330 wich are parked at karachi airport if they came back to market so that will help full for 200 million people of pakistan because in 2018 my friend travel on shaheen air karachi to muscut oman for only 6000 ruppes thats soo chep
As long as the security situation does not improve (support for global terrorism, taliban etc.), Pakistan cannot progress. What was once a tiger economy in that part of the world has been reduced to rubbles, thanks to its decades long policy of supporting global terrorism. They regularly close down their airspace and deny overflight rights for commercial airlines in India, who in their right mind would invest and operate an airline?
From industrial development to tourism, Pakistan lags in the SAARC region and the sooner they sort out the mess, the better it is for all, including aviation.
It is in the best interest for the rest of world if this ‘giant’ keeps sleeping!
Safety and cleanliness ? Right there, dubious at best. UGH, who would choose to fly them; certainly no Westerner who values his/her life.
Follow this link to a posting on the respected site Aviation Herald regarding the latest incident involving a Pakistani airline in Canadian airspace: .http://avherald.com/h?article=4efdecb3&opt=0
Until incidents like these can be eliminated, the Sleeping Giant of Aviation should stay in bed.
It’s a terrorist ridden dangerous country with unpredictable govt and people. Only a crazy person will setup business there. Plus it’s a debt ridden country , so much so they have to borrow from other countries to even pay the interest on their current debt.
That’s totally rubbish, the figure came out to be 28 only and they were holding genuine licences but the exam paper they took were cleared through a person by paying him who was running the exam system on computers. What the minister said in the assembly session was hilarious because he had no knowledge of what he was saying but a puppet used by the govt to put the 320 crash under the carpet for which they are equally responsible. What happened to those 4000 fake pilot licenses issue of India which emerged in 2012? What was the fate of American pilot’s fake licenses ( fake exams) issue which was on the media in 2018? Check the credentials of Pakistan Aviation Minister who doesn’t know A of aviation and became minister on fake welding diploma. The reality is bitter but people target those who are weak and not in a position to defend themselves due to weak economy gifted by their politicians.
Pakistan is not second largest economy in South Asia it is Bangladesh
THE SHORT ANSWER IS this:
“To date, the Pakistani aviation sector has been dealing with a large set of specific challenges: Political instability, security situations, inadequate infrastructure, poor safety culture, inconsistency in state policy, inconsistent tax laws, weak economic growth, poor access to investments and funds, lack of structural reforms and unsupportive”
PIA,was one off the most sought after Air service, off it’s kind,not only did Pia, help create many Airlines across the Arab world, as well as in some of the south eastern countries such as Malta National AIRLINE. Just to Name the one.,Emirates ,Another, if it wasn’t for the corrupt Governments,I,e PPP ,PMLN ,THIS AIRLINE AND THE COUNTRY AS A WHOLE WOULD BE ONE OF THE BEST IN THE WORLD. It’s most unfortunate, that corrupt politicians have Destroyed the ECONOMY and the National AIRLINE ,Pakistan will PROSPER under the IMRAN KHAN, AS THE PRIME MINISTER OF PAKISTAN.
There is no such thing like fake pilot or fake pilot licences. Even if someone got his flying licences early before completing their flying
hours . They must have to pass the flying test conducted by Airbus and Boeing and those test held abroad. From fake licences scandals actually meant that few pilots got their licences early before completing all their flying hours. But those pilots passed the test conducted by Boeing and Airbus . No one in Pia can fly the plane without passing those test . And there is biometric photo Id of every pilot since ages . The scandals like fake licence doesn’t meant that there are fake pilots.
Starting an airline is no child play. Expenses are astronomical. Domestic routes barely makes any profits. If one is not watching the bottom line can quickly go out of business. Shaheen Air, AeroAsia, Bhoja Air and maybe few others have failed and have lost a fortune trying to take off.
Asif Dada – Disruptive Transformation Coach
In Pakistan even a truck driver can become a PIA pilot…!!! That’s the level of malpractices observed. That’s why poor safety record. Moreover PIA is banned European countries.
That’s totally wrong . You know nothing about pia and aviation. Pia pilots test is conducted by Airbus and Boeing officials . Pilot cannot fly without those test . Those test never conducted in Pakistan. Pilots have to visit abroad . So ask Boeing or Airbus bus staff how can they pass the truck driver for the test? Your comment shows how naive you are .
There is no such thing like fake pilot or fake pilot licences. Even if someone got his flying licences early before completing their flying
hours . They must have to pass the flying test conducted by Airbus and Boeing and those test held abroad. From fake licences scandals actually meant that few pilots got their licences early before completing their
flying hours. But those pilots passed the test conducted by Boeing and Airbus . No one in Pia can fly the plane without passing those test . And there is biometric photo Id of every pilot since ages . The scandals like fake licence doesn’t meant that there are fake pilots.
Biometric plus photo ID at testing would help in curtailing the PIA fake pilot issue quickly. As long as the flying public hears of these things, load factors will not appreciably improve with regard to international flying.
Safety is indeed a big issue for PIA but I would also add on-board cleanliness and customer service plus they need to ensure that ALL corruption is eliminated at the airports.