Pakistan international airlines being sold? EASA lifts ban.

Story: PIA EU ban lifted amid ongoing privatization bid;

PIA ticket may get cheaper after waiver of the FED tax.

Pakistan International Airlines (PIA) ticket prices are likely to drop after the IMF approved waiver of the Federal Excise Duty (FED) on international flights.

According to the reports, passengers could save up to Rs. 350,000 (PKR) on flights to the USA, Rs. 210,000 to Europe and Australia, and Rs. 105,000 to the Middle East and Africa.

The waiver excludes domestic flights. Additionally, the IMF has waived an 18% sales tax on aircraft purchases or leases and allowed the transfer of Rs. 46 billion in negative equity to a holding company, aiming to improve PIA’s financial standing and attract investors as privatization efforts continue.

Earlier in November, EASA lifted ban on PIA, that was going on since 2020.

The Pakistan international airlines (PIA) which has famous slogan “Great People to Fly With” is being sold by the Pakistani government due its mounting losses.

The EU safety agency lifted the ban on Pakistan national airline:

The big news for PIA came just on Friday, November 29th, the EU safety agency lifted the ban on Pakistan's national airline after four years.

According to a report published by Reuters, the European Union Aviation Safety Agency has lifted its ban on PIA from operating in the bloc, it said on Friday.

According to the report, EASA suspended PIA's authorization to operate in the EU in June 2020 over concerns regarding the ability of Pakistani authorities and its Civil Aviation Authority (PCAA) to ensure compliance with international aviation standards.

The suspension came days after Pakistan launched an investigation into the validity of pilots' licences issued in the country following a PIA plane crash that killed 97 people.

“EASA has now re-established sufficient confidence in the PCAA oversight capabilities,” an EASA spokesperson said in a statement emailed to Reuters.

The ban was costing PIA nearly 40 billion Pakistani rupees ($144 million) in revenue annually, according to government records presented in parliament.

The airline is running in loss for a long time now, the airline has liabilities of more than $2.8 billion. The airline also has accumulated losses of $2.55 billion as of June last year, according to some reports online.

PIA was one of the top profitable company in Pakistan at one point.

But due to years of improper administration and series of events, the airline has failed and now being privatized at staggering losses.

Pakistan approved plans to sell PIA airline earlier this year:

The government of Pakistan owns 86% of Pakistan International Airlines Corporation Limited (PIACL), while private shareholders own the remaining 14%.

Brief history PIA:

PIA was one of the most successful and modern airline at one point in the aviation history, with technological advancements, great training and flying route connecting west to China, and other Asian countries it was a key player.

It helped the Emirates airline of the United Arab Emirates to establish in its early days. Emirates has now become one of the top carrier around the world.

According to a report, the government of Pakistan initiated the bidding process by qualifying six business groups, with 85 billion Pakistani rupees as its starting bid.

The first and only bid came from an Islamabad centred, real estate company, Blue World City, with only 10 billion Pakistani rupees ($36 million) for a 60% stake in the airline.

It was rejected, and the bidding plan was sent back to the cabinet for reconsideration. Reports suggests that now the government considering selling PIA to a foreign party, names like Qatar and Abu Dhabi has surfaced so far.

The downfall began much earlier, but constant losses began to occur from 2005 with staggering losses. In 2023 PIA reported Rs 75 billion loss, total liabilities of the airline exceed Rs 825 billion and total assets are valued at Rs 161 billion, according to a report.

Some reports suggest PIA has only 32 aircraft, with only 16-19 still operational, this includes Boeing 777, 737, and Airbus A320, 300, 310, ATR 42/72, ATR 72, ATR 42 and some older model aircraft. Average fleet age is around 17 years.

Potential comeback:

Many airlines go bankrupt and come back stronger and profitable as seen in the past, PIA too could make a same comeback to the business, if correct administration and enough cash flow gets in.

In recent examples from last 25 years of aviation history, airlines that went through bankruptcy and came back profit making, includes big US airlines like American Airlines, United Airlines, and Delta and other major US airlines.

Just a few days ago, one of the cheap flights carrier Spirit Airlines filed for the bankruptcy in the US, the governing body confidently stated that the company will make a good comeback with stronger profit making ability.

The future for PIA might be bright as the latest EU ban lift came, this alone would lift some burden as the ban was costing PIA nearly 40 billion Pakistani rupees ($144 million) in revenue annually.

The entry of gulf countries being considered as potential shareholder of the age-old carrier looks promising, due to the fact that gulf airlines like Emirates, Qatar Airways, have been profitable since their respective beginning, reflects positive approach.

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