PIA Revenue Falls in First Six Months of 2016

[Abbas Ali]

Today, PIA officials informed senate standing committee:

21 percent decrease in revenue of PIA observed during six month period from January to June 2016. Low fuel prices and tough competition with other airlines given as reasons for decreased PIA revenue.

PIA operating flights to 49 destinations including 27 international and 22 domestic. It had a market share of 24 percent in international and 47 percent in domestic air travel market during 2015. For 2016, market share projected at 27 percent for international and 68 percent for domestic air travel.

PIA fleet consists of 38 aircraft including six ATR 42s, five ATR 72s, eleven Airbus A320s, five Airbus A310s and eleven Boeing 777s. PIA permanent employees are 14,317 and employees to per aircraft ratio is 376.

Source: http://www.brecorder.com/pakistan/indus ... venue.html

Abbas

[Sherry3002]

The International share in the market for PIA in 2012-13 was 39%, and in 2014-2015 was 28.16%, why is it falling? With flights doing pretty well factor wise, I should have expected a higher revenue. Nonetheless, a good climb from 46% to 65% in the domestic sector. I suppose Shaheen's failing aircraft and bad image is helping PIA grow domestically.

[AN]

if you reduce the number of seats available, by using smaller aircraft, even if you fill the aeroplanes, youre still going to lose revenue. Its quite obvious. PIA has gone from a fleet of 12 A310, 9 777s, 6 747s 7 737s, to a fleet of NO 747s 3 A310s and has only gained a couple of 777s and A320s.
Its just common sense that if you shrink the number of seats available, you will shrink the revenue.

[Sherry3002]

^ All due respect, PIA'S 747s weren't exactly full. They carried around 200+ or so pax, and the 777 is serving that purpose.
Although I agree that PIA needs something the size of an A310, flights to Dubai and other such destinations are overbooked because of the small aircraft. A 787 would do the job beautifully.

[Amaad Lone]

With oil prices at such low levels the efficient airlines will cut fares.

If PIA revenue fell in the first six months the other important statistic is by how much did the costs fell.

[ammad]

This is kind of expected, many of the Airlines are not doing good due to slower travelling demand, weak economic situation in many countries. Also, increase competition is one of the other reason as well.

But what most important is that PIA able to acquire some good number of planes versus what she had in 2013.

I can't forget the PIA situation in 2013 when only 18 Aircraft was operational and AP-BID, yes AP-BID was cannibalized to keep flying other 777 in the fleet. Certainly situation is better now but not up to the mark though.

[Amaad Lone]

In the last ten years PIA has shut down maybe 25 stations all in the name of cutting losses.

While PIA cut revenue generation it did not cut the excess staff resulting in a drop in revenue and no drop in fixed costs so increasing the losses.

While airlines like Emirates, Qatar, Etihad and Turkish took away our share of the European and American network while Shaheen grew in one year 42 percent while the passenger growth rate in Pakistan was 3 percent.

How PIA plans to win back its passengers I have no clue.

But inducting expensive planes on wet lease might not be a good idea.

If PIA gets eight 787s, where will it fly them???????????????????????????????????????????????????????????????/

[Sherry3002]

^To Dubai, Beijing, Milan, Tokyo, Paris sometimes and other new destinations!

[dreamliner99]

They will be used to most European destinations, apart from the UK PIA can't fill the 777's on the other European routes, thus, the 787's would be perfect for them. This will free up the 777's to be used on routes to Kuala Lumpar, Beijing, Tokyo and the Middle East.

[Amaad Lone]

What routes to Europe there are only four weekly flights two to Copenhagen and Oslo and two to Paris via Milan.

Istanbul, Athens, Rome, Barcelona, Frankfurt Amsterdam and Zurich all cut due to losses.

while PIA was shrinking other airlines were expanding and now I dont think PIA will be able to win back the passengers with its twice a week service to different cities around the world.

[Sherry3002]

What routes to Europe there are only four weekly flights two to Copenhagen and Oslo and two to Paris via Milan.

Istanbul, Athens, Rome, Barcelona, Frankfurt Amsterdam and Zurich all cut due to losses.

while PIA was shrinking other airlines were expanding and now I dont think PIA will be able to win back the passengers with its twice a week service to different cities around the world.

The 787s can be used on the following routes:

1. ISB-CPH-OSL-ISB (1x Weekly)
2. LHE-OSL-CPH-LHE (1x Weekly)
3. ISB-MXP-CDG-ISB (1x Weekly)
4. ISB-CDG-MXP-ISB (1x Weekly)
5. LHE-MXP-CDG-LHE (1x Weekly)
= 5x Weekly flights to Europe.

And also:

1. ISB-DXB (2x Daily)
2. LHE-DXB (1x Daily)
= 3x Daily flights to UAE.

Furthermore:

1. KHI-KUL-KHI (1x Weekly)
2. LHE-KUL-LHE (3x Weekly)
3. PEW-KUL-PEW (2x Weekly)
4. LHE-ISB-PEK-NRT-PEK-ISB-LHE (2x Weekly)
5. KHI-ISB-PEK-NRT-PEK-ISB-KHI (1x Weekly)
= 9x Weekly flights to Far East.

That totals to 14x Weekly flights and 3x Daily flights, ie - around 5x Daily flights for the 787 all around the world. I'm sorry, what more do you want? Aren't 5x Daily flights around the world enough?

[AN]

sherry3002 the 747s were utilized strategically on high density routes, ME and occasionally other routes both domestic and Intl when need arised given them great flexibility. When Heathrow was closed due snow, and EU due Volcano, PIA could send 747s in and clear backlog almost immediatly whereas with smaller AC it would have taken much longer. When the 747s were initially grounded pre 2009, other 747s were wet leased for Haj. PIA paid so much for 747 wet lease during Haj, that the lessor never bothered to recover the aircraft from Karachi as the money he made off PIA that Haj season was more than the aeroplanes were worth.

And the most major point is that even if the 747 was operated with 200 pax due to its being completely paid off, its operating cost was still lower than the 777, and when it was full it made almost twice as much money as a full 777. The major cost of the 747s was fuel, and they were operating profitably when fuel was 100$+ and retired when fuel dropped to 30$, at a time when the 747s were practically free to operate.

As far as your quote about the A310 goes, there is no noticeable difference in capacity between an A310 and an A321, infact Air Blue A321s carry more pax than PIA A310s. The 310s are capable of higher payload and range but that is useless for PIA. The 321 can carry the same number of pax at half the operating cost of a 310.

But I dont see you putting up any numbers or figures or stats here, just the usual talk with no sustenance. And I mean no disrespect. =)

[Sherry3002]

sherry3002 the 747s were utilized strategically on high density routes, ME and occasionally other routes both domestic and Intl when need arised given them great flexibility. When Heathrow was closed due snow, and EU due Volcano, PIA could send 747s in and clear backlog almost immediatly whereas with smaller AC it would have taken much longer. When the 747s were initially grounded pre 2009, other 747s were wet leased for Haj. PIA paid so much for 747 wet lease during Haj, that the lessor never bothered to recover the aircraft from Karachi as the money he made off PIA that Haj season was more than the aeroplanes were worth.

I don't see how an airline that is struggling to fill its 777s would plan on buying 747s or aircraft capable of carrying such loads. While we're discussing how to find an aircraft for PIA that is efficient, eco-friendly and suits PIA's needs, what you're suggesting is an aircraft that is larger, older and already being replaced globally. The 747-8 was considered, as per forum member CoyBoy, but was then not chosen due to MTOW restrictions at Lahore. Are you suggesting we get the 743 back again in this day and age? There is simply not enough demand on a flight to fill up a 747.

And the most major point is that even if the 747 was operated with 200 pax due to its being completely paid off, its operating cost was still lower than the 777, and when it was full it made almost twice as much money as a full 777. The major cost of the 747s was fuel, and they were operating profitably when fuel was 100$+ and retired when fuel dropped to 30$, at a time when the 747s were practically free to operate.

I agree with the first part, but the part that I've highlighted is the part that will never happen soon. PIA will not be able to fill a 747. We must admit it. The 743 in a 1-class config. carried around 503 pax I believe. In a 2-class config. that would go down to 470 or so. When will PIA ever be able to fill a 747 when it can't fill a 777 off-peak. And during peak time, the flights are operating at just about the right capacity, ie- 100%. On my return back to Islamabad this year, I paid 82k extra per seat because Business Class was fully booked, and I had to get on. That's what we want.

As far as your quote about the A310 goes, there is no noticeable difference in capacity between an A310 and an A321, infact Air Blue A321s carry more pax than PIA A310s. The 310s are capable of higher payload and range but that is useless for PIA. The 321 can carry the same number of pax at half the operating cost of a 310.

I was talking about our current A320-200s, not the entire family. Our A320s carry 158 passengers in a 2-class config. Our A310s carry 205 in a 3-class config. In comparison to this, Qatar Airways' 788s carry 254 passengers in a 2-class configuration with their flatbed seats and excellent economy. A 788 in Qatar's configuration as compared to PIA's A320 configuration would give you almost 100 extra seats.
PIA could roll out their brand new Business Class product, and still have their economy in a 3-3-3 configuration and fit 254 pax on a flight to DXB as compared to fitting 158. Also, comparing AirBlue to PIA is like comparing EasyJet to British Airways. Both the former airlines have one objective: Squeeze in pax and get money. The latter airlines are flag carriers, fully established airlines. They're expected to provide IFE, food, better service and better legroom for a higher fare.

PIA Recorded a 75% or so seat factor in 2015 if I remember correctly.

Routes to Dubai are usually operating at 80% capacity off-peak, and well above 100% peak-time. Not only do I know this through personal experience but I have many friends who work for PIA Dubai. When routes to Dubai are overbooked, a 787 would serve beautifully.
Routes to Europe are not exactly 80% of a 777, but not less than 60%. Our 772s carry around 320-330 pax, but at 60% capacity they fill around 200 seats. Fly a 254 seater 788 to Europe and it would be a viable option as the flight would neither be flying empty nor too full.
Routes to the Far East are usually at 75% off-peak too, while at a 100% peak time and that of an A310. This too I know through experience and friends. Now, a 205 seater A310 that is old and dangerous is flying a 5 hr route. If this were to be replaced by a brand new 788 with 254 new seats, it would give not only 50 more seats during peak-time, but also guzzle less fuel and be more eco-friendly than a 20+ year-old A310.

But I dont see you putting up any numbers or figures or stats here, just the usual talk with no sustenance. And I mean no disrespect. =)

My argument has always been very simple and doesn't need very deep stats to back it, hence I've never found the need to enter stats and cite my sources. But I think the numbers I have provided above are what are needed to understand my point of view.
No offence taken either.

[AN]

thank you, thats much better, however you keep missing the point. As I mentioned earlier and you quoted, the 747-3 was free, i.e. didnt have to be bought, just maintained. As I stated it was utilised on HIgh Density routes and when the requirements was there (carried over 550/flight on Eid Occassions etc. It was usually full on ME routes and when used domestically during peak periods. IT should not be deployed when the load falls below a 777 load, however during the famous turn around unionised era of PIA with 777s being cannibalized the management was willing to bear the loss of flying empty 747s, rather than cancel flights as it had no other choice. PRior to this 747s were operated full. I would also like to remind you that in 2010 PIA conducted Haj operatio with 125,000 Hajis without leasing a single aircraft, however in later years they halved their netowrk, carried under 50,000 Hajis yet had to wet least 747s. So the 747s were flying full when they were being strategically deployed but when all strategy went out the window and PIA become the worlds only airline to canibilise an almost new 777-300ER, nobody cared anymore. Point is the aircraft was free to own and cheap to operate, PIA official figures peg the 747-300 with fuel at 100$/barrel around 5% cheaper than their 777-200ER and when you bring the price of fuel down to 30$ well you do the math of how much more profitable it was. As far as your arguement for fuel efficiency goes, well that arguement is useless once fuel goes from being 60% of your operating cost to 20% so why ground the 743 when fuel was so cheap. I have read all the PIA presentations on fleet stratey and reasons to ground the 747, not a single one contained a simple cost analysis of procuring replacement. In short the 743 was an excellent Hi density option for PIA to keep in its seasonal fleet and deploy regularly on some routes and on requirement on others.

The only correct statment you make is that PIA cant fill its 777s to europe. Any airline with frequency of 2-3times / week has a flawd strategy and gone are the days when passengers will wait a few days to get a flight particularly when there are options available that depart within hours and give them flexiablity for another flight a few hours later should they not make their initial flight. That was the entire strategy behidn the PKTK deal which envisioned over 100 destinations connection within 3 hours. But only so many years later have the unions of PIA realised theres a reason why all airlines of the world make such large partnership agreements, and i not talking about code sharing.

As far as the Dubai route example you have given that is again a poor one. Max traffic (and cargo) is on the LHE DXB sector, however PIA chooses to operate 2 flights ISB DXB and only one LHE DXB. I recently had to travel DXB ISB and the emirates 777 was oversold and departed without a single seat empty, whereas the PIA 320 had over 100 seats empty. As I mentioned earlier, the combination of frequency and connections (not to mention in dubai the miserable condition of T1) means Emirates is the preferred choice, which is why they carry more passengers out of Pakistan daily than PIA ever has.

This A330 "premium" farce is another example of painting over the truth. There is nothing Premium about the service (the inaugural flight was delayed almost 3 hours so the Premier could inaugurate it, who cares about the pax), it is operated at in insane cost due to aircraft, crew, maint being based out of London, and there is no reason to have it when you already operate 777s on that route which you are not deploying elsewhere and are no idle.

Your statement regarding 787's is correct. PIA was offered the dirty teens years ago at less than half price of new airplanes and they shouldve snapped up as many of those as they could to support a higher frequency europe/uk/far east operation. Only now it seems they have realized this finally. In my opinion, the 787 is not a 310 replacement, a 321 is a 310 replacement with increased frequency, rather than same frequency with higher capacity, and the 743 should not have been retired, the math speaks for itself, specially not at this point. But then what do I know.

PS Ask your friends in PIA Dubai why the booking system has once again started showing the aircraft full, but when you get onboard its empty. Do you think theyll tell you how much they (not necessarily your friends but someone gets paid to block those seats off for travel agents who receive a cut which) get paid to block of those seats most of which are never sold at a loss to PIA, but who cares as long theyre getting paid.=)

[Sherry3002]

In short the 743 was an excellent Hi density option for PIA to keep in its seasonal fleet and deploy regularly on some routes and on requirement on others.

All other things aside, I sort of agree and sort of differ. I agree that during the 3 peak seasons, ie- Eid/Hajj, Summer and Winter, PIA could operate a larger aircraft like the 747 for an extremely cheap price In fact, during high seasons PIA should operate a larger aircraft to Saudi Arabia. Now let me clear one thing up;
I completely understand your argurment about the 747 being very cheap to operate and there being no harm in flying a larger plane that's 70% empty during off-peak seasons and 80% full during peak seasons. I get that.

However, you say that it's better for PIA to operate a 743 on high-density routes all year round, off-peak or during peak, even if the plane is flying empty. What you're trying to say basically is that PIA shouldn't have retired the 743s? Right?
I am, however, a staunch supporter of the retirement. I say that we shouldn't keep old 743s flying with their worn down interiors, their old age and the fact that they would require heavy, heavy maintenance very often. When the 743s were retired, they had served PIA for a record 30 years. Their time had come, very soon you'd have to cannibalise them to keep other 747s flying, just as the situation is with the A310. Wouldn't it just be better to fly a 787 to routes that I've mentioned above? That would free up the 777s which can then be used to either open new routes, or increase frequencies to high-density routes. Yes, if we bought new 747s and flew them with new seats, new IFE, etc, basically a whole makeover, I would agree with you much more. But is that really possible? I doubt it. To fly passengers in an old 743 that's at the end of its life, breaking down after every 2 flights, and in constant need of a makeover would be unfair on both the passengers and PIA's reputation. With brand new 787s and 777s that are eco-friendly, have newer seats, IFE, crew, etc. and aren't nearing their retirement age, both passengers would be pleased and it would make sense to fly them. High density routes, which I believe are UK, Saudia, etc. are, during off-peak, around 80% full. In peak they're 100% full, and believe me, passengers who want to fly PIA will wait a day or two until the next flight to book on that flight.

Like I said, PIA's routes to Europe are not full. They're at 70-75% off-peak, 100% during peak and the reason ofc is like you said, other competition. Another reason is PIA's image, people don't like flying EK or QR, but are forced to due to PIA's image. Now if we hadn't stopped flying 747s to EU, UK and USA, it would only make matters worse when people saw that PIA's Business class has 1980s recliners and Economy class has a small 31-32 inch legroom and no TVs.

Where do you live? I live in Islamabad, and I often fly both Emirates and PIA to Dubai in Club, infact I've done around 3 TRs comparing the two. My most recent flight with Emirates that terminated at Dubai was in May, my most recent flight with PIA terminating at Dubai was in August. Having flown both PK211 and 233, I've found them both to be packed, especially 211. Business Class has always been at 8/8, Economy always around 140-145 from what I could see from the front. My seatmates this time round on PIA were ex-Emirates fliers who chose PIA to see what it was like, (and were pleasantly surpised might I add) and my seatmates to Paris on EK last week were PIA fliers who took Emirates due to PIA being overbooked, and hence they had to splurge an extra 1 lakh per seat. So my personal experience has always shown me that no matter what season, summer or winter, spring or autumn, ISB-DXB is one route that is doing very well. I can't find any stats online I'm afraid, but I think that I'll continue basing my opinon around my own personal experiences, as I've flown this route enough times to make my own personal judgment.
I can't comment on the LHE-DXB route because I've never flown it, but I'll trust you when you say that it's doing well. So while I agree that PIA will never carry more passengers than EK to Dubai, I would like to remind you 70% of EK fliers are connecting. All 100% of PIA fliers are terminating at DXB. A 787 in that sense would fit well, having enough space for 100 or so extra pax, while being brand new, clean and fresh yet at the same time not costing the same as flying a huge 777 or A310 to Dubai. A 787 would free A320s for domestic routes, and the entirety of A310s can finally be retired.
The Premium service shouldn't be just on one route. PIA should revamp their 777s and fly them to the UK, then to Europe and then to North America. It should be as advertised as it is now, but I disagree with this seperate brand concept that they've put forward. This is what standard PIA should be like.
Yes, the A321 was also an option, but since PIA has been offered 787s, I'm sticking to the 787 for now.
And finally, I personally believe PIA has some of the most corrupt officers in any airline, no offence to any PIA worker on this forum. From top managment to the janitors, political influence and greed is the reason this airline is being held back. I appreciate the fact that slowly workers are being fired, and understand it'll take time to bring back the lost revenue. I still, however, believe PIA is capable of making a huge comeback, considering it's popularity amongst Pakistanis. Don't know about you, but my recent flights have always shown the exact load. ISB-LHR, 32/35 and around 20 seats empty in Economy. LHR-ISB, 35/35 and it was indeed 35/35. I walked through Economy and spotted 14 free seats. ISB-DXB, 8/8, indeed was 8/8 and 150/150 in Economy. DXB-ISB, 7/8, it was 7/8 and 139/150 in Economy. And CDG-ISB, 25/25, around 30 seats empty in Economy. But yes, it's true that sometimes seats are blocked, and that is indeed very sad.

I think I've made my point, and although this does fall under the topic of how to regain lost revenue, I'll not go on any further for the sake of staying on topic.