ISLAMABAD: Continuous improvement and development of all state-owned entities is required for Pakistan’s smooth economic growth.
Saddam Hussein, a Research Economist at Pakistan Institute of Development Economics (PIDE), told WealthPK that the enhancement and uplifting of the state-owned enterprises (SOEs), particularly the Pakistan International Airlines (PIA), is a mandatory element for the country’s GDP growth.
He added that the PIA is one of the country’s most debated SOE for incurring frequent annual losses that run into billions of rupees. To completely revamp the airline, the research economist believed that restructuring or privatization will be a viable option because patchwork will not work. Similarly, the economy of scale must be optimized to lower costs and boost revenues.
Saddam said that without a team of experts and effective management, the PIA or any other public organization will never succeed in solving its problems.
According to WealthPK research, the country’s national flag carrier incurred a net loss of Rs34.6 billion during the calendar year 2020, while in 2021, the airline faced loss of Rs50.1 billion, showing an increase of 44.8%. The PIA’s accumulated losses during 2021 surged to Rs565.3 billion in contrast to Rs516.5 billion in 2020. In addition, the PIA’s fuel costs in 2020-21 were Rs22.82 billion, while its operational losses were Rs15.027 billion.
It is important to discourage short-term policies as they can disrupt productivity. After transition of power, the previous government’s progressive policies and regulations should not be changed altogether. A relative change needs to be assessed when policies are implemented during the tenures of at least two governments.
There are some routes where the PIA uses its large capacity planes which prove expensive. Therefore, there should be a restriction on the usage of big planes for the routes where there is no profit or the revenue is even below the break-even point.
Lastly, the national airline should implement stern operational cost-cutting measures to raise its revenue. No extra perks must be given to employees as it is putting a burden on the PIA revenue. Right-sizing and maximizing the quality of work must also be ensured to improve efficiency.
