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Pakistan keen to follow Air India privatisation model for its bleeding national carrier

PIA's losses mounting

The next government in Islamabad will have to take a decisive call on the fate of Pakistan International Airlines (PIA)—the country’s beleaguered national carrier. Flight cancellations and delays are now only increasing with non payment of dues. The caretaker government is looking to firm up a plan to privatise the airline, which has amassed losses of $7.1 billion since 2012.

The decision to sell off its national carrier may not be an easy one. But the local newspaper said that Pakistan should learn from the Air India experience.

“We can take inspiration from India, which recently sold its government-owned airliner Air India to Tata Sons for about $2.4bn,” local newspaper Dawn recently said.

An analyst said that though the privatization plan could face roadblocks—many employees and stakeholders have already registered their concerns—”the fact that the Air India privatization went off smoothly and that the carrier has now got a new lease of life is something that the Pakistan policymakers would naturally want to follow.”

Dawn, in its report further said that though there are many who desire and believe that the national flag carrier will rebirth from its ashes as a phoenix, being a beacon of life for the national economy, it doesn’t need to be a government-owned organisation to do that. “It can do it while being a privately owned company as well as Pakistan’s national flag carrier,” the article titled “Lessons from Air India” added.

According to reports, PIA has tax debts of more than (Pakistani) Rs 400 billion ($1.4 billion). While the airline has sought a bailout from the government, it may not be possible for Islamabad to pull PIA out of the woods, especially after the International Monetary Fund outlined stringent riders as part of its $3 billion bailout package.

According to local newspaper Dawn, PIA owes the oil supplier a whopping (Pakistani) Rs26.7 billion— including almost Rs25 billion in previous arrears and Rs2 billion in new unpaid dues against recent oil supplies — but has not been able to clear that amount in spite of commitments made over the last several months.

Also read: Will Nawaz Sharif’s return today turnaround Pakistan’s fortunes?