(Pia)

Submitted to

Dr. Abdul Haque

Topic

PIA: A WHITE ELEPHANT

Submitted by

Muhammad WaqasMalik Javaid

Umer MehboobNaveed Amjad

Umair IqbalArslan Tariq

1

Table of contents

Topic Page no.

Research question 5

Hypotheses 5 Introduction 5

Birth of an Airline in Pakistan 6

PIA’s First International Service

6

Vision 7

Mission 7

Values:

Customer Expectations 7

Service 7

Innovation 7

Integrity

7

Reliability 8

Safety

8

Competitors:

9

Objective of this study 9

2

Problems 10

Critical Situation of PIA Today:

10

Losses of 2006 to 2008 11

Per Day Loss

11

Per hour Loss

11

Comparison of Trade Deficit and PIA losses

12

Words of chairman of British airways 13

REVIEW OF LITERATURE: 14

Overview of Airline industry in Pakistan: 14

Research Methodology 15

Nature of Study:

15

Data collection procedure 15

3

Secondary Data:

15

Websites

16

Primary Data

16

Target population

16

Sample Size

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

Passengers views about the flight timings:

18

Reservation system for tickets:

18

Staffs attitude:

19

Entertainment facilities:

19

Overall Views: 19

Conclusions& Suggestions:

19

Conclusions

20

Suggestions

20

Bibliography

20

5

6

Research Question

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

Independent variable : Dependent

variable:

Poor Management * 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 737-

300 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.

7

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.

PIA’s 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

8

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

9

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.

Problems

10

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.

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).

11

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.

Per Day Loss

12

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

13

 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 company’s 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 company’s 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)

15

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

16

2) Percentage

After getting the results from scaling percentages of results will be

calculated the formula for this calculation is %

= No. of respondents * 100

Total No. of Respondents

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 consumer’s 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.

17

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

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

departure and arrival

c) Reservation system for tickets:

18

This shows how much passengers are satisfied and dissatisfied with

the ticket reservation system.

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

PIA’s staff.

19

60%

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

Preferences

SatisfiedSomewhat

satisfiedDissatisfied

Entertainment 5 9 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

20

The staff should be trained very well as to how to be polite and

helpful to the passengers.

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 shouldn’t 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_PIA__94639

21

QuestionnaireName____________________

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 don’t continue, thanks.)

Gender Male Female

Age (15 -30) (30-45) (45-60) (60 and above)

Profession ________________

22

Frequency of travel 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 Dissatisfied

23

Staff’s 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? Yes No

Any comments:________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

24