During recent decades, global airline business has experienced a big boom. In 2015, the annual number of air travellers crossed the landmark figure of 3.5 billion passengers in a single calendar year. According to the International Air Transport Association (IATA) statistics, the global passenger air fleet now comprises more than 26000 aircraft which daily fly on more than 51000 routes worldwide. In this huge air travel market, the share of Pakistan’s national carrier, Pakistan International Airline (PIA), has been almost negligible.
PIA has had some inherent strategic advantages which have kept this airline afloat despite organisational weaknesses. For instance, Pakistan is a country of approximately 200 million people with a growing middle class which makes a big protected domestic air travel market. On majority of the domestic routes, PIA still enjoys a monopoly. Similarly, Hajj operation every year is a big source of assured business for PIA. In case of international routes, particularly the UK, USA, Canada and the Middle East, incoming or outgoing Pakistanis still prefer facility of PIA direct flights to save time despite service quality deterioration. But PIA has still been unable to maintain profitability and quality of services.
Since 1955, PIA has functioned as a statutory public corporation. After the promulgation of Pakistan International Airline Corporation (Conversion) Act 2016, it has become a public limited company with a mandatory requirement of minimum 51 percent shares retention with federal government along with management control. Lufthansa Group and the Rotterdam School of Management once conducted a study comprising fifty airlines including the PIA and found that public sector airlines and the mixed ownership airlines, like the PIA, featured lower profits, lower employee productivity and high number of personnel vis-à-vis private sector airlines. Despite having a market-surrogate status, the government control over policy and management makes PIA intrinsically different from efficient private sector airlines.
Pre-flight, in-flight, post-flight customer experience and flight safety reputation of an airline determine the passengers’ choice of an airline. Passengers interaction with the airline starts at pre-flight stage where they experience services regarding reservation and ticketing. At in-flight stage, service quality tangibles are aircraft cleanliness, catering quality, toilets cleanliness, seat comfort and entertainment system. The post-flight experience mostly relates to baggage handling. Punctuality of departures and arrivals, care of passengers’ luggage, number of flights to satisfy passengers’ preferences and attitude of front-desk employees shape customer opinions. In the airline business, it has become a proverb that passengers neither forget nor forgive airline mistakes. On all these customer service metrics, PIA needs Herculean efforts to improve.
If privatisation of PIA is not on policy menu of government, a few lessons may be learned from Singapore Airline (SIA) which has become global business leader despite functioning in a mixed ownership mode like PIA. Singapore government’s invest company Temasek Holdings owns 56 percent shares of SIA. The hallmark of SIA is absence of government intervention in management, high level of innovation and service excellence. The dominant features of SIA performance are excellence in human resource development, customer-first approach, high quality in-flight experience, performance based emoluments and staff retention, and robust accountability.
According to the IATA Safety Report 2016, most civil aviation accidents are still caused by the human factor, such as a lack of workload management, situational awareness and structural decision making. PIA needs to focus on the quality of technical maintenance and pilot training to minimise these risks
The incessant innovation drive of SIA has introduced many ‘world-firsts’ which include SMS check-ins, KrisWorld in-flight entertainment system, and the ‘Book the cook’ service. The SIA has benefited from overall efficiency-centred administrative ethos of Singapore. The lessons which PIA can learn from SIA include a focus on technology to cut costs through automation, innovation in services, a proactive process of change, training of staff, performance based compensation, and accountability.
PIA can make a positive impression on customers by automation and minimisation of customer-employee interface. According to latest Global Passenger Survey of IATA, travellers want more self-service options. According to the survey, 70 percent travellers want to be able to print their own luggage tags remotely; 93 percent of the passengers want direct notifications of up-to-date information; 81 percent passengers want the ability to track their baggage throughout the journey. Most importantly 70 percent passengers wish for boarding and security processing to be automated.
In addition to service quality, airline safety history also plays an important role in passengers’ airline preference. According to the IATA Safety Report 2016, most of the accidents in civil aviation are still caused by human factors such as a lack of workload management, situational awareness and structural decision making. PIA needs to focus on quality of technical maintenance and pilot training to minimize risks.
National Aviation Policy 2015 vows to promote market access liberalisation. The policy says Pakistan will pursue bilateral open skies policy with other countries on the principle of reciprocity. Even if the principle of reciprocity is strictly followed, PIA in its present mixed-ownership mode with small fleet size and inferior service quality does not seem poised to optimally benefit from access to foreign markets. Further fleet expansion is required to increase service frequency and options for customers. But fleet expansion should be undertaken only after taking a qualitative shift towards automation, innovation and HR practices. In the era of mergers and privatisation, there is no other option except to rebuild PIA on the pattern of global business leaders.
The writer works for the public sector and is a development policy analyst
Published in Daily Times, July 30th , 2017.