Analysis WITH THE Airline Industry Of Pakistan

In 1955 Pakistan International Airline formed. It's 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.

PIA is three stars International Airline. In our report we did SWOT analysis and PEST analysis on PIA, identify major strength we find as leading market position, brand recognition, superior operating structure, network presence, hub airport at Karachi, and effective use of technology. Formulation on GOVT rule, High dependencies on passenger revenues, high debt, and reliance on oil prices are major weakness, opportunities are like having MAX route and fleet, growth demand for low cost airline, customer loyalty, shifting customer needs and industry recovery, and major threats are high interest levels, accidents, strong competition by Air blue, interest and forex exchange rates, and decline in industry. In PEST analysis we discover major Government's active role in increasing competition in the airline industry, inflation rate, turning of social environment of Pakistan liberal with the new regime. Innovation in technology, and its own effect on distribution and cost synergies from industry consolidation.

We recommend PIA for better service to decentralized its management system, develop SBUs, adopt transparent promotion polices, employee empowerment to improve the employee motivation and moral. Try to decrease its overhead cost, adopt effective marketing policy, two way communication and TQM. Upgrade its fleet; purchase new Airplane with twin engines these will reduce the operating cost of PIA. Improve control over fares. Hire the services of IT specialists; improve service standards focusing on quality.

Pakistan International Airlines


When Pakistan was founded in 1947 it comprised two territories on either side of the expanse of India. It was in this unusual circumstance that Pakistan International was formed in 1955. Despite wars and economical trouble, the carrier survived to grow and prosper. Pakistan International Airlines is the flag carrier airline of Pakistan, based in Karachi. It is the 16th most significant airline in Asia, operating scheduled services to 73 destinations throughout Asia, the Middle East, Europe and THE UNITED STATES, as well as an extensive domestic network linking 24 destinations.

Its main bases are Jinnah International Airport, Karachi, the Allama Iqbal AIRPORT TERMINAL, Lahore and the Islamabad International Airport, Islamabad/Rawalpindi. The airline also offers secondary bases, including Peshawar International Airport, Faisalabad International Airport, Quetta AIRPORT TERMINAL and Multan AIRPORT TERMINAL, that it connects the metropolitan cities with the key bases, the Middle East and china and taiwan. The airline is owned by the federal government of Pakistan (87%) and other shareholders (13%). It has 19, 263 employees (at March 2007).


There are 36 operational airports. Karachi is Pakistan's main airport but significant levels of both domestic and international cargo are also handled at Islamabad and Lahore. Pakistan International Airlines (PIA), the general public sector airline, though facing your competition from a few private airlines, carries approximately 70 percent of domestic passengers and almost equal domestic freight traffic.

The transportation sector accounts for about 10. 5 percent of the country's GDP and 27. 4 percent of Gross Fixed Capital Formation (GFCF) in FY06. It provides over 6 percent of employment in the country and receives 12 to 16 percent of the twelve-monthly Federal Public Sector Development Program (PSDP). Government agencies dominate the sector.

Hierarchy of PIA:

This organization is split 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 business 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.


'To be considered a world class airline exceeding customer expectations through dedicated employees Committed to excellence. '


"As symbolic of National Pride, We Aspire to be a Choice Airline, Operating Profitably on Modern Commercial concepts and Capable of Competing with the very best in the International as well as Domestic markets. "


6. 1). Customer Expectations:

PIA is the most trusted name in the industry. The reason why of its goodwill is according the expectation of the customers that PIA has fulfilled always. By providing competitive tariff, comprehensive care, and convenience with their valued and prospects.

6. 2). Service:

PIA is aimed at providing valuable and unique services to its customers. They are really more personalized and courteous with their customers. The assistance are valuable and rare; this is the reason why customers trust PIA.

28 Nov 2004, Pakistan International Airlines - PIA passed the IATA Operational Safety Audit (IOSA) benchmark for global safety management The IATA Operational Safety Audit (IOSA) is the benchmark for global safety management in airlines

KARACHI, 22 October 2007 - Abacus Pakistan officially launched Abacus Travel Secure with AIG, providing local travel companies and travelers easy and convenient usage of AIG's travel cover policies. Available for the very first time in Pakistan, Abacus Travel Secure brings real-time and immediate activation of travel cover policies to the Pakistan travel industry with a far more streamlined and time saving application process for travel agents

6. 3) Innovation:

PIA currently has lots of 43 fleets and aims at increasing this numbers to 53 by the next couple of years. PIA is adoptive to changes and believe in innovation that's create new ideas and translating these ideas into action.

6. 4) Reliability:

PIA is the most experience airline using its service with more than 53 years. This has built-in PIA is among the most most dependable airline. PIA is known for its loyalty and consistency.

6. 5) Safety:

The most challenging responsibility of any organization is to provide complete satisfaction to its employees and customers together. This satisfaction rewards favorable and easy working conditions.

The in-flight services are customers friendly and the organizational the organizational environment is also employees oriented.

6. 6) Cohesiveness:

PIA has 12 departments working in their own direction and also provides a number of services including speedex courier service, catering etc. The most impressive part is all of these department and services are integrated in a cohesive way.


PIA offers two types of services.

Business Class

Economy Class

Business Class

It's the sole Business Class service that feels like First Class. A comfortable seat makes all the difference on an extended flight. PIA's Business Class Seats elevate the concept of luxury to a fresh level, fully endorsing your final decision to choose PIA Business Class Relax and relax in our exclusive Business Class Lounges at the Karachi, Lahore, and Islamabad airports.

Our hospitable staff will ensure you are well taken care of during your stick with us at the airport Business Class passengers coming to Airport will receive a warm welcome from PIA.

Our representatives will walk you right through all the arrival formalities so that you need not stand in line or worry about clearance.

Economy Class:

PIA's economy class is also comfortable for passenger as Business class. Economy Class offer seats with a 32-inch pitch, adjustable footrests and "winglet" headrests for improved neck comfort. The non-public TV provides on-going entertainment including sound and video on-demand choices.

Passengers benefit from the same caring service from our flight attendants, along with skillfully prepared meals and a variety of in-flight entertainment options to choose from. Free newspapers are also provided to all Economy class passengers.

The PIA in-flight magazine, Hamsafar, is provided to all passengers on all international flights. Humsafar was introduced on PIA flights in 1980 which is published bi-monthly. PIA is providing its service in twenty-five cites of Pakistan domestically that are as follows:




Saidu Sarif




D. I, Khan





D. G. Khan



Rahim Yar Khan











Revenue Composition:

According to the latest report of PIA, 87% of income generates from passengers, 8% of revenue generates from cargo and remaining 5% involves others. Fleet Pakistan International Airlines fleet includes the following aircraft (as of May 2008)

Major Competitors:

PIA is holding the first position in market. It includes 48% market share. Its major opponents are Airblue and Shaheen International Airline. Airblue has market share of 35% while Shaheen International Airline has 17% market share. People feel prestigious to visit with PIA as compare to Airblue and more.

Latest products by PIA nad qulaity achievements:

Boeing-777 operating to middle east

Flight Barcelona

Linking Abu Dhabi and rahim yar khan

Flights from D. I. Khan to Peshawar and Islamabad

Early buy cheaper fly

Bradford- Islamabad Nov stop! Pak & Glasgow

Flight from Multan and D. G khan to Dubai

Lowest business class fare paksitan Dubai

Connecting Multan and Quetta, Islamabad with Chitral and Nawabshah with Hyderabad.

Promoting web ticketing and SMS booking, Ticketing delivery at Door step

9. 1) IATA Operational Safety Audit (IOSA) benchmark:

28 Nov 2004, Pakistan International Airlines - PIA passed the IATA Operational Safety Audit (IOSA) benchmark for global safety management The IATA Operational Safety Audit (IOSA) is the benchmark for global safety management in airlines.

9. 2) E-Ticketing:

KARACHI, 22 October 2007 - Abacus Pakistan officially launched Abacus Travel Secure with AIG, providing local travel agents and travelers easy and convenient access to AIG's travel insurance policies.

Available for the first time in Pakistan, Abacus Travel Secure brings real time and immediate activation of travel insurance policies to the Pakistan travel industry with a far more streamlined and time saving application process for travel agents.

9. 3) 3Star Ranked airline :

SKYTRAX introduced the globe Airline Star Rating programme in 2000 - the Quality Analysis system that ranks airline product and service standards, predicated on professional analysis by airline audit specialists.

To achieve SKYTRAX Approved Airline status, airlines are subjected to an extremely detailed Quality evaluation across all areas with their front-line Product and Service standards by Skytrax - covering every area that passengers will "typically" experience during their trip.

SKYTRAX Approved Airline analysis covers over 750 areas of product and service quality measurement, and it is split across both airport and onboard environments - airport services based around an airline's home base airport.


= Excellent

= Good

= Fair

= Poor

= Very poor



a 3 Star Airline

PIA Pakistan Int'l Passenger Comments

Home Base Airport Ranking = Karachi Airport


Combined Quality of Product / Staff service in airport and onboard environments

Business Class

Premium Economy Class

Economy Class

Airport Services

Check-In service - Business Class

Check-In service - Economy Class

Transfer Services - Business Class

Transfer Services - Economy Class

Arrival Services

Business Class Lounge - product facilities

Business Class Lounge - staff service

Onboard Features

Inflight entertainment can vary greatly according to aircraft type

Cabin Safety Procedures

Inflight Entertainment

Amenities, Blankets, Pillows, Towels etc

Airline Magazine, Newspapers & other mags

Cabin Seat Comfort Seat Guide

Seating can vary greatly according to aircraft type

Business Class - long haul

Business Class - short haul

Premium Economy Class - long haul

Economy Class - long haul

Economy Class - short haul

Onboard Catering

Business Class - long haul

Business Class - short haul

Premium Economy Class - long haul

Economy Class - long haul

Economy Class - short haul

Cabin Staff Service

Business Class - service efficiency

Business Class - staff attitude & friendliness

Premium Economy Class - service efficiency

Premium Economy Class - staff attitude & friendliness

Economy Class - service efficiency

Economy Class - staff attitude & friendliness

Responding to Passenger requests

Cabin existence through flights

Assisting Parents with children

Staff Language Skills




PIA is one of Pakistan's leading airline carriers, with more than 800 daily flights. Around 150, 000 passengers per month fly on PIA, rendering it one of the major operators in the domestic market in terms of passenger kilometers.

PIA's international market share was 43. 5%, Inside the Domestic market, its market share was 69. 4%. On a system-wide basis, PIA's market share was 51. 2% by 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.


PIA has high brand recall. It is identified 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 main ranking in client satisfaction. This strong market position provides company a scale advantage and helps it strengthen its brand image.


PIA has maintained its position as the reduced cost carrier. It has been high grade Pakistani airline to work with the most advanced technology. Factors' contributing involves different series of Boeing and Airbus and a competent, high-utilization and point- to-point route structure.

Flying one kind 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 principal competitive good thing about PIA.


PIA enjoys a strong network in key domestic and international destinations. The business's network includes three the major airports in Pakistan, as well as major airport terminal such as Dubai International Airport. Having a strong network means that PIA can generate traffic feed for both its domestic and international Flights.


PIA operates from its hub in Jinnah International Airport, Karachi. Jinnah International is one of the world's busiest airports in terms of volume of passengers carried. It is also one of the major international gateways to Asia. Additionally it is the key 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.


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 include the c-ticketing system and the next in South Asia to introduce self check in systems at the Jinnah AIRPORT TERMINAL, Karachi.



The Basic flaw of the organization is its consolidation that is centralized system. The key policies, strategies and set of laws are designed by the top management. The centralized system is one of the primary obstacles of long-term success of PIA. PIA centralizes structure lead to barrel between different level of management, decreased motivation, hard access to information.


Passenger revenues accounted for 87 percent of the PIA's total revenue in 2007. Cargo services allow airlines to create additional revenues from existing passenger flights. Furthermore, cargo revenues are usually counter cyclical to passenger revenues and have lower demand elasticity than passenger business, that allows airlines to pass on fuel price hikes to customers.


PIA has a substantial amount of 42 billion debts. Current and future debts would have important consequences for stakeholders of the business. For instance, debt could impair PIA ability to make investments and acquire additional financing for working capital, capital expenditures, acquisitions or general corporate or other purposes. Debts could also put PIA at a competitive disadvantage to competitors that contain lesser debt and could also improve the company's vulnerability to interest increases.


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 round the world went bankrupt due to rising oil prices. Airlines need to hedge from this risk by taking proper measures.



PIA is getting 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.


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 main criterion for passengers when selecting a flight, well prior to the option of a non-stop service.


PIA's frequent flyer and loyalty programs can make 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 allows the airline to retain customers and keep your charges down, as it generally does not have to invest money targeting new customers to replace those lost to other airlines.


The needs of air passengers are increasingly changing, because they are becoming a lot more price sensitive. If PIA succeeds in making its prices more competitive, then your company can gain significant market share.


Market analysts assume that the global airline industry will experience an upturn in fortunes over the next few years. This represents an opportunity for PIA, as it might generate increased revenues and command market share if it capitalizes on increases popular.



The past few years have observed State Bank of Pakistan impose high as well as low interest rates to check on inflation and the over heating of Pakistani economy. Inflation in Pakistan could see another raise in the short-term.


There had been five accidents with PIA listed as below:

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.

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.

Pakistan International Airlines Flight 268 was an Airbus A300B4-203, registration AP-BCP, which crashed on method of Kathmandu's Tribhuvan AIRPORT TERMINAL on September 28, 1992. All 167 up to speed were killed.

PIA Flight 554 is the flight volume 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.

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 up to speed were killed. PIA must consistently ensure utmost security and safety of its passengers.

Accidents can adversely affect customer confidence in PIA and lead to declined revenues intensifying competition.


PIA is now competing against carriers such as Airblue and Shaheen Airline. PIA remains Airblue's strongest competitor due to huge market it has gained as time passes, strong brand image and customer loyalty.

PIA has started new low-fares subsidiary "PIA Express" to avoid 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 opponents in terms of increasing capacity, matching prices and leveraging their frequent flier programs. Increasing competition could adversely affect the company's margins.


Fluctuating foreign currency exchange rates can have a substantial effect on PIA's earnings. For instance, as PIA is providing its services to the united kingdom. Negative or results arise from exchange rate movements as change in expenses.

Strengthening of foreign currencies contrary to the British Pound will positively impact PIA and vice versa.


A volume of factors have caused the existing decline in the airline industry. For instance, the risk 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 risk of terrorism may discourage folks from traveling by air and could especially decrease the number of passengers traveling on international flights.


The macro-environment includes all factors influencing a firm that are not within its control. Included in these are political, social, monetary and technological factors. They are known as PEST factors.

A technique of analysis of the macro environment is PEST analysis. Environmental analysis should be continuous arid precede all aspects of planning. Since the airline industry is very much influenced by changes taking place in the environment and has undergone rapid and dramatic changes over the last decade, this analysis is especially very important to PIA.


Political factors will have a great influence along the way businesses operate in the airline industry and the spending power of customers. In recent years it has been observed that government played a dynamic role in increasing competition in the airline industry. Several new airlines such as AirBlue and JS Air have been awarded licenses to enter the domestic market.

Pakistan has achieved some political stability lately. In case the management of PIA believes that today's government will perform well (consistently), then there will be more investment in the form of purchase of new airplanes and latest technology. The total industry will grow leading to more luxurious and comfortable flights. With all the military takeover government policies have become more liberal.


Currently, Airlines industry has three major players: Pakistan International Airlines, an Airblue, Aero Asia and Shaheen Airlines. Their marketplace includes domestic travelers as well as Pakistanis living abroad particularly in the UK and USA. These countries have strong economies coupled with high purchasing power. Customers' purchase behavior depends very much on prices of the competing airlines as well as services offered. As inflation rate is unstable in Pakistan, spending power of consumers has effected in the long run. In fact growth in Pakistani economy has resulted in a rise in spending power and has positively impacted the airline industry.

Economically, the new millennium has been highly volatile; the September 11 attacks revolutionized depends upon. Consequently, there is a global depression in the North America, SOUTH USA, Australia and Europe. However, in Asia especially Pakistan the effect for a while was otherwise. The economy started to boom because of greater remittances from abroad and whole sum immigration by expatriates. As a result, demand for flights in South Asia rose.

Economic conditions of Pakistan are however improving. PIA has cost a advantage over its opponents due to its newly acquired, improved, long distance aircrafts from Boeing' which give longer range and better fuel economy than another jet currently produced. This cost advantage is a barrier to entry for new firms. However, this cost advantage will never be significant on domestic routes.


The social arid cultural influences on business change from country to country. The social structure of Pakistan is closely tied. The trend is currently changing as the general public is educated and is also pursuing professional goals. Customers are usually more aware of market conditions and available choices and need to get best value for their money.

They spend considerable time and money on entertainment hence increasing the need of in-flight entertainment systems. Also, person to person has a substantial impact in the use of airline services.

Hajj attracts a wide array of customers. The social environment of Pakistan is turning liberal with the new regime. The initiative to automate check-in and ticket booking process is probably not extremely popular with the general public (even educated population) is still technology averse.

E-ticketing may also face significant challenges as consumers are generally reluctant to provide their bank cards information over the telephone and the internet. The consumers, however, have a warm reaction to the chance of less expensive but quality service flights.


Technology is vital for competitive advantage which is a major driver of the airlines industry. Major technological changes are occurring in the airlines industry with innovations in the reservations and booking systems. In-flight entertainment systems and auto check in counters are two examples of such innovations. Internet plays a key role in e-ticketing as consumer can certainly reserve tickets or check the status of the flight.

A key issue would be the extent, to which technological advancements (such as Internet) impact distribution and cost synergies from industry consolidation, can offset upward pressures on costs. PIA has always led the path of technological innovations by introducing new technologies before its competition such as its auto check-in counters which has helped it gain market share. It was the first airline in Pakistan to install Sabre system followed by the market leader.



PIA should decentralize its structure that could lead to the simple management, increased motivation, quick access to information and resolution of the conflicts (as they might be resolved by the immediate manger time span would then reduced). Since employees' issues regarding their behavior would lessen, so it would eventually lead to more satisfied employees that would result in increased productivity of the organization.

Strategic Business Unit:

PIA should make its different departments into Strategic Business Unit. Every SBU should have a precise business strategy and a manager with sales and profit responsibility.

As PIA is a large organization, so that it must be convert into SBUs. Different facets should be determined for the success of SBUs which as follows. The degree of autonomy given to each SBU manager. The degree to which an SBU shares functional programs and facilities with other SBU's

The manner in which the organization evaluates and rewards the performance of its SBU managers

Transparent policy adoption:

PIA should adopt transparent policy that employees should be promoted on merit basis. And Chairman of PIA should be appointed from with in the business. Union should support it, it'll motivate the employees and PIA will grow in profit.

PIA should not induct new employees till enough time they are simply needed based on my personal observation at Rawalpindi station I have seen that a task that can be performed by person PIA had 3 employees for the. PIA should give bonus to the industrious and competent employees.

Employee Empowerment:

PIA should make efforts towards empowering the employees that is going to lead to more employee participation in your choice making process and also bring about more employee satisfaction and increased motivation. Aside from this, employees would feel more independent to go over the problems explicitly without hesitation.

This would also enhance team work process at PIA as quality team and cross-functional teams. The employees will continue to work with more commitment and dedication and every employee works to his/her fullest due to increased motivation.

However, with empowerment comes accountability, so it is suggested that while they empower their employees, there should also be a "controlled check'' on them to ensue the right use of power delegated to every employees of their circumscribed limits.

Overhead Costs:

PIA also needs to reduce its overhead costs that are it should mange its resources: labor more effectively, so that with less input, more out put may be accomplished and the saved resources can be employed in the areas such as introducing more training courses for the employees so that the quality of the workforce could be increased.

Hiring the services of expertise can enhance the efficiency of the services, so by saving the overhead costs, they can utilize that money for the expertise services. So by analyzing the many segments of the organization and making the right corrections, it can substantially increase the standards of Organizational behavior.

Marketing policy:

PIA should adopt good marketing policies so that it will bring higher profit and maximum utilization of its available resources, Business sector should be drawn to operate at full potential.

Two-Way Communication:

The ideas of the employees can be very effective in enhancing the operations, because they are the ones who manage them. Therefore, a top-down approach should be replaced with two-way communications. In this way, the employees would feel motivated and valued, as they would be included in decision-making

Total Quality Management:

Total quality management should be catered to within the task groups and implementation of various skill enhancement programs for quality and productivity improvements such as Six Sigma should be provided to its executive employees.

Other advice are as follow:

PIA should upgrade its fleet as it's leading to the airline higher operating cost and PIA is incurring loss. PIA should purchase new Airplane with twin engines these will certainly reduce the operating cost of PIA Airline should concentrate on the customer's satisfaction, refund process should be quick so that customer remains loyal to brand.

There should be control on the increase of fares, as mediocre are in majority in Pakistan, and it is highly difficult for to even think about the air traveling. Management should think over it with least they can begin a new packaged flight twice a week having 50% fares. Unnecessary facilities provided to the Government Department shouldn't be discouraged but with drawn as it causes financial losses. Management should concentrate on computerized system up gradation and implementation. Management should hire the services of specialized IT personnel for his or her system development and up gradation on time.

There should be clear and even distribution of work in support of qualified person should be appointed on jobs. There should be improved service standards and which should give attention to quality. PIA should offer its services of reservation and seat confirmation with by SMS and flight confirmation message also needs to be sent via SMS to the passenger.

PIA should give more incentives to its frequent flyer as it'll generate more brand loyalty giving better incentives to the customers.

Comparison of PIA with Different Airlines

After conducting the study in the Preston University, EMBA students have rated the different airlines in the following manner.

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