ISLAMABAD: A parliamentary fact-finding committee has identified the Open Sky Policy as the primary factor behind the downfall of Pakistan International Airlines (PIA), as it allowed Gulf airlines to expand their operations, leading to a sharp decline in PIA’s market share.
The committee, headed by Sehar Kamran of the Pakistan Peoples Party, reported to the National Assembly Standing Committee on Privatisation on Tuesday, revealing that the airline's market share plummeted from 50% to just 20%. The expansion of Gulf carriers, such as Emirates, Qatar Airways, and Etihad Airways, was a major factor, with these airlines operating over 100 flights per week, beyond the scope of bilateral service agreements. Additionally, PIA’s outdated fleet, financial issues, and high taxes on fleet expansion exacerbated its struggles.
The report also highlighted the airline's significant liabilities, exceeding Rs740 billion, which includes vendor dues, fuel charges, and government-backed loans. The committee proposed implementing financial support models similar to those in other countries where national airlines receive subsidies and tax exemptions. It also stressed the need for stable leadership to steer PIA out of its crisis.
The Open Sky Policy, designed to boost competition, instead allowed foreign carriers to dominate international routes, pushing PIA into a defensive position. Gulf airlines benefited from government subsidies and the ability to carry passengers beyond the intended bilateral agreements, further weakening PIA’s competitive edge.
The committee also recommended an Inquiry Commission to investigate former Aviation Minister Chaudhry Ghulam Sarwar for statements that allegedly cost PIA $600 million in losses over four years. The report noted that the airline had reduced its international presence, with PIA carrying 26% fewer passengers in 2024 compared to 2000, despite the country’s growing middle class.
Furthermore, the committee highlighted issues such as the grounding of aircraft due to financial constraints, failed privatisation attempts, and high workforce costs. It also criticized the Golden Handshake Policy, which led to the loss of skilled staff.
To address PIA’s challenges, the committee recommended restructuring, fleet expansion, and revising the Open Sky Policy to ensure a fair playing field for the national carrier.
