PIA Privatization Delayed Despite Efforts and Positive Developments

The discussion around the privatization of Pakistan International Airlines (PIA), which has become a significant burden on the country’s economy, has been ongoing since 2014, but the process has yet to be completed.

In a bid to alleviate the financial burden, the government transferred over 80% of PIA’s debt to another company, creating a separate entity named PIA-CL. This move helped eliminate PIA’s negative equity. Additionally, European routes were restored, and a decision was made to provide sales tax exemptions for the purchase of new aircraft for PIA and other airlines. However, despite these steps, the privatization process has not been finalized.

**Privatization Efforts Underway, Sources Report**

According to sources from the Privatization Commission, three groups—Arif Habib Group, YB Holdings, and another unnamed group—have expressed interest in purchasing PIA. These groups have had significant meetings with the Privatization Commission and are demanding that the government settle the outstanding dues of billions of rupees owed to the FBR, PSO, and Civil Aviation.

Sources also revealed that the International Monetary Fund (IMF) has set a target for the government to complete PIA’s privatization by July 2025. The government is taking various steps to expedite the process.

**Minister Abdul Aleem Khan’s Statements**

Before his portfolio was changed, Federal Minister Abdul Aleem Khan stated on March 7 that the entire privatization process of PIA would be completed within the next three months. He also mentioned that changes had been made in PIA to address the concerns of interested parties. Khan highlighted that the restoration of European routes had made PIA profitable again, creating a favorable environment for privatization. He also announced that flights to the UK would begin soon, with plans to extend services to the US and Far East.

**Delays in Privatization Process: Economic Expert’s View**

Economic expert Shahbaz Rana, speaking to V News, stated that several factors are currently hindering the privatization of PIA. Former Minister for Privatization Abdul Aleem Khan had publicly mentioned that despite a payment of Rs. 2 billion to consultants hired for privatization, their performance had been unsatisfactory. Rana suggested that a new consultant might be appointed, which could delay the privatization process further.

**PIA’s Strengthened Position for Future Privatization**

Senior journalist Tariq Abul Hassan, who covers Civil Aviation, stated that under the leadership of CEO Amir Hayat, PIA’s administrative issues were significant, and many aircraft had been grounded due to lack of spare parts. However, he noted that now PIA is a much stronger institution compared to the past. If the privatization bidding process takes place now, it is expected that a much better bid would be offered.

**Privatization Bid and Previous Setbacks**

A bid for PIA’s privatization was held on October 31 last year. However, only one company showed interest, bidding just Rs. 10 billion, far below the reserve price of Rs. 85.3 billion. As a result, the Privatization Commission rejected the bid, and the privatization process remains incomplete.

**Recent Achievements and Tax Exemptions**

At the beginning of this year, PIA achieved a significant milestone with the restoration of its European routes, with its first flight to Paris landing on January 10. Additionally, a decision was made to provide sales tax exemptions for the purchase of new aircraft by PIA and other airlines. According to the Secretary of the Privatization Commission, airlines will receive tax exemptions worth Rs. 60-70 billion for acquiring new aircraft.

**Clearing Liabilities and Future Steps**

The government has also cleared PIA’s negative equity, and the dues of 16,000 pensioners will be paid by the government. PIA still owes Rs. 26 billion to the FBR and Rs. 10 billion to Civil Aviation, but steps are being taken to resolve these issues as part of the privatization process.