The PIA Story:

Air transport has probably never been more important to the development of a
new nation than in the case of Pakistan. In June 1946, when Pakistan was still in
the offing, Mr. Mohammad Ali Jinnah, the Founder of the upcoming nation,
instructed Mr. M.A. Ispahani, a leading industrialist, to set up a national airline, on
a priority basis. Initially when this air line came into existence it was called as
Orient Airways. It was private limited company with limited capital and resources
and couldn’t grow 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. PIA has
many firsts to its credit and continues to soar, ever
committed to innovation and rich customer experiences.
People fly and discover the magic of PIA experience. It is
the 16th largest airline in Asia, operating scheduled services
to 73 destinations throughout Asia, the Middle East, Europe
and North America, as well as an extensive domestic
network linking 24 destinations.

Situation Analysis:

Pakistan’s flagship, national airline has been an air travel

pioneer since its commencement in 1955. Despite wars and economic trouble,
the carrier survived to grow and prosper. Today it maintains a sizeable
international route network, in addition to its services closer to home, with a
modern and expanding fleet. If we analyzes the current situation of the national
airline, the last few years for PIA turned out to be the exceptionally difficult years
of the cooperation, during these periods PIA experience a series of financial,
operational and marketing problems which results in destabilizing the credibility
of the brand. Imposition of operating restrictions by EU, the recent unpredicted
rise in oil prices, growing losses and cash flow position of the company and
various terrorist attacks in the country has adversely affected PIA‘ s image and
reputation. However efforts were made and need to be taken by the corporation
to recover and neutralize the negative indicators to enhance its standing. To
conclude, the current situation for PIA is not the benchmark which PIA has set for
itself in the past. A fresh strategic approach needs to be adopted by the
corporation in order to climb the mountains of challenges ahead.
 SWOT Analysis:

Internal Factors External Factors

Strengths
National carrier
ISO and IOSA Certified
Leading Market Position and Share
Opportunities
Network Presence across the globe
Having the Maximum Route and Fleet
Recognized Engineering Department
Growing demand for Low Cost Airlines
Superior Operating Structure
Building Customer Loyalty
Only Domestic Airline offering Hajj operations
Shifting Customer Needs
in Pakistan
Industry Recovery
Segmented Seating
Brand Recognition
Hub Airport at Karachi

Weaknesses
Formulation of Govt. Rules
New policies implemented whenever Top
Threats
Management changes
High dependence on Passenger Fluctuation in Oil prices
Reliance on Oil Prices Interest and Foreign currency
Revenues Exchange Rates
Debt Strong Competition by Air-blue
Bureaucratic Structure Terrorist Attack in Pakistan ing
Mismanagement strategiesNGective i.e.
Over Employment Old Fleets
Labour Union Decline in Airline Industry
No Job Descriptions of Employees Growing Recession in the Country
No Long Term Planning Political Uncertainty
INDUSTRY ANALYSIS:

FUTURE OUTLOOK AND TRENDS:

Few inventions have changed how people live and experience the world as much
as the invention of the airplane. The airline industry, therefore, certainly has
progressed. It has also altered the way in which people live and conduct
business by shortening travel time and altering our concept of distance, making it
possible for us to visit and conduct business in places once considered remote.
Today, airline industry in Pakistan exists in an intensely competitive market. In
recent years, there has been an industry-wide shakedown, which will have far-
reaching effects on the industry's trend towards expanding domestic and
international services. Despite wars and economic trouble in Pakistan, the airline
industry survived to grow and prosper but on the contrary there are number of
factors which have caused the current decline in the airline industry. For
example, the threat of further terrorist attacks since September 11 and a fall in
the number of business travelers have both caused passenger numbers to fall.
These and other factors may continue to affect demand for air travel in the future.
The threat of terrorism may discourage people from traveling by air and could
especially reduce the number of passengers traveling on international flights.

ANALYSIS OF COMPETITORS:

From a decade, PIA is now competing against airline carriers such as Airblue
and Shaheen international but on the contrary Air blue’s remains the strongest
competitor of PIA because of the huge market it has gained over time, strong
brand image and customer loyalty. In order to take precautionary measures PIA
has started new low-fares subsidiary “PIA Express” to stop the Airblue market
share growing to fast. Moreover, major legacy airlines have been focusing on
restructuring costs, which has improved their competitiveness. With costs
restructured, the legacy airlines are becoming more formidable competitors in
terms of increasing capacity, matching prices and leveraging their frequent flier
programs. Increasing competition could adversely affect the company’s margins.
AIRBLUE

Established in 2003, Airblue is a private airline which offers passenger and cargo
transportation to both domestic and foreign destinations. There are nine
destinations of Airblue. It is credited as the first private carrier of Pakistan to
operate the Airbus A320 and introduce e-ticketing, wireless check-in and self
check-in kiosk facilities. The major departments include: Human Resource,
Marketing, Sales, Finance, Operations and Systems Support and IT.

The size of the organization is not as huge as PIA and mostly comprises of
young employees. It is the first airline to have employees trained according to
international standards. It is technologically advanced though the size of the fleet
is not comparable to that of PIA. The fleet size of Airblue is eight.

The organogram of the organization follows. It shows that the employees report
to their divisional heads that in turn are answerable to the Chief Executive
Officer.

VISION OF PIA

‘To be a world class airline exceeding customer expectations through dedicated

employees committed to excellence.’

VISION OF AIRBLUE

‘To provide exceptional customer service at low prices.’

COMPARATIVE ANALYSIS

To compare PIA which is a Public Organization, with a Private Organization, we

chose a Private Airline Organization, which is Air blue. A few and major
differences were seen between these two organizations, which provide same
services, but the difference is there. The differences are elaborated below:

Air blue had started in the year 2004. It is a private airline which has its major
labor force from Air force of the country. About 70% of the air blue pilots are ex-
air force officers. With that around 33% of Air blue is owned by JS group itself.

Following are the various departments that Air blue consists:

• Administration
• Air port operations
• Cabin crew
• Commercials
• Corporate affairs
• Flight crew
• Engineering
• Finance
• Flight safety
• Marketing
• Operations
• IT/MIS
• Logistics
• Flight services
It is observed that even though PIA is a public company, it has fewer
departments than a private airline company such as Air blue, but on the other
hand there are more subdivisions in PIA.
In terms of resources, PIA, until a few years was again much more enriched then
Air blue. It had a larger number of planes and more funds plus a strong
management team.

As compared to other airlines in the industry, there is a disadvantage for PIA as it

has majority of quite old age employees. Air blue on the other hand in the
management have young and energetic crew and these employees serve better
for an organization and bring success for it through their new and innovative
ideas.

Another fact to be noticed about PIA is that the organization is not readily
adaptable to technology, but Air blue being a private organization is fast at this.
We can say this because Despite being the first airline industry, PIA was not the
airline that introduced e-ticketing. It was Air blue while PIA was still satisfied with
its manual method of preparing tickets. Also the computer systems used by PIA
are still not those that are latest in technology.

There is no interference of the government or political parties in the decisions

made by the company hence the decisions are not pressurized and are taken
fully with the motive of making the company more successful.

As the Hierarchy chart of the firm is horizontal, taking a decision does not take
long, it is easier and also good management exists. Good Accountability is there
and hence corruption ratio is almost equal to zero.

Air Blue in all has 3415 employees which are very less than that of PIA’s and that
is also the reason where PIA is able to cut its costs and all employees can be
easily monitored which makes the management more efficient.

INDUSTRY AND MARKET FORECASTS:

If we forecast the future situation of the airline industry in the Pakistan, the
current situation provide a gloomy picture as the last few years for airline industry
turned out to be the exceptionally difficult years, during these periods airline
industry experience a series of financial, operational and marketing problems
which results in destabilizing the credibility of the airline industry. The recent
unpredicted rise in oil prices and various terrorist attacks in the country have
adversely affected domestic airlines image and reputation. Moreover the threat of
terrorism may discourage people from traveling by air and could especially
reduce the number of passengers traveling on international flights.