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Kashif Sanaullah15-10734Salman Akhlaq Ahmed15-10703Abdul Rehman Amin15-10702Muhammad Asadullah Khan15-10135

Pakistan International Airline

OverviewIntroductionOrganizational StructureCurrent PictureSWOTStatisticNew Investment ProjectReference

Vision

To be world class airline Exceeding customer expectation through dedicated employees committed to excellence.

MissionEmployee teams will contribute towards making PIA a global airline of choice through:Offering quality customer services and innovative productsUsing state-of-the-art technologiesEnsuring cost-effective measures in procurement and operationsDeveloping Safety Culture

Orient AirwaysMuhammad Ali Jinnah requested Mirza Ahamd Isphani and Adamjee Haji Dawood to build airline for Pakistan.

Orient Airways was registered in Calcutta. The airline bought three DC-3 airplanes.

The planned route for Orient Airways was Calcutta-Rangoon-Akyab

In 1946 Muhammad Ali Jinnah requested financial help from Mirza Ahamd Isphani and Adamjee Haji Dawood to build a flag barrier airline for Pakistan23rd October, 1946 Orient Airways was registered in Calcutta.

In February 1947, the airline bought three DC-3 airplanes from a company in Texas and obtained a license to fly in May of the same year.Operations started in JuneOrient Airways was a privately owned company, with limited capital and resources. It could not be expected to grow and expand independently.5

Birth of PIAGovernment of Pakistan decided to form a state-owned airline. In 1955, PIA started first international service route to London, via Cairo and Rome.

In 1959, the Government of Pakistan appointed Air Commodore Nur Khan as the Managing Director of PIA.

January 10, 1955, Government of Pakistan decided to form a state-owned airline and invited Orient Airways to merge with it 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.

In 1959, the Government of Pakistan appointed Air Commodore Nur Khan as the Managing Director of PIA. With his visionary leadership, PIA 'took off' and within a short span of 6 years, gained the stature and status of one of the world's frontline carriers. In aviation circles, this period has often been referred to as the "golden years of PIA".6

MilestonesFirst Boeing 707 jet service on the London-Karachi-Dacca.

In 1961, initiated a Cross-Atlantic service from Karachi to New York.

PIA set the record for the fastest flight between London and Karachi.

PIA's first service to China was from Karachi to Shanghai via Canton.

In March 1960, PIA launched its first Boeing 707 jet service on the London-Karachi-Dacca, route which later proved to be very successful. This trail-blazing accomplishment resulted in PIA becoming the first Asian Airline to operate a jet aircraft, setting trends for the future.

In 1961, the airline took on the mammoth task of initiating a cross-Atlantic service from Karachi to New York.

Boeing 720s flown by Captain Abdullah Baig flying from London to Karachi established a world record for the Speed over a commercial airline service for powered landplanes of 938.78km/h PIA completed the flight in 6 hours, 43 minutes, 51 seconds, a record which remains unbroken to this day.

In 1964, PIA achieved another historic first, regarded as a major milestones in the chequered history of the airline. On 29th April, 1964, with a Boeing 720B, PIA earned the distinction of becoming the first airline from a non-communist country to fly into the Peoples Republic of China. PIA's first service to China was from Karachi to Shanghai via Canton7

Style, Glamour and CharismaIn 1966, introduction of a new air-hostesses' uniform designed by Pierre Cardin.

Installed Pakistan's first computer, an IBM1401, in 1967.

Set up flight kitchen in Karachi which caters PIA as well as other carriers.

Later in 1975, Sir Hardy Amies, designed new uniforms.

Most technologically advanced airline of its time.

In 1975, PIA introduced new uniforms for air hostesses which were chosen through an open competition, with the winning entry designed by Sir Hardy Amies, the designer of Her Majesty Queen Elizabeth II

In 1970, PIA set up its own Flight Kitchen in Karachi, which caters, even today, to the national airline as well as other carriers.8

Organizational Structure of PIA

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Current PicturePIA serves 30 domestic and 36 international destinations in 28 countries.

The average ratio of staff should not exceed 100 per aircraft while PIA has more than 400 employees per aircraft.

PIA has around 19,418 employees as of 2014.

AcrossAsia,EuropeandNorth America from its home bases ofKarachi, Lahore, Islamabad and Peshawar.

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Current PictureFirst Quarter 2014 - Revenue 28 Billion First Quarter 2013 - Revenue 25 BillionPIA has 34 planesOnly 24 are operational

http://www.dawn.com/news/1121292/flag-carrier-running-on-only-19-planes-pia-chairman11

PIAs FleetPIAs FleetAircraftsQuantityATR 42-5006ATR 72-5001AIRBUS A310-3009AIRBUS A320-2003BOEING 747-3001BOEING 777-200ER4BOEING 777-200LR2BOEING 777-300 ER3

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Domestic RoutesGilgitLahoreDalbandinChitralFaislabadSukkarSkarduZhobPanjgorSaidu SarifMultanJacoabadIslamabadD.G.KhanTurbatPeshawarQuettaMoenjodaroSialkotBahawalpurGawadarD.I.KhanRahim Yar KhanKarachi

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International Routes

BeijingTokyoMumbaiDelhiDhakaKabulKashgarKaula lumpurBirminghamCopenhagenLondonManchesterMilanOsloParisAbu DhabiBahrainDammamDohaJeddahDubaiKuwaitMadinahMuscat RiyadhSharjahNew YorkToronto

PIAs OfferingsPIA Business Plus ClassPIA CargoPIA SpeedexBaggage Track ServiceGlobal Special DealsHoliday DealsSenior Citizen DiscountsStudent Discounts

PIAs Business Plus class offers a range of exclusive services, from the time you leave your home till you land at your destination.PIA Cargo commenced operations in 1974, with flights to the USA, Europe, and Hong Kong on the B-707 aircraft. PIA Cargo has the unique distinction of introducing Pakistan's fruits to international markets and pioneered the exports of fresh fruits and vegetables to global destinations.In the 1970s, Pakistan International Airlines pioneered the express delivery of shipments across Pakistan. The Air Express service delivered documents and parcels from one airport to another, ushering in the dawn of the courier industry in Pakistan.PIA also offers Baggage Track Service to its customers.PIA has established connection with the worldwide computerized baggage tracing system, that will help customers to know the status of their delayed bag and, as needed, modify the delivery and contact information.PIA also offers Global Special Deals and holiday deals of different International routes for its customers.PIA also offers Senior Citizen (65 Years and above) discounts on International flights.PIA also offers Student Discounts on International flights.

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Code Sharing AgreementPIA has 4 Code Sharing AgreementsTurkish Airlines (June 2006)AeroSvit Airlines (November 2006)Thai Airways (March 2007)China Southern Airlines (March 2007)

Code Sharing Agreement, is an aviation business arrangement where two airlines share the same flight on specific routes. A seat can be purchased on one airline but is actually operated by a cooperating airline under a different flight number or code.This type of agreement, widespread in the air transport industry, allows carriers to expand their networks, optimizing the use of resources and fleets while giving their customersmore destinations, more flightsandmore convenient schedules16

PIA SubsidiariesScribe Hotel in ParisRoosevelt Hotel in New YorkIncrease in revenue of $ 3 millionProfit after tax increased by 9.6 %Skyroom Limited in KarachiRevenue has increased by 10.6%

PIA Investment Limited operates Scribe Hotel in Paris and Roosevelt Hotel in New York along with other prestigious subsidiaries. PIA Investment Limited continued profitability trend showing an increase in revenue of US$ 3 million while profit after tax increased by 9.6 % during the financial year

Skyroom Limited (Airport Hotel) located next to PIA Head Office in Karachi provides its services mainly to the transit passengers of PIA. Revenue has increased by 10.6% which has been offset by similar increase in cost and other income.17

SWOT ANALYSIS

StrengthsLeading market position.Brand recognition.Network presence.Hub airport at Karachi.Effective use of technologyElectronic ticketing by web.

Weaknesses Formulation of Government rules.Old fleetPoor quality foodHigh dependence on passenger revenues.DebtReliance on oil pricesHuge burden of employees

Old aging fleet of PIA causing higher operating cost. Huge burden of Employees which cause financial burden20

OpportunitiesHaving the maximum route and fleet.Growing demand for low cost airlines.Customer loyalty.Huge market in middle East.Large domestic network

PIA has huge potential market in Middle East if PIA upgrades its fleet. PIA has largest domestic network and by proper route planning PIA can generate huge amount of Revenue with higher profit.

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ThreatsAccidentsStrong competitionDecline in airline industryTerrorismPolitical instability and law and order situation

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STATISTICS

Profit/Loss History

From the above figure we can clearly see the performance of PIA, in the starting years it has generated some profit or we can say a minimal profit, but if we see specially after 2002 and 2003 till 2010 PIA has drowned into the sea of loss,, PIA is even not able to generate its own operating expenses so this one is the Crucial situation that PIA is facing from last few years. We all know how much senior airline PIA is and how bright past it had and it was one of the favorite airline of people, but unfortunately PIA wasnt able to sustain its brightness and because of many reasons now people are avoiding to travel on PIA which in result has decreased the PIAs market share specially on international routes, The factors which are affecting PIA and leading it towards the side of loss are many, one of the major factor is increasing fuel prices, the fuel prices are increasing day by day which are causing loss to PIA specially when it gets fuel from foreign suppliers then PIA has to pay in Dollars while it gets the amount of ticket purchased by the people in rupees so the gap of currency exchange is again loss to PIA. The condition of most of the planes of PIA is not so good which demands in repeated maintenance which again is loss to PIA and due to the worst condition most of the time the planes of PIA are grounded and because of the flights get delayed or cancelled which results in trouble to the passengers and then next time when they avoid travelling from PIA and choose any other airline to travel and in this way PIA continuously looses its passengers

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Cost Composition

The above graph shows that the major cost of PIA is its fuel and one thing which is always criticized about PIA is that it is over employed means huge number of people are employed and the salaries of those employees are causing loss to PIA

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Breakdown of Revenue

The above graph shows that major source of earning of PIA is passengers movement, while the other departments which are mentioned in the graph are capable of generating more revenue but irresponsible behavior of employees and corruption has shortened their revenue an senior administration could increase the revenue generation of these departments and that increased revenue from all the departments could help PIA in decreasing its losses. The graph shows that only 5% of the revenue was generated from the cargo service which could have been much more because PIA and its cargo department is capable of generating more revenue but they were not able to generate because of many reasons, eg: Planes conditions, Competition, High Charges, Low Orders26

Capacity and Utilization of Cargo

The graph clearly shows the capacity and the utilization of cargo service, the capacity is higher and the utilization is lower which has resulted in low revenue generation which means loss to PIA, so the management must try to utilize more of its capacity to earn more revenue.

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Market Share of PIA

The above graph shows that PIA has 31% of market share in Pakistan on international routes, while remaining 69% is divided in other foreign/local private airlines, means PIA is available but still international airlines specially of gulf countries are coming and picking a major number of passengers from Pakistan and taking them to other countries even where PIA flies which is a serious concern for PIA.

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Yearly Flight Departures

The Corporation registered a decline in total revenue by 14.6% as compared to the last year. Passenger revenue decreased by 15.4% mainly because of reduced available capacity. The decrease in revenue was observed in Passenger, Cargo and Charter revenues. Moreover, passport, visa issues negatively impacted the Umra revenue by 36%. Key factors attributing to the significant losses included shortage of operational aircraft as the average available number of aircraft decreased to 24 during year 2013 (year 2012: 30 aircraft), high operational costs due to increase in landing, handling and navigation charges across the network.

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Annual Report 2013ParticularsYear Ended December 3120132012(PKR in Millions)Turnover-Net95,771112,130Operating Cost and Expenses(121,421)(127,233)Other Income1,6643,405Exchange Loss(6,407)(6,697)Financial Costs(12,588)(11,381)Loss Before Tax(42,981)(29,776)Taxation(1,550)(810)Loss after tax(44,531)(30,586)

2013 Many of the airplanes were expired therefore there was a loss in revenue30

Operating Expense RatioYears Ratio2013124.40%2012115.44%2011115.38%201099.33%2009104.29%

Expense over Revenue Ratio31

PIA EXLahore Toronto (non stop) 14 hrsLahore - Dubai (non stop) 3hrs 25 minWet lease airplanes from Qatar Airways.Boeing 737-800 (180 Seater)

Bring 60s PIA BackIn Flight Entertainment Activities Trivial Quizzes KaraokeWi-FiSeat - Seat Chat.Business ClassPick and Drop services for business class within city.Personalized Meals for Business Class.Yves Saint Laurent designed air hostesses uniforms.

Total Cost of ProjectUnit cost(PKR)Wet Lease36 million272 millionAircraft accessories 10 million10 millionPersonalized meals30 million30 millionTransportation10 million200 millionMiscellaneous100 million100 millionConsultant fees100 million100 million Fuel 1.301 billionTotal1.823 billion

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Investment RequiredInvestment RequiredUnitsTotal CostWet Lease272 MillionTransportation30/City200 MillionConsultant fees100 MillionMiscellaneous100 MillionTotal472 Million

RevenueRevenueAmount (PKR)Lahore to DubaiSale of Tickets (Economy Class) @ 30,000655,200,000Sale of Tickets (Business Class) @ 65,0001,411,200,000Lahore to TorontoSale of Tickets (Economy Class) @ 100,0001,344,000,000Sale of Tickets (Business Class) @ 195,000561,600,000Total3,972,000,000

Need For This ProjectOver StaffingIn Loss Since 1996Old FleetPoor ManagementPolitical InterferenceVery Low Customer SatisfactionFlight DelaysUnderinvestmentCorruption

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Referenceshttp://www.piac.com.pk/pia_about/profiles/2013/PIA-Annual-Report-2013-27052014.pdfhttp://www.piac.com.pk/http://www.historyofpia.com/forums/http://www.pprune.org/airlines-airports-routes/476628-wet-lease-cost.htmlhttp://www.hifly.aero/en/wet-leasinghttp://www.dawn.com/news/1135512/pia-acquires-two-boeing-aircraft-through-wet-lease-program

Referenceshttp://www.dawn.com/news/1135512/pia-acquires-two-boeing-aircraft-through-wet-lease-programhttp://www.dawn.com/news/1137739/pia-gets-two-aircraft-on-wet-leasehttp://www.dawn.com/news/1121292/flag-carrier-running-on-only-19-planes-pia-chairmanIdeas from Dr. Bashir KhanAli Sajjad Civil Aviation, Pre-Flight DepartmentNaveed Ahmed Khan - Civil Aviation, Air Traffic Control Officer

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