KARACHI: The national carrier Pakistan International Airlines has improved its revenue by Rs1.425 billion during the third quarter of current calendar year compared to the same period last year, the PIA said in its interim report.

The airline earned Rs15.981 billion during the period against Rs14.556 billion in the corresponding period of 2004.

The cost of services also inflated to Rs15.406 billion compared to Rs12.689 billion last year.

The PIA achieved an actual growth of 10 per cent in turnover during July-September 2005 over the same period of 2004 and restricted the increase in operating expenses (excluding fuel) to 1.1 per cent.

The passenger traffic also improved by 11 per cent and a record seat factor of 80 per cent was achieved during the quarter despite increase in the capacity of existing fleet.

The unprecedented rise in fuel prices offset all these positive indicators. Details indicate if the fuel prices had remained at last year’s level, the operating profit would have been Rs736 million during the 3rd quarter of 2005 compared to a loss of Rs695 million during the 3rd quarter of 2004.

The fuel bill percentage of 32 per cent of total turnover in the third quarter of 2004 rose to 45 per cent in the third quarter of 2005 as fuel price increased from Rs74.88 million to Rs111.39 million per USG. The breakdown of non-fuel expenses showed there was no major increase in expenses.

The report further showed a landmark achievement in the domestic seat factor at 84 per cent (compared to budgeted seat factor of 74 per cent for 2005 and 67 per cent of last year).

All routes showed improvement in the period under review as seat factor of the UK route increased from 71 per cent to 80 per cent, Europe route increased from 63 per cent to 73 per cent, North America route improved from 69 per cent to 71 per cent, Gulf route increased from 78 per cent to 82 per cent and Saudi Arabia route seat factor increased from 83 per cent to 88 per cent.

Regional route seat factor too rose from 61 per cent to 62 per cent and domestic route seat factor increased from 67 per cent to 84 per cent.

During the third quarter of 2005, in a total passenger market increase of 13 per cent, PIA had 47 per cent share.

With the thrust of marketing strategies/ initiatives, concept of 3Cs and targeting the higher market share, PIA was amongst the top five airlines by attaining 80 per cent seat factor compared to Cathay Pacific (77.3 per cent), Emirates (74.6 per cent), Singapore Airlines (74 per cent) and Thai Airways (72.5 per cent), the report claimed.

Source: [url=http://www.jang-group.com/thenews/nov2005-daily/18-11-2005/business/b4.htm[url]The News[/url]

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PIA needs to look to decrease costs aswell as increasing revenue. To be honest with you, PK needs to concentrate on the costs more.

Its easy to increase revenue, lower prices-->more demand--> improved load factor but cutting costs is hard.

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PIA on the move, earns 10% growth

KARACHI, Nov 19 : Salient features of the Interim Report of Pakistan International Airlines (PIA) show revenue of Rs.15.98 billion (July-Sep.2005) as compared to Rs 14.556 billion and cost of services of Rs.15.406 billion as compared to Rs.12.689 billion for the corresponding period of FY 2004.

PIA achieved an actual growth of 10% in turnover during July-September 2005, over same period of 2004 and increase in operating expenses (excluding fuel) was restricted to 1.1%. Passenger traffic improved by 11% over the corresponding period last year and a record seat factor of 80% was achieved during the quarter despite increase in the capacity from the existing fleet.

The unprecedented level of fuel prices had offset all these positive indicators. Details of bottom line indicate that had the fuel prices remained at last years level, the operating profit in 2005 would have been Rs.736 million during 3rd quarter 2005, comprising a loss of Rs.695 million during the 3rd quarter 2004. The fuel bill percentage of 32% of total turnover in 3rd quarter of 2004 rose to 45% in 3rd quarter of 2005 and fuel price increased from Rs.74.88 to Rs.111.39 per USG as compared to last corresponding quarter. The breakdown of non-fuel expenses shows that there was no major increase in expenses.

Similarly, a landmark achievement was made by achieving a domestic act factor of 84% (comparing to a budgeted seat factor of 74% for 2005 and 67% seat factor of last year).

All routes had shown improvements in 3rd quarter 2005 as compared to 3rd quarter of 2004, and seat factor of UK route increased from 71% to 80%, Europe route seat factor increased from 63% to 73%, North America route seat factor increased from 69% to 79%, Gulf route seat factor increased from 78% to 82%, Saudi Arabia route seat factor increased from 83% to 88%, Pearl route seat factor increased from 54% to 60%, China-Japan route seat factor increased from 66% to 71%. Regional route seat factor increased from 67% to 84%. During the 3rd quarter of 2005, in a total passenger’s market increase of 13%, PIA shared 47%.

The 12% aggregate increase of Rs 4.945 billion in Turnover over the last corresponding period of nine months included, Rs 4.550 billion in passenger turnover, Rs 364 million in Freight/ Mail and Rs 31 million in all others areas, 10% aggregate turnover in areas of Rs 1.426 billion over the last corresponding quarter of 2004, show that passenger turnover increased by Rs 1.327 billion, Freight/ Mail by Rs 52 million and Rs 47 million in all other areas. PIA had budgeted a system seat factor of 78% for 2005, whereas, a commendable annual seat factor of 79% on international routes, was achieved comparing to 72% seat factor on international routes last year.

In any business the lesser market share could be trouble some, therefore, with thrust of the strategic marketing strategies/ initiatives, concept of 3Cs and targeting for higher market share, PIA’s was amongst five top airlines by attaining 80% seat factor compare to Cathay Pacific (77.3%), Emirates (74.6%), Singapore Airline (74.1%) and Thai Airways (72.5%). Since, price could not be the only factor for enhanced profitability, therefore, by enhancing seat factor with could not be the only factor for enhanced profitability; therefore, by enhancing seat factor with reduced fare more turnover was generated. Without comprising safety aspects, the mounting of 36% additional capacity from existing fleet was achieved with proper utilization of aircraft, better marketing scheduling, monitoring of engineering heavy maintenance costs, were contributing factors for higher turnovers despite higher fuel cost. PIA had also become one of the first 50 airlines to get IOSA Certification, a pre-requisite of IATA Regulations, and would provide a basis of code sharing agreements with renowned world-class airline.

Source: Pakistan Link

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It is truly hard, just look at some of the struggling American Carriers. They really need to focus on fleet commonality, which will reduce maintenance costs and pilot training costs, they also have to cut more people from the payroll.