Only one PIA bidder left: Why are buyers running away from Pak Airlines?

Initially, the government aimed to complete PIA's privatisation by June, but this timeline has since been pushed to October due to various delays

Despite six groups initially qualifying to submit offers, only one consortium remains in the bidding process for Pakistan International Airlines (PIA). The sole bidder has submitted the required earnest money to the Privatisation Commission by the stipulated deadline, according to Ahsan Ishaq, spokesman for the Privatisation Ministry. However, the identity of the bidder has not been revealed. 

The Pakistani government had previously shortlisted several entities, including Airblue, Arif Habib Corporation, Fly Jinnah (a subsidiary of Air Arabia), Y B Holdings, Pak Ethanol, and the real estate consortium Blue World City, for a majority stake in the national carrier. Initially, the government aimed to complete the privatisation by June, but this timeline has since been pushed to October due to various delays. 

 

Despite the interest shown by multiple parties, five of the six bidders have withdrawn from the process. The remaining consortium is believed to have been deterred by concerns over PIA’s substantial financial liabilities, aging fleet, and operational challenges. Initially, the bidders sought full ownership of the airline, but the government has countered with an offer of a 76 per cent stake.

 

Financial struggles, safety concerns 

PIA has faced ongoing financial difficulties, recently highlighted by reports of unpaid salaries to 7,000 employees for November 2023. Additionally, a travel blogger’s recent experience on a PIA flight to Skardu raised alarms, with claims of unclean conditions and safety issues, reinforcing concerns surrounding the airline. 

In 2020, the European Union imposed a ban on Pakistan International Airlines due to safety violations, including the revelation that one in three of its pilots held fraudulent licences. The current fleet, composed mostly of smaller leased aircraft, requires an estimated $500 million for renewal and operational enhancements, a substantial investment for potential buyers.

 

Need for strategic improvements 

Media reports indicate that prospective buyers are urging the government to consider reinstating PIA’s suspended international routes to Europe and the United States, believing this would significantly improve the airline’s chances of becoming a profitable venture. As the deadline approaches for the sale of the majority stake, the future of PIA remains uncertain.