I envy Ansar Abbasi

I seriously am overawed with the capabilities of Jang Group journalists. They are all seeing, all knowing and the areas under their command are just supernatural. Look at the case of Ansar Abbasi. According to blogger Kala Kawaa “isn’t he an expert on the law? Just like he’s an expert on Islam, and the constitution, and the economy, and foreign relations, and making up sources?”. If there was anyone fit to run Pakistan, it will be Ansar Abbasi.

Journalists are generally not well acquainted with economy, running businesses etc. If they were, they would have been newspaper and TV channel owners than working for someone. However, Ansar Abbasi is seriously challenging MSR and also literally thrown in his candidature to run PIA. In his report that was simultaneously published in Jang and The News on Sunday, February 06, 2011, Ansar Abbasi has raised the matter of PIA’s planned collaboration called code-share with Turkish Airlines. He probably doesn’t even know that Joint Ventures and Collaborations are different. But he knows all. Why would he care about such mistakes.

He also says that PIA would become a “feeder or backyard airline”. I never knew there were airlines in the backyard too. You can read the whole report and get in awe of this amazing journalist.

Off course, in response to any rational explanation given, it will always be trumpeted that it is a “qaumi asason ka sauda”, “giving up national interest” etc. A few days back, an expatriate was telling me the same thing that “PIA tabah honay ja rahee hay, aur PIA ko nuqsan hoga if PIA sells its routes to Turkish Airlines”. I asked him “What is the prime motive when you travel to Karachi or what is the decision clincher or how many times you travel on PIA?”. His answer was “whichever is the least expensive ticket is the one that I buy”. If one was so much in love of PIA, then no one would travel any other airline.

I also suggest that one reads Mr. Meekal Ahmed’s article “A Good Deal for PIA” and then develop their judgment.

PIA pushing Turkish deal despite serious flaws

By Ansar Abbasi
Sunday, February 06, 2011

ISLAMABAD: The PIA is all set to hit bottom as its top management is vigorously pursuing the idea of having a joint venture with Turkish airlines despite strong reservations of its own finance department and the Ministry of Defence.

Documentary evidence and background interviews with the sources in the Ministry of Defence and the airlines revealed that the mere assumption based PIA-Turkish airlines joint venture will reduce the PIA to a feeder airline, which according to the calculation of airline’s own financial consultants would make more loss than what is already estimated in the 2011 budget.

The Ministry of Defence, which is unhappy with the PIA’s unilateral move to sign a Record of Discussion (RoD) with Turkish airlines, objected that while this joint venture is being pursued under the pretext of getting rid of loss making routes whereas in actual the biggest loss making route — UK sector — does not cover in the proposed venture.

A senior Defence Ministry source said that the PIA management is pursuing the venture following latent pressure and without taking the ministry into confidence. “The RoD was signed between the PIA and the Turkish airlines without our knowledge,” the source said.

Under the proposed venture the PIA management is inclined to surrender to the Turkish airlines almost all its west bound flights with the exception of Paris, UK and Canada. Acting like a feeder or backyard airlines, the PIA management plans to run daily flights from Islamabad, Karachi and Lahore to Istanbul from where the Turkish airlines would take the passengers to their final destinations in Europe and America.

PIA spokesperson Muhammad Tajwar when approached said that the defence ministry did have complaint about the signing of the RoD without its approval but insisted that the ministry is told that the RoD does not mean anything as it is not an agreement. He said that the defence ministry is now being briefed about the details of the proposed venture following which the former has started taking it positively.

Regarding the objections of the PIA’s own finance department, the spokesperson said that the finance department is presently evaluating the scheme.

Tajwar explained that the proposed joint venture has three steps. In step one the PIA would link itself with Turkish airlines for destinations where the PIA does not operate at all. In the second-step, he said the PIA-Turkish airlines cooperation would work for the PIA destinations but only during those days when the PIA does not fly on such destinations. In the third step, the spokesperson said the PIA and Turkish airlines would share those routes, which are loss making for both of them.

In its analysis on the RoD, the Defence Ministry, however, recently found it in contradiction with the PIA’s own business plans besides expressing reservations that how the airlines could go ahead with such a joint venture with a foreign airlines without the approval of the Ministry of Defence.

According to the Defence Ministry’s analysis, total losses for the year 2010 projected in PIA’s business plan were approximately Rs14 billion. These include losses on UK route (27 flights) are about Rs5.9 billion (38%), North American route (USA 5 flights & Canada 3 flights) are about Rs6 billion (39%) and on rest of the European routes about Rs2 billion (13%) (up to July 2010).

The MoD, however, wondered that while the major reason being given in favour of the RoD is the need for PIA to cut down its loss making routes, the biggest loss making route is the UK sector, even with 27 weekly flights, are being retained. By this definition PIA should also be seizing its operations to the UK.

The defence ministry source also shared details of the observations made by the employee unions besides reservations raised by the aviation body — CAA. “Even the financial experts of the PIA are of the view that the airline would lose instead of increasing its revenue from such a cooperation with the foreign airline,” the source said. The source believes that the analysis of the project’s assumptions shows fall in revenues as against what is budgeted for the year 2011. “It would mean that the project will add further to the loss,” the source said, wondering with such a scenario, what is the wisdom in risking global operation of the PIA. From PIA’s own Business Plan, according to the MoD’s analysis, it is evident that all routes/sectors are hugely profitable. But it is only when all other fixed costs, direct and indirect costs are added, the routes/sectors are being shown as loss making. The conclusion that can be drawn is clear. The losses are not owing to operations on these routes. The reasons lie elsewhere.

The MoD also apprehended that there exists no guarantee that PIA would be able to hold on to its share of traffic on the routes it is planning to abandon.

The News has learnt that the management of PIA has claimed on various occasions that it would get 15% of the fare of each passenger from the Turkish airlines for onward flights to Western destinations but this point is not reflected in the RoD.

Moreover sources said that in order to get the deal done, exaggerated assumptions of fare and seat factor have been given by the marketing department of the PIA, which have been challenged by the finance department.

The ministry also pointed out that the PIA has been continuously crying hoarse on the issue of exploitation of 6th freedom traffic by Gulf Carriers and Turkish Airlines, whereas now it is itself planning to facilitate carriage of sixth freedom traffic between East and West, especially for the Turkish Airlines. This would automatically lead to similar demands, which have been forestalled up till now, by Gulf carriers. The ministry though acknowledged that the PIA could negotiate and conclude any commercial or technical arrangement that would be of operational and financial benefit to the airline, reminded the airlines’ management that it could only be done while remaining within the framework of the bilateral arrangement that is negotiated by the government (MoD). According to one source, without even waiting for the approval of the Ministry of Defence, the airlines management is enthusiastic to engage an American company to procure software and consultancy worth $4 million for the proposed joint venture.



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