Scribd
Upload
25 views

Case Study: Pakistan International Airlines: 02-20-2007 - Source

Pakistan International Airlines (PIA) chairman Tariq Kirmani took over the airline in 2005 and initiated a fleet renewal program in response to PIA's aging fleet. Kirmani aims to replace over 20% of PIA's planes within the next 6 months and lower the average age of the fleet from 21 to under 10 years within 5 years. This program is important as rising fuel costs now represent almost half of PIA's operating expenses and the EU has banned some of PIA's oldest Boeing 747 planes from flying to Europe. While competition from other regional airlines has increased, Kirmani believes competition will drive PIA to improve operations and customer service, though running an airline remains a challenging business with

Uploaded by

sandeep_guru68
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
25 views

Case Study: Pakistan International Airlines: 02-20-2007 - Source

Pakistan International Airlines (PIA) chairman Tariq Kirmani took over the airline in 2005 and initiated a fleet renewal program in response to PIA's aging fleet. Kirmani aims to replace over 20% of PIA's planes within the next 6 months and lower the average age of the fleet from 21 to under 10 years within 5 years. This program is important as rising fuel costs now represent almost half of PIA's operating expenses and the EU has banned some of PIA's oldest Boeing 747 planes from flying to Europe. While competition from other regional airlines has increased, Kirmani believes competition will drive PIA to improve operations and customer service, though running an airline remains a challenging business with

Uploaded by

sandeep_guru68
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Case Study: Pakistan International Airlines

02-20-2007 | Source: Institutional Investor Sponsored Report

One of the sectors that has benefited from Pakistan’s improving economics is transport. The aviation
industry grew by about 20 percent in 2005 and, while growth has been more subdued in 2006, it’s still
proving a good place to be.

Tariq Kirmani took over as chairman of Pakistan International Airlines in 2005 after having been
managing director of Pakistan State Oil since 2001. He took on a carrier with a mixed reputation
internationally, an aging fleet, in a country low on the world tourism agenda and with a rising fuel
price.
“The five year outlook is pretty good,” he says. “We have a fleet renewal program in place and an upgrade of the
entire organization. What we’re trying to do is work with our customers, our passengers, which was missing in the
past to some extent.” PIA now hedges up to 25 percent of its fuel costs but has only recently developed this
capacity, so was badly hit by the rise in the oil price to $78 a barrel. It represents almost half of the airline’s
operating costs.

The fleet renewal program is timely; days before Institutional Investor’s interview, the European Union
banned four of the airline’s Boeing 747s from flying there.
“Basically it’s the age,” Kirmani says: some of them are more than 25 years old. PIA will get nine new planes in
the next six months, three of them Boeing 777s, and within five years he wants the average age of the fleet to be
less than 10 years rather than 21 today.

PIA faces much more competition than it used to. Kirmani speaks of four competitors on the western border
(Emirates, Qatar Airways, Etihad and Gulf Air) and four on its eastern side (Singapore Airlines, Cathay Pacific,
Malaysian Airlines and Thai Airways), and in addition there are private sector competitors within Pakistan. “In any
industry I enjoy competition,” Kirmani says. “When you are competing you improve your operations and start
giving better service.” He says PIA’s market share domestically has actually grown, from 66 to 69.3 percent in the
last year, and that its share of international flights in and out of Pakistan has climbed from 48.5 to 50 percent.

But it’s a tough business. “A lot of people who are interested in the airline business think there is a lot of glamour.
When they open up the airline there is less glamour and lots of losing money.”

You might also like