Submitted to

Dr. Abdul Haque

Topic
PIA: A WHITE ELEPHANT

Submitted by
Muhammad Waqas Malik Javaid Umer Mehboob Naveed Amjad Umair Iqbal Arslan Tariq

Table of contents Topic

Research question Hypotheses Introduction Birth of an Airline in Pakistan PIAs 6 Vision Mission Values: Customer Expectations 7 7 7 7 7 First International 6 Service 5 5

Page no.
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Service Innovation Integrity 7 Reliability Safety 8 Competitors: 9 Objective of this study 8

Problems

10

Critical Situation of PIA Today: 10

Losses of 2006 to 2008 Per Day Loss 11 Per hour Loss 11 Comparison of Trade Deficit and PIA losses 12

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Words of chairman of British airways 13

REVIEW OF LITERATURE: 14 Overview of Airline industry in Pakistan: 14 Research Methodology Nature of Study: 15 Data collection procedure 15 15

Secondary Data: 15 Websites 16 Primary 16 Target 16 Sample 16 Method of Data Collection 16 Data Analysis 16 Scaling 17 Percentage 17 Presentation Formats 17 Results & Discussions 17 Survey result: 17 In flight services: 17 4 Size population Data

Passengers 18

views

about

the

flight

timings:

Reservation system for tickets: 18 Staffs attitude: 19 Entertainment facilities: 19 Overall Views: 19 Conclusions& Suggestions: 19 Conclusions 20 Suggestions 20 Bibliography 20

Research Question
Through the continuous improvement in management can PIA convert its losses into profits?

Independent variable : variable:

Poor Management *

Dependent

Losses

Hypotheses
Ho: Poor management has no effect on losses. H1: Poor management has effect on losses.
*There was a close relation found in the poor management and losses because the most profitable air line British airlines have gained maximum profits due to continuous improvement in their management skills

INTRODUCTION
The first airline from an Asian land country and the first airline from a Muslim country to fly the Super Constellation. The first Asian airline to operate a jet aircraft. The first Asian airline to be granted maintenance approval by the US Federal Aviation Administration (FAA) and the Air Registration Board, predecessor of the British Civil Aviation Authority (CAA). The first non-communist airline to fly to the People's Republic of China, and to operate a service between Asia and Europe via Moscow. The first airline in Asia to induct the new technology Boeing 737300 aircraft. An IBM 1401, the first computer in Pakistan, was installed in PIA.

The first airline to introduce a second route to People's Republic of China over the mighty Karakoram mountains. The first airline to show in-flight movies on international routes. PIA set up Pakistan's first planetarium at Karachi. The first airline in South Asia to introduce auto-ticketing facility. The first airline in the world to fly to Tashkent, capital of the newly independent state of Uzbekistan. First airline in the world to start Air Safari with jet aircraft. First Asian airline to start flights to Oslo, the beautiful capital city of Norway. First airline in the world to induct Boeing 777-200LR, the world's longest range commercial airliner. First airline in South Asia to offer the facility of seat reservation through mobile phone.

Birth of an Airline in Pakistan:

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.

PIAs First International Service

The year 1955 also marked the inauguration of the fledgling airline's first scheduled international service - to the glittering, glitzy capital city of London, via Cairo and Rome. Initially, there was much criticism, as the public could not comprehend or justify the need to operate an international route when, in their opinion, other projects vital for a developing country should have been given a higher priority. However,

PIA's focus was, and continues to be, to serve the Pakistani community at large. The provision of transportation to expatriates has remained one of the foremost priorities of the national airline. Moreover, PIA earned substantial foreign exchange through international services, which it invested in the purchase of aircraft and spare parts, as fleet expansion was a grave necessity for the airline.

Vision
PIA's vision is to be a world class airline exceeding customer expectations through dedicated employees, committed to excellence.

Mission

Employee teams will contribute towards making PIA a global airline of choice: Offering quality customer services. Participating in global alliances. Using state-of-the-art technologies. Ensuring cost-effective measures in procurement and operations

Values Customer Expectations

Convenience, Caring, and Competitive Tariff

Service
Personalized and Courteous

Innovation

Cherishing New Ideas, Translated Into Action

Integrity
Business Ethics, Accountability, and Transparency

Reliability
Loyalty and Consistency

Safety
Passengers, Employees, Environment, and Health

1.8.Competitors:
There are a number of airlines operating in Pakistan which include P.I.A SHAHEEN INTERNATIONAL ETIHAD AIRBLUE AERO ASIA

Objective of this study:

Following are the main objective of this research study. To review the existing scenario of operation. To identify the short comings of Pakistan International Airlines. To provide suggestions for improvement.

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Problems
The major problems faced by the Aviation Industry of Pakistan revolve round reduced volume of air passenger, undeclared price war on the domestic and foreign sectors, extremely poor financial health of the national Airline, absence of a level playing field and drastic rise in insurance costs. The various players: P.I.A., private airlines and the Civil Aviation authorities have to work together to find solutions to the problems which can otherwise make or break the Industry. The role of foreign operators and the continuation of the policy in the absence of bilateral agreements would keep on favoring the foreign operators at the cost of the domestic operators . As a symbol of national pride, P.I.A. must strive to be an airline of choice operating profitability on modern commercial concepts, capable of competing with the best in its entire International and Domestic markets consistently exceeding customer expectations. It should be a choice employer deploying modern technology in all spheres of its activities. Much has to be done to develop the National Aviation Industry on sound footings for the ultimate benefit of the economy and to provide travelers with real choice in terms of fare as well as facilities .Pakistan International Airlines Corporation was incorporated on April 18, 1956 under the Pakistan International Airlines Corporation Act, 1956 (PIAC Act 1956) and its shares are quoted on all stock exchanges of Pakistan.

Critical Situation of PIA Today:

Today the situation of PIA is really critical and we have analyzed it to some extent.

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The PIA board of directors will be presented a delayed budget for 2009 projecting losses of about Rs 12 billion as against the estimated losses in 2008 running close to Rs 15 billion, (PIA sources). Just in the regime of Shaukat Aziz the total losses suffered by the airline to over Rs 55 billion.

Aviation experts and analysts are surprised at the massive PIA losses despite an injection of billions of rupees by the government during the last three to four years under the Shaukat Aziz government. Experts and analysts say the story of PIA has been one massive failure of the Shaukat Aziz government, which had been deliberately covered up by one top management reshuffle after one another, all making the situation slip from bad to worse.

According to the published figures of PIA, the operating loss after-tax for Jan-Sep 2007 was Rs 10.904 billion while the accumulated operating loss after tax was Rs 34.839 billion. The current liabilities of the company, its own figures show, exceed current assets by Rs 29.552 billion. "PIA needs to earn an operating profit similar to the amount it will be losing during 2007 which will be around Rs 14 billion. Based on the current losses, PIA will require around one billion US dollars or Rs 60 billion for the next two years for its revival and upgrading,"

Losses of 2006 to 2008

PIA suffered a loss of Rs 12.7 billion in 2006 and 12 billion in 2007 and 15 billion in 2008, " We also calculated per day and per hour losses. 12

Per Day Loss

PIA is losing over Rs 40 million every single day

Per hour Loss

PIA is facing Rs 1.8 million loss every single hour of the day.

Comparison of Trade Deficit and PIA losses

The trade deficit is estimated at $10.7 billion rupees, with exports of $18.3 billion rupees and imports of $28.9 billion rupees in the coming fiscal year. But the PIA loss of 2008 is 15 billion suggesting a difference of 4.3 billion rupees

British Airways could mostly be attributed to its continuous addition of more long-haul international flights as well as the continuous improvement in services and all this because of good management. Apart from that, the entire airline boasts of features that provide their passengers with the best comfort through value added services such as extended leg room for travelers within their economy class cabins, special lounges of British Airways and the profit of British airways in last 6months was $600 million.

Words of chairman of British airways

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Martin Broughton said: We make this profit by providing best services according to our customer desire and all this make possible because of good management.

REVIEW OF LITERATURE Overview of Airline industry in Pakistan:

The Pakistan aviation industry was started up when Orient Airways merged with Pakistan International Airlines Corporation (PIAC) to become the national flag carrier of Pakistan called Pakistan International Airlines (PIA). PIA remained the only operator for many years after its creation, but soon private airlines arrived at the scene to compete with the national flag carrier as conditions of the country stabilised.It was not until the early ninties there was a major growth in the Pakistani aviation market with four new private airlines launching operations. The airline did very well to compete with the well established flag carrier, PIA which was controlled by the government. However, this was not to last as the UN placed economic sanctions on Pakistan and its neighbour, India that caused the airline market to suffer. It caused two airlines of the airlines to file for bankruptcy and liquidate its assets. The airline industry remained quite stable with PIA developing a strong hold on the international and domestic market for many years. It was not until the early 21st century that the industry started to pick up again that allowed the entry of a new carrier in the market, Airblue which launched operations with new state of the art aircraft. As of August 2007, the aviation market is developing and allowing more services and facilites to be inaugurated as well as the development of a brand new airport to be built for the capital at Fateh Jang. 14

Research Methodology Nature of Study:

The type of study conducted for this research report is Descriptive. The objective and the purpose of this research to evaluate the satisfaction level of the customers of PIA. On the other hand the purpose is to evaluate the companys current financial position and the reasons for customer dissatisfaction.

Data collection procedure:

In this research the researcher used secondary data. We will use the Secondary data to know the companys financial figures .While to check the Customer satisfaction which includes meals, flight timings, entertainment facilities and comfort we will use Primary data.

Secondary Data
The secondary data we got was from the companies website and search engines. So, the secondary data in this research mainly got from different sources.

1) Websites:
Economic survey of Pakistan (http://www.finance.gov.pk/ P.I.A(http://en.wikipedia.org/wiki/Pakistan_International_Airlines) Shaheen airline(http://en.wikipedia.org/wiki/Shaheen_Air_International) P.I.A(http://www.historyofpia.com)

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2) Primary Data
The researcher gets the primary data from different kinds of sources like questionnaires, interviews, observations and situations analysis as well. Primary data speaks the present scenarios and relationship between company, market and customers

3) Target population
This research is basically conducted in Lahore so; our target population is people living in Lahore.

4) Sample Size
A sample size of 25 respondents of different areas was taken from specific areas of Lahore.

5) Method of Data Collection

Method of data collection in this research is an instrument that is questionnaire. The questionnaire is closed ended and open end. The questionnaire is attached with the report.

Data Analysis:
For the analysis of the data the techniques which are used are as following

1) Scaling
The scaling which used is The respondents would be given a question for which they have to mark their preference from the given multiple choices

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2) Percentage
After getting the results from scaling percentages of results will be calculated the formula for this calculation is % = No. of respondents Total No. of Respondents * 100

3) Presentation Formats
The information that would be collected from the questionnaires will be presented in the form of charts, pie-charts, bar charts etc.

Results & Discussions

We will discuss the results of the qquestionairee and also discuss various reasons behind the reasons of demise of Pakistan international airline.

Survey result: a) In flight services:

It includes the consumers likings towards the in-flight services such as meal, security and comfort and also the environment .It nearly includes all of the services which an air line can offer.

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25 20 15 10 5 0 MEAL SECURITY COMFORT POOR AVERAGE GOOD

About 68% of the people said that the meal served was not up to the mark and poor. Only 12% of the people considered it good. Most of the people said that the security is average. And the comfort level was rated good by 32% of the people

b) Passengers views about the flight timings:

It is what passengers think about the flight timings, i.e., arrival and departure
25 20 15 10 5 0 DEPARATURE ARRIVAL SATISFIED SOMEHAT SATIFIED DISSATISFIED

About 45% of the people were satisfied with the flight timings...i.e., departure and arrival

c) Reservation system for tickets:

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This shows how much passengers are satisfied and dissatisfied with the ticket reservation system.

s atisfied dissatisfied s om ew hat s atisfied

60%

60% of the people were satisfied with the reservation system.24% of the people were somewhat satisfied.16% of the people were dissatisfied with the reservation system.

d) Staffs attitude:
This shows that how many people were satisfied with the attitude of PIAs staff.

satisfied somewhat satisfied dissatisfied

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80% of the people were dissatisfied with the attitude of the staff/crew on board of the plane.

e) Entertainment facilities:
This shows how many people were satisfied and dissatisfied with the entertainment and waiting lounge facilities Particular Entertainment Preferences Somewhat satisfied 9

Satisfied 5

Dissatisfied 11

Overall Views
Some people said that traveling through PIA was a nightmare. The flights are always late in departing, the food is the same as it was 10 years a go, the seats are cramped and the airline staff are very unprofessional. A few people also said that the toilets are small. Only 1 or 2 people said that the steward and stewardess were polite.

Conclusions& Suggestions Conclusions

Although PIA has monopoly in Pakistan but people have started disliking PIA. The staff and their poor management is the major issue. Plus the meals served and the flights not boarding on time are the major causes of disliking the air line.

Suggestions
The staff should be trained very well as to how to be polite and helpful to the passengers.

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 Managerial skills should be really improved a lot.

The flights should be on time. The entertainment facilities should be improved. The luggage of the people should be kept safely.

Political influence shouldnt be in the organization.

BIBLIOGRAPHY:
www.msn.com www.yahoo.com http://www.dawn.com/2004/05/10/ebr10.htm http://en.wikipedia.org/wiki/Shaheen_Air_International http://travel.ciao.co.uk/Pakistan_International_Airlines_PI A__94639

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Questionnaire
Name____________________ I am a student of Comsats institute of information and technology and conducting a research on the measurement of satisfaction level of passengers of Pakistan International Airlines. Have you ever traveled by PIA? Yes (please continues) No (please dont continue, thanks.) Gender Male Female Age (15 -30) (30-45) (45-60) (60 and above)

Profession ________________

Frequency of travel

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Weekly Monthly Yearly Once in a 5 years

Reason for preference Economical Comfortable Efficient service Easy accessibility Which class do you prefer to travel in? Business Economy Reservation system (for tickets) Satisfied Some what satisfied Dissatisfied Arrival/departure timings Satisfied Some what satisfied Dissatisfied Extra luggage facilities Satisfied Some what satisfied Dissatisfied Security of passengers and luggage Satisfied Some what satisfied Dissatisfied Entertainment facilities during journey Satisfied Some what satisfied Dissatisfied Comfortable journey (environment) Satisfied Some what satisfied

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Dissatisfied

Staffs attitude: Satisfied Some what satisfied Dissatisfied Political factors are affecting the performance of PIA: Agree Somewhat agreed Strongly disagree

Are you satisfied with existing PIA facilities? No

Yes

Any comments: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _____

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