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Abstract

The report includes the information about Pakistan International Airlines, the introduction of

the PIA and the problems which are being faced by national flag carrier, the purpose of selecting

this topic is to know the reasons that why PIA an airline which was one of the best airline of the

world and the strong pillar of Pakistan’s economy, why it is facing loss from many years? The

passengers are continuously switching to other airlines and PIA is consistently going down, what

are the reasons behind this? The survey results are also included in the report that we conducted

at Jinnah Terminal Karachi, during the survey we met with different passengers where we

noticed their complaints about PIA, the complete information is also included in the report. In

the end we have added some suggestions which can help PIA in recapturing the lost passengers.

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Introduction:

Pakistan International Airlines Corporation, commonly known as PIA is the flag carrier

airline of Pakistan. The airline, with its head office on the grounds of Jinnah International

Airport in Karachi, is one of the largest airlines' in Asia, operating scheduled services to 24

domestic destinations and 39 international destinations in 25 countries across Asia, Europe and

North America. Its main bases are Karachi, Lahore and Islamabad/Rawalpindi.

The airline's secondary bases include Peshawar, Faisalabad, Quetta, Sialkot and Multan, from

which it connects the metropolitan cities with the main bases, the Middle East and the Far East.

The airline is owned by the Government of Pakistan (87%) and other shareholders (13%). It

employed 18,043 people as of May 2008.

History:

'Pakistan International Airlines', or 'PIA' for short, can trace its beginnings to the days when

Pakistan was not an independent state. In 1946 Muhammad Ali Jinnah realized the need for an

airline network for the forming country and called upon the help of an industrialist Mirza Ahmad

Ispahani to develop a flag carrier for the nation. Meanwhile, an airline called 'Orient Airways',

registered in Calcutta, was formed on 23 October 1946. In February 1947, the airline brought

three DC-3 airplanes from a company in Texas, and in May of that year the airline was granted a

license to fly. Services were started in June from Kolkata to Sittwe and Yangon. This was the

first post-war airline flight by a South Asian registered airline company. Two months after this

service began, Pakistan was formed. Orient Airways began relief flights to the new nation and,

soon after, it moved its operations to Karachi, where it began flights to Dhaka on 7 June 1954. In

addition, the first two domestic routes in Pakistan were established, from Karachi to Lahore

Peshawar, and from Karachi to Quetta to Lahore.

PIA L1049C Super Constellation at London (Heathrow) Airport in 1955

The Government of Pakistan, realizing the operation was failing economically, proposed that

Orient Airways merge into a new national airline. On 11 March 1955, Orient Airways merged

with the government's proposed airline, becoming 'Pakistan International Airlines Corporation'.

During the same year the airline opened its first international service, from Karachi to London

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Heathrow Airport via Cairo International Airport and Leonardo da Vinci Airport in Fiumicino,

Italy, using three newly-acquired Lockheed L-1049C Super Constellations. The DC-3s continued

operating the domestic services in Pakistan. In May 1956, PIA ordered two further Super

Lockheed Constellations of the latest L-1049H version and five Vickers Viscount 815. In 1959,

Malik Nur Khan was named Managing Director.

In March 1960, PIA became the first Asian airline to use jet aircraft when Boeing 707 services

were introduced. The aircraft were wet leased from Pan American and in 1961 services were

begun to John F. Kennedy International Airport in New York City. In 1962, orders were placed

for Boeing 720s, Fokker F27s and Sikorsky helicopters. One of PIA's Boeing 720s broke a world

record that year, when it flew from London to Karachi non-stop in 6 hours and 43 minutes during

its delivery flight from Seattle, piloted by PIA's senior Captain Abdullah Baig, a record unbroken

to this day. During 1962, services to East Pakistan (now Bangladesh) were proving to be

difficult; therefore PIA placed their Sikorsky S-61 helicopters on these routes until 1966 when

conditions improved. In 1964 PIA became the first airline from a non-communist country to fly

to the People's Republic of China. As the Indo-Pakistani War of 1965 broke out, PIA helped the

Pakistani forces with logistics and transport. In 1966, the Viscounts were phased out, substituted

by four Hawker Siddeley Tridents. However, as growth surpassed the need for these aircraft,

they were later sold to Civil Aviation Administration of China.

The 1970s saw the resumption of transatlantic flights and new destinations. It once again aided

the Pakistan Army by transporting soldiers to East Pakistan in the Indo-Pakistani War of 1971

and lost a couple of its aircraft to Indian Air Force fighters. In 1972 it applied to operate to Libya

and an agreement was signed with Yugoslav airline JAT. In 1973, McDonnell Douglas DC-10s

arrived and were used by the airline before they were replaced by Boeing 707-300s. In 1974 air

freight services started, as well as a cargo service to New York City under the name, 'Pakistan

International Cargo'. In 1975, PIA introduced new uniforms for air hostesses. These uniforms

were chosen through an open competition, the winning entry was a design by Sir Hardy Amies

who was designer to Her Majesty Queen Elizabeth II.

A Convair CV-240 in the 1950s at Karachi airport

In 1976, leased Boeing 747-200Bs came into service. In 1979, the airline bought their first

Boeing 747-200BM aircraft. Also in 1978 the airline provided help to Somali Airlines, Air Malta

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and Yemenia and established a hotel management service in the United Arab Emirates. PIA

leased two of its own Boeing 720s to Air Malta during the 70s.

The 1980s began with the opening of a cargo centre in Karachi and the delivery of a new aircraft,

Airbus A300B4-203. In 1981, a duty-free sales service was inaugurated. During 1982, the first C

and D checks were carried out on the fleet in Karachi. In 1984, domestic night coach fare service

was introduced to offer lower prices for low-income passengers. In 1985 the PIA Planetarium

tourist attraction was inaugurated in Karachi and later in Lahore. In the same year, five Boeing

737-300s joined the fleet making PIA the first Asian operator of such a type. Two former PIA

Boeing 720Bs now form part of the Planetarium's exhibition at Karachi and Lahore. In late 1987

and early 1988, flights were introduced to Malé and to Toronto Pearson International Airport,

respectively. In 1989, the first women pilots started their career on passenger airplanes.

During June 1991, PIA received the first of six Airbus A310-300 aircraft on from Airbus

Industries. In 1992, flights started to Tashkent and in 1993, to Zurich, Switzerland. In addition,

PIA became a user of the Sabre, Galileo and Amadeus global distribution systems. During 1994,

PIA added Jakarta, Fujairah, Baku and Al-Ain to its destinations. Air Safari flights were

launched in the same year using Boeing 737–300 aircraft over the Karakoram Mountains. In

1995, PIA received a Boeing 747 flight simulation system and a used Air France A300 aircraft

was bought. In 1996 the airline leased Tupolev Tu-154 aircraft, and re-opened services to Beirut.

PIA only used the Tupolev Tu-154 for a short time to deal with the demand during the summer

of 1996. In 1999, PIA leased five Boeing 747–300 aircraft from Cathay Pacific to replace its

aging Boeing 747-200M fleet. The aircraft wore a new livery with a handwork Pashmina tail on

white body and large Pakistan titles on the front fuselage. The livery was applied to some of the

fleet during the 90s but due to copyright problems the livery was dropped. The Boeing 747-300s

remained in the new look but with a plain green tail with PIA titles. The other aircraft in the fleet

were repainted in the 1990s livery.

The Fokker F27 was once the backbone of PIA's northern area flights in the 1990s

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Domestic Network of PIA

Domestic Network of PIA

Islamabad - Rawalpindi (Benazir

Bhutto International Airport) Hub

Northern Areas

o Gilgit

o Skardu

North West Frontier Province

(NWFP)

o Chitral o Dera Ismail Khan o Peshawar (Peshawar

International Airport)

Focus City

Sindh o Hyderabad o Karachi (Jinnah

International Airport)

Hub o Moenjodaro o Sukkur

Punjab o Bahawalpur o Dera Ghazi Khan o Faisalabad

o Lahore Hub o Multan o Rahim Yar Khan o Sialkot

Balochistan

o Dalbandin

o Gwadar

o Panjgur

o Quetta

o Turbat

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International Network of PIA

South East Asia

Malaysia

o Kuala Lumpur

Thailand

o Bangkok

North America

Canada

o Toronto

United States

o New York City (JFK)

Southwest Asia

Bahrain

o Manama

Kuwait

o Kuwait City

Oman

o Muscat

Qatar

o Doha Dammam

Saudia

o Jeddah

o Riyadh

United Arab Emirates

o Abu Dhabi

o Dubai

o Sharjah

Europe

Denmark

o Copenhagen

France

o Paris

Italy

o Milan

Netherlands

o Amsterdam

Norway

o Oslo

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ORGANIZATIONAL STRUCTURE OF PIA

CHAIRMAN

PIAC

SA to

Chairman

Secretary

PIAC Managing Director

Director Precision

Engineering

Director Coordination/

SA to MD Chief Operating

Officer

Director Flight Services

Director Network &

Route Planning

Director

Flight Operation’s

Director Airport

Services

Director

Administration

Director Cargo Sale

& Service Director Marketing

Director Finance

Director Engineering

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Departments of PIA: PIAC Airline has been divided into the following function units.

Network & Route Planning

Administration

Finance

Marketing

Engineering

Flight Operations

Airport Services

Cargo Sales & Services

Precision Engineering Complex

Flight Services

Coordination

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SWOT ANALYSIS OF PIA:

Through the technique of "SWOT" one can analyze the present performance conditions of an

organization and its weaknesses. Also the opportunities it can grab in the external environment

and the threats it faces. This technique serves as a base for sound recommendations and

conclusions. We will use SWOT analysis technique in order to come up with conclusion about

PIA.

Strengths

Leading Market Position

Brand Recognition

Advance Maintenance Facilities

Network Presence

Hub airport at Karachi

Weakness

Debt Burden

Frequent Changes In Management

Government Influence

Reliance on Oil Prices

Opportunities Explore new destinations/ routes

Customer loyalty

Shifting customer needs

Industry Recovery

Threats

High Interest Rates

Low cost airlines in domestic competition.

Entry of International Airlines

Decline in airline industry

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Problem Statement:

The problem that we are discussing in our ARM report is that why PIA is facing loss from many

years? Why it is not generating profit and contributing in country’s economy? Intact it is not

even able to generate sufficient revenue to run its operations every year government feeds PIA

with special funds, there are many of the reasons which are causing loss to PIA, we have

gathered some data from different pages that shows the current financial position of PIA,

The Figure shows the financial position of PIA of last two consecutive years i.e. 2010 and 2011,

we can see that PIA has suffered from loss in these years, but the most important and the more

alarming thing is that its loss in last year i.e. 2011 is more than the previous year i.e.2010, which

shows that PIA which already is facing huge loss is not yet even able to control the losses but it

is going even more worst, so nobody knows what will be the next 2-3 years in PIA’s life, if we

see the track record of PIA apart from the data of these last two years we can see that PIA is not

just facing loss from last few years but from many years it isn’t performing well as it should be

doing so, though it’s the biggest Airline of the country and we can say it is among the senior

airlines of the world so it should have been competing with one of the best Airlines of the world

and it should have been having the ranking of at least 4 Stars,

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From the above figure we can clearly see the performance of PIA of its last 30 years, in the

starting years it has generated some profit or we can say a minimal profit, but if we see specially

after 2002 and 2003 till now PIA has drowned into the sea of loss, because in these years the loss

that PIA has faced, it has never faced before, PIA is even not able to generate its own operating

expenses so this one is the Crucial situation that PIA is facing from last few years. We all know

how much senior airline PIA is and how bright past and it was people’s one of the favorite

airline, but unfortunately PIA wasn’t able to sustain its brightness and because of many reasons

now people are avoiding to travel on PIA which in result has decreased the PIA’s market share

specially on international routes, here is a graph that shows the market share of PIA both on

international routes and on domestic routes.

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PIA Info - 2010

The graph shows that PIA is only able to get 39% of international market share which is very

low being the national flag carrier it should have been having more than 60% of the market share

but because of many reasons PIA is not able to get the major share, while in domestic market

PIA has captured the major share and the reason behind this is that there are only two other

airlines operating in Pakistan other than PIA and both of them are not much better than PIA so

people prefer PIA on those, another graph is presented that shows the share distribution of

airlines on international routes.

PIA info - 2011

The above graph shows that PIA has 31% of market share in Pakistan on international routes,

while remaining 69% is divided in other foreign/local private airlines, means PIA is available but

still international airlines specially of gulf countries are coming and picking a major number of

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passengers from Pakistan and taking them to other countries even where PIA flies which is a

serious concern for PIA and the reasons behind this situation are many.

PIA is not just offering the service of taking passengers from one place to another, it offers many

other services as well, eg:

Cargo

Engineering

Passengers

Flight Kitchen

Others – Speedex Courier Service

The revenue generation of PIA from different departments is shown in the following graph,

PIA info - 2011

The above graph shows that major source of earning of PIA is passengers movement, while the

other departments which are mentioned in the graph are capable of generating more revenue but

irresponsible behavior of employees and corruption has shortened their revenue an senior

administration could increase the revenue generation of these departments and that increased

revenue from all the departments could help PIA in decreasing its losses. The graph shows that

only 5% of the revenue was generated from the cargo service which could have been much more

because PIA and its cargo department is capable of generating more revenue but they were nit

able to generate because of many reasons, eg: Planes conditions, Competition, High Charges,

Low Orders following graph is showing the information about the capacity and utilization of

cargo service department,

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The graph clearly shows the capacity and the utilization of cargo service, the capacity is higher

and the utilization is lower which has resulted in low revenue generation which means loss to

PIA, so the management must try to utilize more of its capacity to earn more revenue.

The factors which are affecting PIA and leading it towards the side of loss are many, one of the

major factor is increasing fuel prices, the fuel prices are increasing day by day which are

causing loss to PIA specially when it gets fuel from foreign suppliers then PIA has to pay in

Dollars while it gets the amount of ticket purchased by the people in rupees so the gap of

currency exchange is again loss to PIA. The condition of most of the planes of PIA is not so

good which demands in repeated maintenance which again is loss to PIA and due to the worst

condition most of the time the planes of PIA are grounded and because of the flights get

delayed or cancelled which results in trouble to the passengers and then next time when they

avoid travelling from PIA and choose any other airline to travel and in this way PIA

continuously looses its passengers, following is the graph that shows what costs PIA,

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The above graph shows that the major cost of PIA is its fuel and one thing which is always

criticized about PIA is that it is over employed means huge number of people are employed and

the salaries of those employees are causing loss to PIA

Research Objectives :

To find out the reasons behind the poor performance of PIA from many years

To know the insights

To get customer’s idea about PIA

To suggest PIA that how it can improve.

Statements Of Hypothesis :

Null Hypothesis H0

Poor Quality Service Does Affect the Market Share of PIA.

Alternate Hypothesis H1

Poor Quality Service Does Not Affect the Market Share of PIA

Research Methodology and Data Collection Method

Secondary Data

Primary Data

Questioners

Individuals In depth Interviews

Survey results

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Secondary Data : The main source of gather secondary data is internet and Pakistan

International Airlines yearly officials report, also we have gathered data from PIA”s

Head Office

Primary Data : Primary data we have gathered through survey small size questioners

and also we conducted informal Individual in depth interviews from Air Travel agents on

the basis of these sources we measure survey results,

This is the Questionnaire, we designed for our survey at Jinnah Terminal

Project – ARM

Airline:

Group Size:

Destination:

PIA wasn’t Considered, Reason;

Suggestions

Filled By: Adnan Ahmed/ Abdul Salam

Schedule Service Price

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Survey:

The survey was conducted by both of us the group members Abdul Salam Shaikh and Adnan

Ahmed Memon, at the gate of International Departure Lounge Jinnah International Airport Karachi,

we spent a whole day there and took the survey from a sample of more than 100 people which were

travelling to different countries using the international airlines, we took survey from them to know

their reason of not selecting the PIA.

After the survey we found that main problem lies in the service of PIA that is why people are

switching to other airlines, Again in service we got different complaints in service. Eg. The

airhostesses and other staff of plane treats the passengers really badly, they don’t listen to them they

don’t ask whether they need anything or not, the other complaint regarding service was of airport

staff of PIA, that the staff doesn’t help them in

reaching the plane and once when they are landed they face so much trouble in getting their luggage,

They have to stay for so many hours at airport to get their luggage, while some passengers told that

other airline’s staff treat them very nicely and help them in each stage till they sit in the plane or till

they get their luggage and leave airport. Also another very common complain was of the staff of PIA

outside Pakistan people complained that the staff of PIA outside Pakistan is so rude and they treat

even the old aged passengers just like their servants. So these were some complaints about the

service of PIA that we got from the passengers during survey.

The other main problem is of high prices and Delays. As we observed while conducting the survey

at the terminal that most of the passengers were from low class and they were mostly travelling to

UAE and Saudi Arab for labor work, and it is for sure that a labor class person will always look for

low cost airline, even the upper class also consider the price factor sometimes, and as already

described if we look at fares of PIA and compare them to other airlines then we will get a clear

difference of huge pricing. And it is clear also that the airlines of Middle East are getting the

passengers from Pakistan just because of low pricing.

The Major Complaints of Passengers:

The price differences in international carrier and PIA.

Attitude of crew is not good. They do not support passengers if they are in trouble.

Website is not user friendly. Many passengers complained that the flight schedule is not

properly mentioned and credit card acceptability issue is there.

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Delayed flights of PIA

No luggage safety

Agents of PIA are not promoting PIA. At the time of selling the tickets they

themselves preferring other airlines such as Emirates.

No respect given to diamond card holder.

Individual In Depth Interview:

The Individual In depth we conducted from Air travel agent which is located at Badar

Commercial Area Defense phase 5 Karachi

Name of Air Travel Agency : A. M Travel Agency

Name of Air Travel Agents : Arif Ali Morejo and Abdul Naeem Rubbani

Travel Agents Ideas:

PIA service is not as much competent as other Airlines Offering

Delayed Flights

Airport Staff and Flight Staff behavior problem

Language problem

Contact Card of the Travel Agent

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Conclusion:

The final conclusion of the whole report is that people of Pakistan want to travel through PIA but

they say they are compelled to travel from other airlines because of above reasons, so its now the

time when the management and the Government of Pakistan need to take some serious steps

towards the uplifting of PIA, because Pakistan at this time is facing economical and inflations

problems so if PIA can get dependent then the day is not far when it will start contributing in the

country’s economy by adding its revenue in it.

Suggestions:

1. PIA should not discourage its loyal customers by degrading them with their attitude

2. Fares should be matched with other competitive airlines if not less

3. Conditions of airplanes should be improved

4. Food quality should be improved. Equipments are needed for flight kitchen but PIA’s top

management is not supporting it. Equipments should be arranged in order to make flight

kitchen more effective and it will in return increase the reputation of PIA.

5. Frequency of flights should be increased. It will create a huge impact because passengers

are demanding more frequent flights to travel. If they can not catch one flight so they can

catch another easily.

6. Fleet size should be increased by adding new planes, as thy can attract those passengers

which are not travelling on PIA because of its old fleet.

7. Government influence should not be there as it is also considered as one of the biggest

reason of PIA’s downfall

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Bibliography:

www.piac.com.pk

www.wikipedia.org

www.airliners.net

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