KARACHI: Five new airlines are expected to venture into Pakistan’s aviation industry in the next one year in the latest sign of intensifying competition in the backdrop of an open skies policy, which may bring down passenger fares, but will pose fresh challenges to the financially struggling Pakistan International Airlines (PIA).

Askari Air, Air Siyal, Go Green, Liberty Air and Afeef Zara Airways are going to enter Pakistan’s air space in a bid to take a slice of the growing air travel market.

“Air traffic of the country has swelled 40 per cent over the past five years to 20 million passengers,” Standard Chartered Pakistan Chief Executive Officer Shahzad Dada said at the recent launch of the Emirates Standard Chartered Credit Card.

The current rate of growth in Pakistan’s aviation industry is expected to be around 9 per cent per annum which could continue till 2020, according to a forecast of the International Air Transport Association (IATA) a trade body of world’s airlines.

“These numbers tell us the open skies policy has proved favourable for the country and its people,” remarked Muhammad Afsar Malik, former additional director of the Civil Aviation Authority (CAA), who was believed to have played a key role in framing the National Aviation Policy 2015.

Most of the upcoming carriers will target low-profit, far-off destinations like Gwadar, Turbat, Panjgur, Khuzdar, Dalbandin, Zhob, Rawalakot, Skardu, Chitral, Gilgit, Bannu, Parachinar and Muzaffarabad.

Of these, Gwadar, Gilgit-Baltistan and Turbat could generate immediate profits because of their tourism potential and work on China-Pakistan Economic Corridor (CPEC) projects.

New carriers

For these remote regions, the new carriers will bring airplanes suitable for small airports. National flag carrier PIA has thus far taken advantage of these routes as it is the only player catering to air travel needs of these areas.

PIA, which once helped Emirates airline of the UAE by giving two aircraft with crew, is now beset with financial trouble with losses going beyond Rs300 billion.

According to Malik, Pakistan’s domestic air traffic has grown 10 per cent, which is six percentage points higher than the 4 per cent expansion in international air traffic.

Although Pakistan’s market size is increasing, the share of domestic airlines is contracting.

They carried 42 per cent of the passengers in financial year 2016-17 as opposed to the 58 per cent flown by international airlines. “Airlines are in the race to attract customers through fare reduction; had the market not been free, the air ticket you got for Rs10,000 would have cost around Rs30,000,” said Malik. “Competition is good for public service.”

However, PIA does not seem to be buying the idea.

“Private airlines, especially foreign carriers, have mainly resorted to price cuts, instead of going more towards customer satisfaction in terms of comfort and improved services,” commented PIA spokesperson in an email response to a query.

Separately, a Shaheen Air spokesman said in an email “about every player in the aviation chain including airports, plane manufacturers, jet engine makers, travel agents and service companies turn in healthy profits.

Yet, it is one of the enduring ironies that companies that actually move passengers from one place to another, which are a crucial link in the chain, struggle to achieve break even.”

He suggested that the government should revisit its open skies policy as foreign carriers could enter Pakistan’s market without any restriction.

“Authorities should devise a new concept called a fair skies policy whereby local carriers along with foreign ones have a fair share in the market,” he said.

Internews