PRINCIPLES OF MANAGEMENT

Project Report:

PAKISTAN INTERNATIONAL AIRLINE (PIA)

SUBMITTED TO:

MRS.RAFIA

SUBMITTED BY:

DANISH KHAN

NABEEL HUSSAIN

KASHIF KHAN

UMER AZAD
 CONTENTS

1. PIA
• Introduction

• Vision

• Mission

2. SWOT ANALYSIS
• Strength, Weakness, Opportunity, Threat

3. PEST ANALYSIS
Political, Economical, Social, Technological

4. FUNCTIONAL STRATEGIES
• Human Resource Management & Business Management

5. CONCLUSION
6. RECOMMENDATION
7. REFERENCES
 INTRODUCTION
Pakistan International Airline (also referred to as PIA), is the national flag carrier of
Pakistan and national airline operating passenger and cargo services around the world. Its
main hubs are Jinnah International Airport, Islamabad/Rawalpindi.

It also serves regional airports, including Peshawar International Airport, Faisalabad

International Airport Multan International Airport that connect to the main hubs and have
direct flights to the Middle East. It has been ranked as a 3-star airline by Skytrax. PIA was
also one of the first airlines to provide in-flight entertainment.

The origin of PIA can traced to the days when Pakistan was still a concept, an idea, yet to
take shape. Once this idea was realized, in 1946, Muhammad Ali Jinnah, also known as
Quaid-e-Azam (Founder of the Nation), realized the need of an airline network. For this,
he called upon the help of Mirza Ahmad Ispahani, an experienced industrialist. The end
result was the formation of Orient Airways, registered in Calcutta, on October 23 1946. In
February 1947, three airlines were bought from a company in Texas, and in May of that
year, the airline was granted a license to fly. Services were started in June from Calcutta to
Akyab and Rangoon (now known as Sittwe and Yangon in Burma). This was the first post
war airline flight by a south Asian registered airline company.

Pakistan inherited Orient Airways, at creation. Hence, their primary goal became to start
relief flights to the new nation. With Pakistan being split into two wings, Orient Airways
moved operations to Karachi, where it began the most important route, from Karachi to
Dhaka, capitals of West and East Pakistan (now known as Bangladesh) respectively. In
addition, their domestic route in West Pakistan was established, from Karachi to Lahore to
Peshawar, and from Karachi to Quetta to Lahore.
Orient Airways was quite instrumental during the partition and its aftermath. The fact
though remained that Orient was a private company, with a small setup, low cost
infrastructure and limited resources. Furthermore the DC-
3’s of Orient Airways did not permit non-stop flights from Karachi to Dhaka. The
government, therefore, proposed Orient to merge with a new national airline that they were
planning. On 11 March 1955, they merged, becoming Pakistan International Airlines
Corporation. The same year, PIA started its first international service from Karachi to
London Heathrow Airport in London, United Kingdom, via Cairo International Airport in
Cairo, Egypt and Leonardo Da Vinci International Airport in Fiumicino, Italy. The
Aircrafts acquired by continued operating the domestic services in Pakistan.

It is interesting to note that the merger was more of a takeover, with PIA taking point over
Orient Airways controls and assets. With a large budget, new airplanes and the government
backing them, all PIAC needed were experienced crewmen. Orient provided them with the
cabin crews, the engineering staff as well as small established operating bases in some cities.
Most of the higher officials, from Orient Airways, were shown the door, with reasons such
as transparency, going in a new direction, wanting a change, new organization new
management being cited.
 VISION OF PIA
‘To be a world class airline exceeding customer expectations through dedicated employees

‘Committed to excellence’
MISSION OF PIA
“As a Symbol of National Pride, We Aspire to be a Choice Airline, Operating Profitably on
Modern Commercial concepts and Capable of Competing with the Best in the International
as well as Domestic markets.”
Customer Expectations
PIA is the most trusted name in the industry. The reason of its goodwill is according the
expectation of their customers that PIA has fulfilled always. By providing
competitive tariff, extensive care, and convenience to their valued and potential
customers.’
Service
PIA aims at providing valuable and unique services to its customers. They are
more personalized and courteous to their customers. The services are valuable and rare; this
is the reason why customers trust PIA.
Innovation
PIA currently has a number of 43 fleets and aims at increasing this numbers to 53 by the
next few years. IA is adoptive to changes and believes in innovation that’s
create new ideas and translating these ideas into action.
Reliability
PIA is the most experience airline with its service with more than 53 years. This has built in
PIA has become the most reliable airline. PIA is known for its loyalty and consistency.
Safety
The most challenging responsibility of any organization is to pr
o v i d e c o m p l e t e satisfaction to its employees and customers together. This satisfaction
rewards favorablea n d e a s y w o r k i n g c o n d i t i o n s . T h e i n -
f l i g h t s e r v i c e s a r e c u s t o m e r s f r i e n d l y a n d t h e organizational the organizational
environment is also employees oriented.
Cohesiveness
PIA has 12 departments working in their own direction and also provides a
number of services including speedex courier service, catering etc. The most impressive
part is these all department and services are integrated in a cohesive way.
 SWOT ANALYSIS
 Strengths
 Weaknesses
 Opportunities
 Threats

STRENGTH
LEADING MARKET POSITION

PIA is one of Pakistan’s leading air carriers, with more than 800 daily flights.
Around1 5 0 0 0 0 p a s s e n g e r s a m o n t h f l y o n P I A , m a k i n g i t o n e o f t h e
m a j o r o p e r a t o r s i n t h e domestic market in terms of passenger kilometers. PIA’s
international market share was 43.5%, In the Domestic market, its market share was
69.4%. On a system-wide basis, PIA’s market share was 51.2% at the end of year
2007.Its strong market position is driven by consistently low fares as well
as reliable service, frequent and convenient flights, use of new technologies like e-
ticketing and self-check-in terminals, comfortable cabins and superior customer service.

BRAND RECOGNITION

PIA has high brand recall. It is recognized by travelers all over

t h e c o u n t r y . P I A i s a national airline, operating passenger and cargo services covering
eighty-two domestic and foreign. PIA has earned the number one ranking
in customer satisfaction. This strong market position gives the company a scale
advantage and helps it strengthen its brand image.

SUPERIOR OPERATING STRUCTURE

PIA has maintained its position as the low cost carrier. It has been first class
Pakistani airline to use the latest technology. Factors’ contributing consists
of different series of Boeing and Airbus and an efficient, high-utilization and
point- to-point route
structure.F l y i n g o n e t y p e o f a i r c r a f t s i g n i f i c a n t l y s i m p l i f i e s s c h e d u l i n g ,
m a i n t e n a n c e , f l i g h t operations, and training activities. PIA has continually achieved
high asset utilization
andemployee efficiency. Superior operating structure serves as the primary
Competitive advantage of PIA
.
EFFECTIVE USE OF TECHNOLOGY
PIA has successfully incorporated latest technology in all its systems, giving
it an edge over competitors. PIA takes credit for introducing most new technologies to the
Pakistani market. It was the second carrier in Pakistan to incorporate the c-ticketing system
and the s e c o n d i n S o u t h A s i a t o i n t r o d u c e s e l f - c h e c k i n s y s t e m s a t t h e
J i n n a h I n t e r n a t i o n a l Airport, Karachi.
 WEAKNESSES
FORMULATION OF GOVT. RULES
The Basic flaw of this organization is its consolidation that is centralized system. The
key p o l i c i e s , s t r a t e g i e s a n d s e t o f l a w s a r e d e s i g n e d b y t h e u p p e r
m a n a g e m e n t . T h e centralized system is one of the biggest obstacles
o f l o n g t e r m s u c c e s s o f P I A . P I A centralizes structure lead to barrel
between different level of management, decreased motivation, hard access to
information.
DEBT
PIA has a significant amount of 42 billion debts. Current and future debts could
have important consequences for stakeholders of the company. For example, debt could
impair PIA ability to make investments and obtain additional financing for
working capital, capital expenditures, acquisitions or general corporate or other purposes.
Debts could also put PIA at a competitive disadvantage to competitors that have lesser debt
and could also increase the company’s vulnerability to interest rate increases.
RELIANCE ON OIL PRICES
PIA’s sustainability, growth and revenues directly depend on oil prices. A steep rise in
oil prices can seriously damage the long term viability of any airline. Recently many airlines
around the world went bankrupt due to rising oil prices. Airlines need to hedge
against this risk by taking proper measures.

OPPORTUNITIES
HAVING THE MAXIMUM ROUTE AND FLEET P I A
is having the maximum route and flat domestic and international desti
nations network in Pakistan as compared to its
C o m p e t i t o r s . R o u t e a n d f l e e t e x p a n s i o n w i l l positively impact the company’s
operations by increasing revenues.
GROWING DEMAND FOR LOW COST AIRLINES
The growing demand for air travel is driven by lower fares and consumer
confidence. A survey by International Aviation Authority showed that ticket
price is the number one criterion for passengers when selecting a flight, well
ahead of the availability of a non-stop service.
CUSTOMER LOYALTY
PIA’s frequent flyer and loyalty programs can help it reta
i n c u s t o m e r s . P I A ’ s Awards+plus (frequent flyer program) was established to
develop passenger loyalty by offering awards and services to frequent travelers. Such
schemes encourage repeat travel on PIA, as passengers seek to accrue the benefits given to
regular travelers. This enables t h e a i r l i n e t o r e t a i n c u s t o m e r s a n d r e d u c e
c o s t s , a s i t d o e s n o t h a v e t o s p e n d m o n e y targeting new customers to replace
those lost to other airlines.
INDUSTRY RECOVERY
Market analysts believe that the global airline industry will experience
an upturn infortunes over the next
f e w y e a r s . T h i s r e p r e s e n t s a n o p p o r t u n i t y f o r P I A , a s i t c o u l d generate
increased revenues and command market share if it capitalizes on increases in
demand.
 THREATS
HIGH INTEREST RATES

The past few years have seen State Bank of Pakistan impose high as well as low interest
rates to check inflation and the overheating of Pakistani economy. Inflation in Pakistan may
see another raise in the short-term.
ACCIDENTS

There had been five accidents with PIA listed as below:

 Pakistan International Airlines Flight PK 705 was a Boeing 720 – 040 B that crashed
while descending to land on Runway 34 at Cairo International Airport on
May 20, 1965 resulting in 119 fatalities.
 Pakistan International Airlines Flight PK740 was a Boeing 707-340C that
crashed a f t e r t a k e o f f f r o m J e d d a h I n t e r n a t i o n a l
A i r p o r t o n N o v e m b e r 2 6 , 1 9 7 9 . A l l 1 5 6 aboard were killed.
 Pakistan International Airlines Flight 268 was an Airbus A300B4-203,
registration AP-BCP, which crashed on approach to Kathmandu's Tribhuvan
International Airport on September 28, 1992. All 167 on board were killed.
 PIA Flight 554 is the flight number of a Pakistan International Airlines (PIA)
Fokker F27 that was hijacked on May 25, 1998. The flight started its
journey at Gwadar in Baluchistan after originating in Turbat, and was flying to
Pakistan's southern port city of Karachi. The aircraft was carrying 24 passengers and
5 crew members.
 Pakistan International Airlines Flight 688 (PK688, PIA688) was scheduled to
operate from Multan to Lahore and Islamabad at 12:05 pm on July 10, 2006. It
crashed into a field after bursting into flames a few minutes after takeoff from Multan
International Airport. All 41 passengers and four crewmembers on board were killed.
 PEST ANALYSIS
The macro-environment includes all factors influencing a company that are not within its
control. These include political, social, economic and technological factors.
These are k n o w n a s P E S T f a c t o r s . A t e c h n i q u e o f a n a l y s i s o f t h e m a c r o -
environment is
PESTanalysis. Environmental analysis should be continuous arid prece
d e a l l a s p e c t s o f planning. Since the airline industry is very much influenced
by changes taking place in the environment and has undergone rapid and
dramatic changes during the last decade, this analysis is especially important for PIA

 POLITICAL
 ECONOMICAL
 SOCIAL
 TECHNOLOGICAL

POLITICAL FACTORS
Political factors always have a great influence on the way businesses operate in the airline
industry and the spending power of customers. In recent years it has been observed that
government played an active role in increasing competition in the airline
industry. A number of new airlines such as Air Blue and JS Air have been
awarded licenses to enter the domestic market. Pakistan has achieved some political
stability in recent years. If the
management of PIA believes that the present government
will perform well
(consistently), then there will be more investment in the
form of purchase of newa i r p l a n e s a n d l a t e s t t e c h n o l o g y . T h e o v e r
a l l i n d u s t r y w i l l g r o w r e s u l t i n g i n m o r e luxurious and comfortable
flights. With the military takeover government policies have become more liberal.
ECONOMIC FACTORS
Currently, Airlines industry has three major players: Pakistan International
Airlines, an Air blue, Aero Asia and Shaheen Airlines. Their target market includes
domestic travelers as well as Pakistanis living abroad particularly in the UK and USA.
These countries have strong economies coupled with high purchasing power.
Customers’ purchase behavior depends very much on prices of the competing
airlines as well as services offered. As inflation rate is unstable in Pakistan,
spending power of consumers has effected in the long term. In fact growth
in. Economically; the new millennium has been highly volatile; the September
11 attacks revolutionized the whole world. Consequently, there was a global depression in
the North America, South America, Australia and Europe. However, in Asia especially
Pakistan the effect in the short term was otherwise. The economy began to boom
 because of greater remittances from abroad and whole sum immigration by expatriates.
As a result, demand for air travel in South Asia rose. Economic conditions of Pakistan are
however improving. PIA has cost a advantage over its competitors because of its newly
acquired, improved, long distance aircrafts from Boeing’ which give longer
range and better fuel economy than any other jet currently produced. This cost
advantage is a barrier to entry for new firms. However, this cost advantage will
not be significant on domestic routes.
SOCIAL FACTORS
The social arid cultural influences on business vary from country to country. The social
structure of Pakistan is closely tied. The trend is now changing as the general
public
ise d u c a t e d a n d i s p u r s u i n g p r o f e s s i o n a l g o a l s . C u s t o m e r s a r e m o r e a w a
r e o f m a r k e t conditions and available options and want to get best value for their money.
They spend considerable time and money on entertainment hence increasing the
need of in-flight entertainment systems. Also, word of mouth has a significant impact in
the use of airline The social environment of Pakistan is turning liberal with the new regime.
The initiative t o a u t o m a t e c h e c k - i n a n d t i c k e t b o o k i n g p r o c e s s m i g h t n o t
b e v e r y p o p u l a r w i t h t h e general public (even educated population) is still
technology averse. E-ticketing might also face significant challenges as
consumers are generally reluctant to provide their credit cards information over the
phone and the internet. The consumers, however, have a warm reaction to the prospect of
less costly but quality service flights.
TECHNOLOGICAL FACTORS

Technology is vital for.competitive advantage and is a major driver of t

he airlinesindustry. Major technological changes are taking place in th
e a i r l i n e s i n d u s t r y w i t h innovations in the reservations and booking systems. In-flight
entertainment systems and auto check in counters are two examples of such innovations.
Internet plays a key role in e-ticketing as consumer can easily reserve tickets or check the
status of the flight. A key issue will be the extent, to which technological
advancements (such as Internet) impact distribution and cost synergies from industry
consolidation, can offset upward pressure son costs. PIA has always led the path of
technological innovations by introducing new technologies ahead of its competitors
such as its auto check-in counters which has help edit gain market share. It was the first
airline in Pakistan to install Sabre system followed by the market leader.
 FUNCTIONAL STRATEGIES
Human Resource Management & Business Management

The organizational structure of PIA is centralized, therefore decision-making

is a time-consuming process and delays occur in downward communication. Though, it is
believed that the current Chairman is inclined towards a decentralized system, the
effectiveness of such an approach in PIA will be seen soon. Effective
communication is essential in all organizations and it becomes even more
essential in an organization like PIA due to its large size and expanded network.
It is necessary that people from various departments
communicate between each other to have an overall
U n i f o r m i t y . A m i d a h i g h l y Competitive environment, PIA needs to m
o t i v a t e i t s e m p l o y e e s . F o r t h i s p u r p o s e , ‘Promotion Boards’ are held twice
a year. ‘Extra-mile Awards’ are handed over to the
competent employees. An ‘Employee Suggestion Scheme’ gives e
m p l o y e e s a n opportunity to be vociferous regarding their issues. The three best
suggestions are given m o n e t a r y a w a r d s r a n g i n g f r o m R s . 5 0 0 0 t o R s .
2 0 , 0 0 0 . E f f o r t s a r e m a d e b y P I A ’ s management to ensure that employees
are exposed to information in a manner
whichm i n i m i z e s u n c e r t a i n t y a m o n g s t t h e m s o t h a t t h e y a r e n o t d i s i l l u s i
o n e d . H o w e v e r , information through grapevine disturbs this process at times

CONCLUSIONS
Organizational Behavior forms an integral part of any organization for prosperity.
Greater e m p h a s i s n e e d s t o b e l a i d o n c o n t r o l l i n g a n d m o n i t o r i n g o f
o r g a n i z a t i o n a l b e h a v i o r because in the present dynamic environment
employees are the key to success in any organization. T h i s i s m a i n l y d u e t o t h e
varying structures and leadership styles. As mentioned on
various accounts, PIA has a centralized structure. This has caused higher
conflicts and p o o r m a n a g e m e n t o f e m p l o y e e s a s d e c i s i o n s a r e m a d e b y
t h e t o p l e v e l m a n a g e m e n t without involving the employees. In addition, this leads to
complexities in employee tasks as it takes more time to reach the information from top to
bottom. Due to this bureaucratic nature of PIA, inefficiencies have crept in and
morale of the employees has plummeted over the years. Delegation of tasks is minimal
at PIA. The current status of employees is less control and authority over different tasks
apart from their own assigned tasks, so employees feel distant as far as other issues
and problems of the departments are concerned. H o w e v e r , P I A e m p h a s i z e s o n
e x p e r i e n c e . T h e r e f o r e , t h e o r g a n i z a t i o n h a s y o u n g a n d active employees
who may lack in experience but not competence. This has increased productivity
of the employees and consequently of the organization.
 RECOMMENDATION
Decentralization
Em pl oy e e Em p ow er m e nt
Overhead Costs
Two-Way Communication
Decentralization
PIA should decentralize its structure that would lead to the easy management, increased
motivation, easy access to information and resolution of the conflicts (as they would be
resolved by the immediate manger time span would then reduce). Since
employees issues regarding their behavior would lessen, so it would ultimately lead to
more satisfied employees that would result in enhanced productivity of the organization.

Em ployee Empowerment

PIA should make efforts towards empowering the employees that is going to lead to more
employee participation in the decision making process and also result in more employee
satisfaction and enhanced motivation. Apart from this, employees woul
d f e e l m o r e independent to discuss the issues explicitly without hesitation. This would
also enhance team work process at PIA as quality team and cross-functional teams. The
employees will work with more commitment and dedication and every employee would
work to his/her fullest due to increased motivation. However, with empowerment comes
accountability, s o i t i s s u g g e s t e d t h a t w h i l e t h e y e m p o w e r t h e i r e m p l o y e e s ,
there should also be a “controlled check’’ on them to ensure the correct
u s a g e o f p o w e r d e l e g a t e d t o e v e r y employees within their circumscribed limits

Overhead Costs
PIA should also reduce its overhead costs that are it should manage its
resources: labor more effectively, so that with less input, more output can be
achieved and the saved resources can be utilized in other areas such as introducing more
training courses for the employees so that the quality of the workforce could be increased.
Hiring the services of expertise can improve the efficiency of their services, so by
saving the overhead costs, t h e y c a n u t i l i z e t h a t m o n e y f o r t h e e x p e r t i s e
services. So by analyzing the
varioussegments of the organization and making the right corrections,
i t c a n s u b s t a n t i a l l y improve the standards of Organizational behavior

Two-Way Communication
The suggestions of the employees can prove to be very effective in
improving the operations as they are the ones who manage them.
T h e r e f o r e , a t o p - d o w n a p p r o a c h should be replaced with two-way
communications. In this way, the employees would feel motivated and valued as they
would be included in decision-makind