PIA Privatization Efforts Continue Amid Challenges and Debt Relief Plans

Discussions surrounding the privatization of Pakistan International Airlines (PIA), a major burden on the national economy, have been ongoing since 2014, yet the process has not been completed. In an effort to reduce the airline’s debt, the government recently transferred over 80% of PIA’s liabilities to another company and formed a separate entity, PIA-CPL, reducing the debt load on the national carrier.

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

Federal Minister for Privatization, Abdul Aleem Khan, cited various reasons for the delay, primarily a lack of cooperation from the Federal Board of Revenue (FBR). He revealed that a request was made to the FBR to waive the 18% GST on aircraft leasing, but the FBR did not show any flexibility.

Despite the challenges, PIA achieved a major milestone at the start of this year with the restoration of European routes. The airline’s first flight to Europe arrived in Paris on January 10. Additionally, the UK Department for Transport and Pakistani Civil Aviation authorities are conducting an audit of measures taken by PIA and other Pakistani airlines to resume flights. It is expected that the British routes, including those to London, Birmingham, and Manchester, will be revived, which are crucial for Pakistan’s foreign exchange earnings.

In a further boost, PIA and other airlines have been granted tax exemptions for the purchase of new aircraft. According to the Privatization Commission Secretary, airlines will receive a tax break of up to Rs 60-70 billion for new fleet acquisitions. PIA will also need to purchase 15-20 new aircraft. Moreover, PIA’s negative equity has been addressed, and the government will settle dues for 16,000 pensioners. The airline still owes Rs 26 billion to the FBR and Rs 10 billion to the Civil Aviation Authority.

The Secretary of the Privatization Commission emphasized that privatizing PIA remains a top priority for the government. An Expression of Interest for potential buyers will be issued later this month. However, currently, major airlines like Etihad and Qatar Airways are not showing interest in PIA’s privatization.