Aviation market in South Asia is among the fastest growing in the world. It is soaring in terms of both domestic and international travel. Last year, Indian commercial aviation market grew to 176 million passengers and Pakistan’s reached 22 million. A total of 22 million passengers (7.2 million domestic, 14.6 million international) flew commercial airlines in Pakistan in 2016-17, up from 20.7 million (6.95 million domestic, 13.76 million international) in 2015-16, according to Civil Aviation Authority (CAA). While Pakistan’s international aviation market as a percentage of its population is bigger than India’s, the Indian domestic market is far outpacing Pakistan’s mainly due to greater competition and significantly lower airfares. International Travel Nearly 15 million international passengers flew in and out of Pakistan in fiscal year 2016-17. This number is about a quarter of the 59 million international passengers who flew to and from India in roughly the same period, according to data available from the aviation authorities of the two South Asian countries. India’s population is about six and a half times larger than Pakistan’s.Domestic Aviation The difference in domestic air traffic between the two countries is far bigger compared to the ratio for international traffic. India has seen its domestic air travel market soar to 117 million passengers versus Pakistan’s 7.2 million in 2017. India’s combined aviation market for both domestic and international travel is 176 million versus Pakistan’s 22 million passengers.The other difference in terms of domestic markets of the two nations is that the state-owned Pakistan International Airlines (PIA) enjoys 67.2% market share while the state-owned Air India has only 14.2% market share. Fares and CompetitionAs to the reason for India’s domestic market being 16 times larger than Pakistan, let me quote the UK’s Financial Times as an explanation: “A highly competitive domestic aviation market (in India) means that a passenger looking to fly from Delhi to Mumbai on July 1 this year, for example, can pay as little as $35. In Pakistan, someone wanting to do the roughly equivalent trip from Islamabad to Karachi will probably have to fly with the government-controlled Pakistan International Airlines and pay at least $100 to do so”. Given the basic price-demand elasticity, it makes sense that Pakistan’s domestic airfares being three times higher than India’s reduce air travel demand to a mere 3.5% of Pakistan’s population versus India’s 8% of its population.Level of ServiceHigher airfares in Pakistan do get you better service, according to Kiran Stacey of Financial Times. Here’s how she sees it:“Flying in Pakistan is unlike anywhere else I have been – and the polar opposite to flying in India, where I live. Departing from any of the three major Pakistani cities is the closest a modern traveller is likely to get to experiencing what flying was like in the 1950s. Checking in is effortless and there are no queues at security. At Islamabad airport, you do not even have to go to your gate: you can sit in the café until your flight is called and then leave via a downstairs door that takes you straight on to the tarmac and a waiting minibus. Just hours earlier, I had suffered the regular indignity of catching a flight from Delhi airport. It took 20 minutes of disorganised queueing to check in, and another 30 to get through security. Getting on the aeroplane, as usual, reminded me of warfare at the Sino-Indian border, where troops are unarmed and so fight by jostling each other using only their torsos”.Highly Competitive BusinessCommercial business has become much more competitive in recent years. Many of the big name airlines of yesteryears like Pan Am, TWA and Eastern Airlines are no more. Running a successful airline business requires different management skill sets and efficiencies in the current environment.Part of it is technology driven transformation that enables minimizing staff and aircraft time on the ground, higher fuel efficiency and dynamic pricing based on demand. Unfortunately, state-owned airlines are finding it extremely difficult to operate in this environment.I saw an example of poor management of Pakistan International Airline (PIA) a few days when a friend posted a picture of nearly empty PIA flight from Karachi to Lahore. There were rows and rows of empty seats which is rare site in the airline business these days. An efficient airline uses yield management software to cut fare dynamically until the airplane is almost full. Flying even one empty seat is seen as a problem by professional airline managers.The other serious issue with PIA is its staff is not recruited based on merit. It is reported that even the senior managers lacks professional experience of running a commercial airline. Instead, the PIA jobs are doled out as part of the political patronage system to give favors to the supporters of ruling politicians.Published in Daily Times, April 7th 2018.