Project On PIA
Project On PIA
PROJECT ON
MUHAMMAD ALI
Faculty of Management Sciences
INTERNATIONAL ISLAMIC UNIVERSITY
ISLAMABAD
TABLE OF CONTENTS
Acknowledgement
1.
DEDICATION
2.
EXECUTIVE SUMMARY
3.
4.
5.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
5
6
12
15
16
17
21
26
29
31
38
41
47
62
ACKNOWLEDGEMENT
All glories to be Allah, the most beneficent, the most merciful who bestowed us with
the sight to observe and mind to think and judge. Peace and blessings of Allah be upon the
Holy Prophet (PBUH) and his pure and pious descendants who advise strongly followers to
seek knowledge from cradle to grave.
We are a group of six (6) students studying in MBA 1st semester. We required
to do a project of the course Business Management,Policy &Strategy about business
policies of the renounced organizations.For that ,we have selected a a company named PIA.
To collect daa ,there were two sources 1 st ,we have referred to the internet, including the
official website of the company, as a secondary source then to physically observe and feel,
we have visited office of PIA.
DEDICATION
3
By the grace of almighty, we have able to complete this project. Our parents prayer and
wishes have been with us all the way through. We would like to thank our teacher
Mr.Khurram Shahzad he guided us whenever we needed his help and guidance. His interest
in our project ha has been a great source of encouragement for us. He helped and
encouraged us more than we could ask.
We also thanks to Mr.akbar Shah Admin manager of PIA.they guided and provide us the
necessary information about organization.thier information helped us to complete our
project in a right and correct direction.
EXECUTIVE SUMMARY
PIA was established in 1954. It was actually incorporated on April 18, 1956. It's shares are quoted
on the stock exchanges in Pakistan. PIA's 57.66% shares are with the government of Pakistan and
remaining 42.44% are shares of different companies.
PIAC basic mission is to provide quality, reliable and safe air transportation while
earning sustainable profits.
Management is in a process to acquire skilled workers in order to target customers
more efficiently and economically. Employees are sleeted entirely on merit basis.
Recruitment is also done on the basis of seniority, but on the executive level personal skills
are counted in regard with promotion.
The ambitious 3 year 1995 - 1998 restructuring process was started by aggressively
addressing the excess man power issue, for this purpose a mandatory retirement scheme and
a voluntary (Golden Hand Shake Scheme) was implemented under which more than 3600
employees left the company.
HISTORY OF PIAs
BIRTH OF A NATION
BIRTH OF AN AIRLINE
Probably never has air transport been more important to the development of a new
nation than in the case of Pakistan. In the days when Pakistan was still in the offing (June
1946) Mr. Mohammed Ali Jinnah, the Founder of the upcoming Nation, instructed Mr.
M.A. Ispahani, a leading industrialist, to set up a national airline, on priority basis. With
his singular vision and foresight, Mr. Jinnah had foreseen that with the formation of the
two wings of Pakistan, separated by 1100 miles, a swift and efficient mode of transport
was imperative.
The new airline was initially a pilot project, registered in Calcutta as Orient
Airways Ltd., on 23rd October 1946. With Mr. A.M. Ispahani as the Chairman and Air
Vice Marshal O.K. Carter as the General Manager of the new air carrier, an operating
license was obtained in May 1947 with Calcutta as the base. Four Douglas DC-3s had
been purchased from Tempo of Texas in February 1947 and operations first started on 4
June 1947. The designated route was Calcutta-Akyab-Rangoon, which also happened to
be the first post-war international operation to be flown by an airline registered in India.
Within two months of Orient Airways' operational beginnings, Pakistan was born. The
birth of a new nation generated one of the largest transfers of population in the history of
Mankind.
Orient Airways, along with the help of some BOAC aircraft which had been
chartered by the Government of Pakistan, started relief operations and transportation of
the population between Delhi and Karachi, the two capitals. Later, Orient Airways
transferred its base to Pakistan and established the vital, link between Karachi and Dacca,
the two capitals of the two wings of Pakistan. With a skeleton fleet of just two DC-3s,
three crew and twelve mechanics, Orient Airways launched its scheduled operations in a
8
fairy-tale fashion. The initial routes were Karachi-Lahore-Peshawar, KarachiQuetta-Lahore and Karachi-Delhi Calcutta-Dacca. By the end of 1949, Orient Airways
had acquired 10 DC-3s and 3 Convair 240s which it operated on these routes. In 1950, it
had become increasingly apparent that additional capacity would have to be inducted in
order to cater to the growing needs of the sub-continent.
Orient Airways was a privately owned company, with limited capital and
resources. It could not be expected to grow and expand on its own. It was then that the
Government of Pakistan decided to form a state-owned airline and invited Orient Airways
to merge with it. The outcome of the merger was the birth of a new airline, named
Pakistan International Airlines (PIA) on 11 March, 1955.
Apart from transport activities, Orient Airways had established the nucleus of
overhaul and maintenance facilities and acquired trained pilots, engineers and technicians
which proved a great asset for PIA during its teething phase.
The year 1955 also marked the inauguration of the fledgling airline's first
scheduled international service - to the glittering, glitzy capital city of U.K, London, via
Cairo and Rome. At first, there was much criticism regarding this venture as the public
could not comprehend or agree with the need to operate an international route when
priority, in their opinion, should be given to other projects which were considered more
vital, for the growth of a new and developing country. However, PIA's priority then as
well as now, was to serve the Pakistani community at large. The need to provide
transportation to the expatriates has remained one of the foremost priorities of the
national airline.
Moreover, with the provision of this service, PIA could and did earn substantial
foreign exchange, which in turn it invested in the purchase of aircraft and spare parts.
Fleet expansion was one of the airlines major requirements.
In 1956, orders were placed for two Super constellations and five Viscounts which
were to be delivered by 1959.
9
PIA's run for recording historic firsts was not yet over. Pakistan's first computer,
an IBM1401, was installed by PIA in 1967.
PIA's first Engine Overhaul Shop, located near the Head Office building, was also
completed and commissioned around this time. The Ground Training School (GTS) now
known as PIA Training Centre (PTC) was first conceived and developed sometime in
1961-62.
Training was initially imparted, interestingly-enough, in the T-shaped building
which has now become the PIA Dispensary in the vicinity of the Head Office.
Besides the visible development and growth in traffic and revenues in the sixties, PIA
saw the advent of new destinations, new equipment, new technology. A new Jet Hangar
for Boeings with a supporting airframe overhaul shop was completed and commissioned
in 1968.
In 1970, PIA set up its own Flight Kitchen at Karachi, which caters even today to
other carriers as well as to all PIA flights. Over the years, with the airline's expansion and
increased capacity, the need for a second Flight Kitchen became imperative.
PIA heralded the 90's decade by donning a bright new corporate identity. Oldtimers may remember the flutter the earlier green and gold livery had created when it was
first introduced in 1974. But, in keeping with the changing times, PIA came up with its
smart sporty 90's look. The familiar PIA green was reinforced with moss green and pale
blue stripes in the new corporate identity. The stripes, a universal symbol of sport,
highlighted PIA's active participation and sponsorship of a diverse variety of national
games. PIA players are in the forefront in Pakistan Cricket, Hockey, Squash, Football,
Chess, Bridge, Polo and Table-Tennis teams.
Nineties have also seen the expansion of PIA's massive Haj and Umrah operations
to Pakistan's smaller cities besides the operations from the major cities of Islamabad,
Peshawar, Lahore, Quetta and Karachi.
At present, PIA operates to 70 destinations ( 38 international and 37 domestic )
in countries spread over 4 continents of the globe.
12
Impressive statistics for a comparatively young airline? One could say that since
its inception in 1955, PIA has indeed, come a long way.
13
INTRODUCTION
Presently, we are living in the age of computer and technical era. Fast
communication, particularly transportation is the foremost demand of the age. For speedy
transportation aeroplane is the fastest traveling source and without effective airline business
of the country can not remain in touch with rest of the world.
In Pakistan, PIAC stands for "Pakistan International Airline corporation". It is one of
the best airline of the world. Its revenue is in millions of dollars and playing an important
role in the growth of the economy of country.
It was established in 1955 as a statutory corporation. Its departments are
administration, human resource management, finance, marketing, communication and
operation department.
"Great people to fly with"
PIA global network stretches Westward via the Gulf and Mid-East to Europe, and
across the Atlantic to New York and Toronto, in Africa PIA flights to Nairobi Cairo and
Indian Ocean to Maldives Islands.
Being a national flag carrier apart from commercial point of view PIA also providing
social services to the community by lining the remote and northern areas with the major
cities of Pakistan, incurring heavy losses on the theses routes due to meager charges.
Six million passengers fly PIA every year in four continents, 45 countries, 88 cities,
44 off-line station and forty domestic cities.
14
Name of Aircraft
Exel
Class
# of Aircraft
1.
Boeing 747-300
388
45
06
2.
Boeing 747-200
--
08
PAX
368
18
--
Combined
238
18
--
3.
188
30
10
4.
168
30
06
5.
Boeing 737
88
30
07
6.
Fokker
44
09
7.
Twin Otter
18
03
8.
Helicopter
03
Total
52
15
TOTAL ROUTE
The total route of PIA is 272,635 kms.
16
PERSONNEL
Nov 1, 2000
1.
(567)
2.
Aircraft Engineers
(799)
3.
Flight Engineers
(115)
4.
Airhostesses
(846)
5.
Flight Stewards
(868)
57.66
Financial Institution
28.66
Individuals
6.70
Investment companies
2.30
Insurance companies
1.32
Foreign companies
2.62
0.51
Modarbas
0.08
Other
0.02
Total
100
17
ORGANIZATION STRUCTURE
BOARD OF DIRECTOR
18
MANAGEMENT
19
SWOT ANALYSIS
STRENGTHS
EXPANSION OF PIA
PIA links 38 cities of Pakistan, almost covering all regions of the country. It provides
services to very remote far-flung and land locked areas. Similarly it also provides services to
52 cities internationally.
SERVICE CHARGES
The price of services PIA renders is very subsidized, considering the low economic
status of majority of Pakistan, special subsidized rate in air travel also provides the means
for integrating the population of the remote areas of the country e.g. Gilget, Makran and
Chitral etc.
EMPLOYMENT
PIA employs talented Pakistani technicians, engineers, and skilled workers and also
gives extensive training to its workers.
COMPUTERIZATION
The departments of PIA are mostly computerized. On the national it has contributed
significantly in the field of computer technology and automation by providing skills and
expertise. the functions like passenger reservation, auto ticketing, departure control, baggage
tracing and cargo movement information are all computerized. PIA is also exporting its
device, computerized programs to other countries.
20
Oldest airline
Sort of monopoly
Governmental Influence
Shares on Stock Exchanges
Huge Target Markets Captured
Niches well segmented
21
WEAKNESSES
MAINTENANCE COST
The maintenance cost of PIA is very high due to its obsolete fleet. Due to over-aging
of aircraft the airline is also suffering losses through frequent breakdown to which
passengers are lodged in quite expensive which is an unscheduled expense.
OVERSTAFFING
PIA is suffering a lot of financial problems die to overstaffing of at least 3,000
employees.
ADMINISTRATIVE SET-BACK
Due to bulky administration and lack of administrative controls, pressure from Pilot
Association Flight Engineers Association and Officers/Employees union, there remain a lot
of pressure the higher management who are not in a position to effectively control on
budgetary constraints.
TAXES
Despite the fact that PIA is fulfilling there socio-economic goals as directed by the
government likewise PIA does not get any concession on duties of its imports from abroad.
OPEN-SKY POLICY
Airline has suffered few losses die to Open-sky policy, as foreign airlines were better
equipped so they took away lot of Pakistan passenger market.
22
TECHNOLOGY
PIA is legging behind technically developed countries airlines in related fields.
FOREIGN EXCHANGE
PIA contributes to boost the economy of Pakistan as it earns valuable foreign
exchange by carrying the passengers and flight on international routs, tourism education and
invite foreign to come in Pakistan and invest in new department projects.
Low Cash flows
Uncontrolled expenses
Over exceeded staff
dishonest employees
No Delegation
No. Division of labour
Political Induction
Stagnant jobs
Open sky policy
23
OPPORTUNITIES
DECISION OF GETTING RID OF NON-CORE ACTIVITIES
Management is planning to privatize most of the non-core businesses such as the
Midway Hotel and Sky rooms restaurants. The appointment of a financial advisor in this
regard is in the pipeline duty free shops are already in the process of privatization following
the appointment of a financial advisor.
LAYOFFS
The present government has introduced a golden handshake scheme in order off load
surplus employees, the managing director has been replaced, and 1,147 employees including
4 directors and 18 out of 79 general managers have been retired under the scheme at a cost
of Rs. 500 millions.
have also been terminated. The management is planning to re-route and expand the network
to Hong Kong, South Africa and Australia.
LEASING FREIGHTERS
Management is also considering the option of leasing freighters or converting the 6
Boeing 747-200 into freighters. A conversion from Jumbo into freighter would cost 10
million dollars.
25
THREATS
THINGS THAT SHOULD NOT HAPPEN
The Government of Pakistan which owns 80% equity steak of the airline is
experiencing severe by financial difficulties bearing in mind the country's annual debt
servicing of about 5.6 billion dollars, trade deposit of above 2 billion dollars, budget deposit
of above 5% of GDP and meager reserve of about 1.1 billion dollars. Pakistan's economy is
expected to remain depressed for at least in the next couple of years. PIA has been
witnessing losses on most of its international routes for the last three years. "We forecast
meager traffic growth on international routes after the replacement of six aircraft while
financial charges will shoot up. The only way to avoid losses and improve bottom line is to
cut the fleet replacement program and trim costs".
*
Growing competitors
26
SUGGESTIONS
PIA is a big organization but is operating below break even PIA is facing losses for lost 5
years.
The reason of losses;
1.
Political reasons
2.
Poor management
4.
5.
6.
Customer dissatisfaction
7.
8.
27
RECOMMENDATIONS
CUSTOMER SERVICES BE IMPROVED
The basic need is to improve the customer service because customer is king.
POLITICAL APPOINTMENT
Most of the incapable people are appointed by political pressure. Most of them are
created bad image for PIA. They should be properly trained according to the requirements of
air line.
COUNTER SELLING
PIA has so many economic fare packages but it cannot sell on its own counters. The
passengers at counter directed to the travel agent, leases buy our concessional rate tickets
from our travel agent. This practice is not favorable for airline. It should be discouraged.
RECRUITMENT CRITERIA
It is recommended that there should be clear and well-defined recruitment criteria.
Job specification and effectiveness.
PROMOTION CRITERIA
Promotion criteria should be made specific and clear.
AGENT SELECTION
Thee should be a well defined criteria for selection of agents, for the contracted
work, the contractors should be employed after a screening test or after approved by a
proper tender system.
TECHNOLOGICAL LAGGING
28
As the world is heading towards the paperless offices PIA beings the national carries
should be computerized the finance section or administration section.
PROFESSIONAL ATTITUDE
The staff as well as the manager should come on time. There should be a check on
management as well as staff, as time is the greatest asset for the company like PIA.
POLITICAL PRESSURE
The airline should run on commercial line. With out any interference of political
parties. Political pressure is the major problem for PIA. Proper measure should be taken in
order to reduce the political pressure.
FLEET REPLACEMENT
It's very necessary to replace the obsolete fleet. As it's the cause of high maintenance
cost, and destroys the image of national carrier. PIA will have to be find out their aircraft
depreciation.
29
CONCLUSIONS
Pakistan International Airlines is flying over the globe and scaling the new heights of
dignity and pride for that nation. The main objective of the corporation is to provide job
opportunities and to take part in national development. The question arises that since its
establishment the corporation achieved its goals or not?
During internship programme following conclusions are drawn:
*
The van provided to office for the passengers seems to be not air-conditioned and is
not maintained properly.
At airport the passenger's relatives come to receive and see-off them but there seems
to be no waiting room facilities where they could wait for the flights.
There seems to be more and more PIA booking offices in most suitable areas of city
at public places.
There seems to be lack of facilities provided to the passengers e.g. ticket cover purse
etc.
30