Op-Ed: It’s time to privatise PIA, period.

It is an unfortunate fact, but a fact none the less, that countries have to make difficult decisions when it comes to finding their unique path to development. Many countries in the global South shy away from making these strategic decisions because it shakes the status quo and hence their own interests, but those countries which have taken difficult decisions today for a better tomorrow are certainly now better of than those who continue to refuse to plan for tomorrow. When Deng Xiaoping led Chinese economic reforms, he faced a backlash both from his party hardliners and the populace, but by moving away from inherently unsustainable policies he was able to lift the curtains to a new, better – admittedly not perfect – China.

In no way, I’m comparing the Chinese paramount leader to Nawaz Sharif, but what I plead is the need for cautious, forward-looking decision making by all relevant stakeholders, so Pakistan can look back from a point of progress, not that of despair. So far, the Sharif administration has made some very positive reforms, which certainly is a moment for cautious optimism. One of these is the willingness to reform the ownership of Pakistan’s inefficient and overstaffed state-owned enterprises. A state which struggles to provide the basic services of education, healthcare, and security to its citizens has no right to linger on loss-making corporations which needs millions of dollars every year to sustain their otherwise failing operations.

The recent wave of protests against the privatization of Pakistan International Airline by its employee union’s is nothing new, and to an extent it is understandable. A large number of them have been appointed due to their political affiliations, many have roles which could much cheaply be outsourced or replaced by modern technology, while others simply are uncertain of their fate which feeds for their desire to maintain the status quo. It is, certainly, the duty of the government and the management to ensure that no employee is unfairly treated, or has to go through the torture of an uncertain future, but what should be made clear to all of the employees of PIA, that the airline can no longer be bailed out by the people of Pakistan anymore.

There is no doubt that if it was not for the federal government’s repeated bailout’s, PIA would have never have survived, but it should also be without doubt, that without the political interference of the political parties into the management, of what was until the late 1980s a fairly decent carrier, PIA would have never become the airline in crises as it is now. It is time to get rid of both the bailouts and the political interference, the only way to do both, is to hand over the management of the national flag carrier to a private party, so for once PIA get’s to learn to play by the rules of economics.

Will everyone in PIA lose their jobs? certainly not, but some trimming of fat is a necessity. The employee per plane ratio — standing at a staggering 780 employees per plane, compared to Emirates 220 per plane, is outright unsustainable. If the PIA unions believe that the people of Pakistan will sit back and continue with this mockery, then they are wrong. Indeed I sympathize completely with the plight of the workers’ union, no one want’s to lose their livelihoods and essentially they shouldn’t, but unwise decisions by former governments have left no choice than to make some unfortunate but in-eliminable decisions. Certainly, it should be made sure that those non-core departments which are broken off or eliminated – such as catering or ground services don’t encourage unnecessary layoff’s and don’t ignore the rights of employees including pensions and access to health insurance. PIA needs strong reforms like these, the unions can’t be allowed to hold the management hostage, but at the same, the management can’t ignore the rights of the employees.

What is needed for PIA now, is a substantial investment and tough but fair decisions which can turn the airline into a sustainable and globally competitive carrier. This sort of investment is unwise for the government to make because at the end of the day it’s political motives will outweigh sensible economic decisions, take the 2010 164-page comprehensive restructuring plan which recommended the elimination of 4,300 staff positions, but like almost all other plans for the airline, was never implemented. If PIA has any hope of survival it is time to privatize it so a culture of compliance and a structure of meritocracy can be built. The only way forward for the government is to maintain it’s position of a pathway privatization which allows for a majority of its employees to retain their jobs and all of them to retain their dignity while turning the airline into a profit-making entity. Simply put, business is not government’s business, it’s time Pakistan woke up to this reality.

Like all articles on this blog, they can’t be reproduced, copied or distributed without permission of the author. This is written for Daily Times, published here. You can follow me on Twitter here.


Published by Shahrukh Wani

Economist at International Growth Centre, University of Oxford.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: