Project Final Mak

8/8/2019 Project Final Mak

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“PIA HISTORY”

Birth of an Airline:

Air transport has probably never been more important to thedevelopment 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 upa national airline, on a priority basis. With his singular visionand foresight, Mr. Jinnah realized that with the formation of the two wings of Pakistan, separated by 1100 miles, a swiftand efficient mode of transport was imperative.

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PIA First International Service:

The year 1955 also marked the inauguration of the fledglingairline's first scheduled international service - to theglittering, glitzy capital city of London, via Cairo and Rome.Initially, there was much criticism, as the public could notcomprehend or justify the need to operate an internationalroute when, in their opinion, other projects vital for adeveloping country should have been given a higher priority.However, PIA's focus was, and continues to be, to serve thePakistani community at large. The provision of transportationto expatriates has remained one of the foremost priorities of

the national airline. Moreover, PIA earned substantial foreignexchange through international services, which it invested inthe purchase of aircraft and spare parts, as fleet expansionwas a grave necessity for the airline.

PIA Training Center:

The PIA TrainingCenter is a leading airline training institution that deliversthe highest standards of aviation instruction. The TrainingCenter is built around a highly advanced traininginfrastructure, approved by local and international regulatoryauthorities such as CAA, ICAO, and IATA. The PIA TrainingCenter's courses are based on a unique, standards-basedcurriculum designed to impart knowledge and best practicesin all the aspects of the airline industry. The PIA Training

Center provides quality training to PIA's pilots, engineers, airhostesses, and to employees of other associated PIAdivisions.

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HISTORICAL PROFILE

1. HUMAN RESOURCE.2. MARKETING.3. CORPORATE PLANNING.4. INFORMATION SERVICES.5. FINANCE.6. FLIGHT SERVICES.7. FLIGHT OPERATION.8. ENGINEERING.

9. PROCUREMENT AND LOGISTICS.10. CUSTOMER SERVICES.11. TRAINING AND DEVELOPMENT.12. QUALITY ASSURANCE.

MANAGEMENT PIA

CAPTAIN MOHAMMAD AIJAZ HAROON MANAGINGDIRECTOR OF PIA:

Captain Mohammad Aijaz Haroon assumed the charge of Managing Director, Pakistan International Airlines on May 7,2008.

Captain Mohammad Aijaz Haroon has over thirty years of airline experience with vast expertise in major operationalareas of the airline. He joined PIA in the year 1977 as a

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Cadet Pilot. He has served the national airline as Chief Pilotof F-27 aircraft besides having over 16,000 hours of flyingexperience on different aircrafts and has been flying thelatest B-777 aircraft since 2004. He holds ICAO Airline

Transport Pilots license with Simulator / Flight InstructorRating on all aircrafts in PIA and possess a SimulatorInstructor & DCP “A” Check Captain endorsement license forBoeing 777.

He has also held Senior Management positions in PIAincluding General Manager Central Control, General ManagerAirport Services and Director Airport Services.

He is married and has three children.

Managing DirectorCaptain Mohammad Aijaz HaroonDeputy Managing DirectorMr. M. Salim Sayani

Chief Financial OfficerMr. Arif Majeed

Director - Corporate PlanningMr. Shahnawaz Rehman

Director - Engineering and MaintenanceMr. Maqsood Ahmed

Director - FinanceMuhammad Ziyad A Syed

Director - Flight OperationsCapt. Shuja Naqvi

Director - Information TechnologyMr. Shahid Sarwar

Director - Human Resource & AdministrationMr. Hanif Pathan

Director - MarketingMr. Salah uddin

Director - Precision Engineering ComplexAVM Muhammad Kamal Alam Siddiqui

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Director - Procurement, Logistics and Food ServicesMr. Imran Ahmed Khan

Director - Training and Development

Mr. Dilawar Farid BaigDirectorMr. S. Kamran Hasan

General Manager : Corporate Safety & QACapt. Salman Azhar

Chief Engineer: Engineering QAMr. Aslam Tariq

General Manager: Passenger Handling ServicesMr. Syed Aijaz Mazhar

General Manager: Ramp ServicesCapt. S. Bayar Masood

General Manager: Management Information ServicesMr. Zulfiqar Husain

General Manager: Public AffairsMr. S. Sultan Hasan

HIERARCHY OF PIA:

This organization is divided into following

departments: Human Resource and Administration, Marketing, Corporate Planning,

Information Services, Finance, Flight Services, Flight Operation, Engineering,Procurement and Logistics, Customer Services, Training and Development, Quality

Assurance. The organ gram of the organization follows, with the Chairman at the top and

directors of departments reporting to him.

The structure is centralized with the top-level management making the decisions.

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PIA DECISION MAKING:

How can donors and partner countries assess the intendedand unintended consequences of donor interventions? TheOrganisation for Economic Cooperation and Development(OECD) explores ex ante Poverty Impact Assessment (PIA),which can assist in modifying the design of interventions to

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improve pro-poor impacts by identifying key areas formonitoring and evaluation (M&E). It can be applied to mostmodalities of donor support.

PIA is a process which helps policy-makers to understand theintended and unintended consequences of theirinterventions. This approach considers that good design of an intervention requires governments and their partners tounderstand the effect of their policies on diverse socialgroups, actors and institutions, including those not targetedby the policy.

The Paris Declaration on Aid Effectiveness stresses theimportance of results-oriented frameworks, harmonisation

and alignment to improve aid effectiveness and to assurebetter pro-poor outcomes. Yet, prior analysis of the impactsof policy and investment decisions on poverty reduction is acomplex task. It is often built on contentious assumptionsand is dependent on data availability. Ex ante PIA helpsdonors and their partners understand and maximise thepoverty reducing impacts of their interventions. It respondsboth to the need for accountability to partners’constituencies and to the importance of transparentevidence-based decision-making. It can identifyinterventions with high impact on poverty reduction and pro-poor growth as well as mitigating measures to protect thepoor. A broad application of ex ante PIA could also provide abasis for a harmonised reporting system on poverty impacts.

Poverty Impact Assessment helps decision makersdetermine strategic choices for public actions so as to havethe greatest impact on reducing poverty and achieving pro-poor growth. PIA provides a better understanding about

potential winners and losers of an intervention and thusstrengthens a results-oriented approach. PIA helps tounderstand stakeholders and institutions that influence andare influenced by an intervention understand the importanceand inter-relationship of specific transmission channelsthrough which changes are transmitted to the stakeholdersassess the likely positive and negative outcomes for

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stakeholders taking into account multi-dimensionality of poverty assess the reliability of data/information andknowledge gaps.

Using PIA, policy-makers can estimate the likely quantitativeand qualitative outcomes of the policy for poor groups,identify potential risks and assess the reliability of availabledata. Through involving people with different interests andapproaches, ex-ante Impact Assessment helps to saveresources, and design interventions to be better targeted toachieve their goals and avoid unintended harmfulconsequences. Thus it also contributes to strengthening thetransparency and accountability of democratically electedgovernments, and encourages consistency of policy-making

across policy areas.

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SWOT ANALYSIS OF PIA

INTERNAL FACTOR

STRENGTHS:

i) . LEADING MARKET POSITION:

PIA is one of Pakistan’s leading air

carriers, with more than 800 daily flights. Around 150,000 passengers a month fly onPIA, making it one of the major operators in the 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.

ii) BRAND RECOGNITION :

PIA has high brand recall. It is recognized by

travelers all over the country. PIA is a national airline, operating passenger and cargo

services covering eighty-two domestic and foreign. PIA has earned the number one

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ranking in customer satisfaction. This strong market position gives the company a scale

advantage and helps it strengthen its brand image.

iii) 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.

Flying one type of aircraft significantly simplifies scheduling, maintenance, flight

operations, and training activities. PIA has continually achieved high asset utilization and

employee efficiency. Superior operating structure serves as the primary competitive

advantage of PIA.

iv) NETWORK PRESENCE:

PIA enjoys a strong network in key domestic and

international destinations. The company’s network includes three the major airports in

Pakistan, as well as major international airport such as Dubai International Airport.

Having a strong network means that PIA can generate traffic feed for both its domestic

and international Flights.

v) HUB AIRPORT AT KARACHI :

PIA operates from its hub in Jinnah

International Airport, Karachi. Jinnah International is one of the world’s busiest airports

in terms of number of passengers carried. It is also one of the largest international

gateways to Asia. It is also the leading international air passenger (and cargo) gateway to

Pakistan. The company’s strong presences in airports with heaviest traffic levels in

Pakistan give it a competitive advantage.

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vi) 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 second in South Asia to

introduce self check in systems at the Jinnah International Airport, Karachi.

WEAKNESSES :

i) FORMULATION OF GOVT. RULES :

The Basic flaw of this organization is its

consolidation that is centralized system. The key policies, strategies and set of laws are

designed by the upper management. The centralized system is one of the biggest

obstacles of long term success of PIA. PIA centralizes structure lead to barrel between

different level of management, decreased motivation, hard access to information.

ii) HIGH DEPENDENCE ON PASSENGER REVENUES :

Passenger revenues

accounted for 87 percent of the PIA’s total revenue in 2007. Cargo services allow airlines

to generate additional revenues from existing passenger flights. In addition, cargo

revenues are usually counter cyclical to passenger revenues and have lower demand

elasticity than passenger business, which allows airlines to pass on fuel price hikes to

customers.

iii) 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

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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.

iv) 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:

i) . HAVING THE MAXIMUM ROUTE AND FLEET:

PIA is having the

maximum route and fleet domestic and international destinations network in Pakistan as

compared to its Competitors. Route and fleet expansion will positively impact the

company’s operations by increasing revenues.

ii) 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.

iii) CUSTOMER LOYALTY :

PIA’s frequent flyer and loyalty programs can help it

retain customers. PIA’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 the airline to retain customers and reduce costs, as it

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does not have to spend money targeting new customers to replace those lost to other

airlines.

iv) SHIFTING CUSTOMER NEEDS :

The needs of air passengers are increasingly

changing, as they are becoming more and more price sensitive. If PIA succeeds in

making its prices more competitive, then the company will be able to gain significant

market share.

v) INDUSTRY RECOVERY:

Market analysts believe that the global airline

industry will experience an upturn in fortunes over the next few years. This represents an

opportunity for PIA, as it could generate increased revenues and command market share

if it capitalizes on increases in demand.

THREATS

i) 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 over heating of

Pakistani economy. Inflation in Pakistan may see another raise in the short-term.

ii) ACCIDENTS:

There had been five accidents with PIA listed as below:

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o 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.

o Pakistan International Airlines Flight PK740 was a Boeing 707-340C that

crashed after takeoff from Jeddah International Airport on November 26,

1979. All 156 aboard were killed.

o 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.

o 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 Balochistan 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.

o 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. PIA has to continuously ensure

utmost safety and security of its passengers.

Accidents can adversely affect customer confidence in PIA and result in declined

revenues intensifying competition.

iii) STRONG COMPETITION BY AIRBLUE:

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PIA is now competing against

carriers such as Airblue and Shaheen Airline. PIA remains Airblue’s strongest competitor

because of the huge market it has gained over time, strong brand image and customer

loyalty.

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.

iv) INTEREST AND FOREIGN CURRENCY EXCHANGE RATES:

Fluctuating

foreign currency exchange rates can have a significant impact on PIA’s earnings. For

example, as PIA is providing its services to the UK. Negative or positive effects arise

from exchange rate movements as change in expenses.

Strengthening of foreign currencies against the British Pound will positively impact PIA

and vice versa.

v) DECLINE IN AIRLINE INDUSTRY:

A number of factors 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, which

will affect revenues of PIA. The threat of terrorism may discourage people from traveling

by air and could especially reduce the number of passengers traveling on international

flights.

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