Pakistan international airline Corporation (PIAC) is the national airline of Pakistan under the supervision of civil aviation authority (CAA). Currently the CEO of PIA is Air Marshal Arshad Malik. PIA was found before the partition of sub-continent in year 1946 which was known as orient airways based in Calcutta, British India and now the main hub is Jinnah International Airport Karachi while Islamabad and Lahore, Peshawar, Multan, Quetta and Faisal Abad international airports are secondary hubs. Orient Airways was nationalized which we known as currently is PIAC. After seven years of independence it start services. PIA is the largest airline of Pakistan with 32 aircraft with operation of 100 flights on daily bases on national and international level. PIA is also traded in Pakistan stock Exchange (PSX). According to financial year 2018-19 the total number of employee is round about 15000, the revenue is RS 147.50 billion, operating income is RS -19.41 Billion and the net income is RS -55.45 Billion.
The Developed and under Developed countries are adopting the policy of Privatization to achieve the objective and this policy is succeed Pakistan is also established the “Privatization Commission” in which the PIA is top on the list. From several years PIA is bearing losses and every year Govt. of Pakistan allocate million if rupees in subsidies which is burden on Pakistan economy. In April 2016 Parliament Passed a bill under this bill PIA will convert into Public limited company under this bill govt. will not reduce it share less than 51% but after 4 years it is still hang due to several reasons. There multiple objectives of Privatization. If we privatized PIA than it can save 36 billion rupees which PIA pay an interest. After privatization govt. will save RS 4 Arabs which PIA received year in subsidies. The privatization will help to reduce the burden of deficit financing. It will also help to free from political interference and there will be no free ride because the private sectors focus on profit. There is also competition among the airline Privatization of PIA will play role of catalyst in competition so there will be better services, fairs etc.at last but not at least PIA will pay different taxes which will lead to increase the revenue.
There are different views about privatization. The US international financial institutions and free market economists view that the state should limited its self to regulations only and the operations, ownership of industrial enterprise and utility should left on private enterprises, while an opposite the economic historian Gershenkron said that the states which are behind in development, the public sector play a vital role in growth. Pakistan followed and other under developed countries followed the state role as result the high industrial growth rate in Pakistan.
We would not like to recommend that Govt. Privatize PIA Completely. The govt. should follow policy in which “The Snake Gets killed but the stick does not break”. The govt. should not keep PIA is SOE not privatized it. The govt. should convert PIA into shareholding system. The govt. of Pakistan will own PIA asset more than 51% but the management will be private. This system will not only boost efficiency of PIA but will also generate employment opportunities and investment to the country. This system adopted by China and they are enjoying its benefits. Within first year of this policy labor productivity increased by 57%, profit and tax per worker by 85%, sales profit by 49%, profit/capital ratio by 39%, and the average wage by 44%. Before this system the china was in loss of 400 billion Yuan after the shareholding system china got profit, with the comparison of Chinese economy with India and Brazil china was ahead from both countries in several sectors in growth.
The writer is M.Phil. scholar at Pakistan Institute of Development Economics (PIDE), Islamabad.