SUBMITTED TO: SIR AYMEN SAJJAD

BS (BA) 8TH B
JULY 20TH, 2009

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 My beloved AMI and Bhai

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First of all I am thankful to Allah then I would like to record my heartful thanks to
specially my respected Professor Sir Aymen sajjad. And to my dear friend
Muhammad Umar who help me out in the report editing and fromating.

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The pursuit of excellent through technology and quality control and ushering in a new era
of growth and development.

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 1) EXECTIVE SUMMARY………………………………………………. 7

2) INTRODUCTION……………………………………………………… 8

3) AIRLINE INDUSTRY IN PAKISTAN………………………………… 8

4) HIERARCHY OF PIA………………………………………………….. 9

5) CORPORATE VISION OF PIA………………………………………… 10

6) CORPORATE MISSION……………………………………………….. 10

7) VALUES………………………………………………………………… 10

8) REVENUE COMPOSITION……………………………………………. 14

9) MAJOR COMPETITORS……………………………………………….. 14

10) LATEST PRODUCTS BY PIA AND QUALITY ACHIEVEMENTS…. 15

11) SWOT ANALYSIS………………………………………………………. 19

12) PEST ANALYSIS……………………………………………………….. 26

13) RECOMMENDATIONS FOR………………………………………….. 29

PAKISTAN INTERNATIONAL AIRLINES

14) References…………………………..…………………………………… 32

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EXECUTIVE SUMMARY:

In 1955 Pakistan International Airline formed. It is the 16th largest airline in Asia,
operating scheduled services to 73 destinations throughout Asia, the Middle East, Europe
and North America, as well as an extensive domestic network linking 24 destinations.

PIA is three stars International Airline. In our report we did SWOT analysis and PEST
analysis on PIA, identify major strength we find as leading market position, brand
recognition, superior operating structure, network presence, hub airport at Karachi, and
effective use of technology. Formulation on GOVT rule, High dependencies on passenger
revenues, high debt, and reliance on oil prices are major weakness, opportunities are like
having MAX route and fleet, growth demand for low cost airline, customer loyalty,
shifting customer needs and industry recovery, and major threats are high interest rates,
accidents, strong competition by Air blue, interest and foreign currency exchange rates,
and decline in industry. In PEST analysis we discover major Government’s active role in
increasing competition in the airline industry, inflation rate, turning of social environment
of Pakistan liberal with the new regime. Innovation in technology, and its impact on
distribution and cost synergies from industry consolidation.

We recommend PIA for better service to decentralized its management system, develop
SBUs, adopt transparent promotion polices, employee empowerment to increase the
employee motivation and moral. Try to decrease its overhead cost, adopt effective
marketing policy, two way communication and TQM. Upgrade its fleet; purchase new
Airplane with twin engines these will reduce the operating cost of PIA. Improve control
over fares. Hire the services of IT specialists; improve service standards focusing on
quality.

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Pakistan International Airlines
1) INTRODUCTION:
When Pakistan was founded in 1947 it comprised two
territories on either side of the expanse of India. It was in this unusual circumstance that
Pakistan International was formed in 1955. Despite wars and economic trouble, the
carrier survived to grow and prosper. Pakistan International Airlines is the flag carrier
airline of Pakistan, based in Karachi. It is the 16th largest airline in Asia, operating
scheduled services to 73 destinations throughout Asia, the Middle East, Europe and North
America, as well as an extensive domestic network linking 24 destinations.
Its main bases are Jinnah International Airport, Karachi, the Allama Iqbal International
Airport, Lahore and the Islamabad International Airport, Islamabad/Rawalpindi. The
airline also has secondary bases, including Peshawar International Airport, Faisalabad
International Airport, Quetta International Airport and Multan International Airport, from
which it connects the metropolitan cities with the main bases, the Middle East and the Far
East. The airline is owned by the Government of Pakistan (87%) and other shareholders
(13%). It has 19,263 employees (at March 2007).

2) AIRLINE INDUSTRY IN PAKISTAN:

There are 36 operational airports.
Karachi is Pakistan's main airport but significant levels of both domestic and international
cargo are also handled at Islamabad and Lahore. Pakistan International Airlines (PIA), the
public sector airline, though facing the competition from a few private airlines, carries
approximately 70 percent of domestic passengers and almost equal domestic freight
traffic.
The transportation sector accounts for about 10.5 percent of the country’s GDP and 27.4
percent of Gross Fixed Capital Formation (GFCF) in FY06. It provides over 6 percent of
employment in the country and receives 12 to 16 percent of the annual Federal Public
Sector Development Program (PSDP). Government agencies dominate the sector.

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 3) HIERARCHY OF PIA:
This organization is divided into following
departments: Human Resource and Administration, Marketing, Corporate Planning,
Information Services, Finance, Flight Services, Flight Operation, Engineering,
Procurement and Logistics, Customer Services, Training and Development, Quality
Assurance. The organ gram of the organization follows, with the Chairman at the top and
directors of departments reporting to him.
The structure is centralized with the top-level management making the decisions.

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 4) CORPORATE VISION OF PIA:

‘To be a world class airline exceeding customer expectations through dedicated

employees Committed to excellence.’

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 5) CORPORATE MISSION

“As a Symbol of National Pride, We Aspire to be a Choice Airline, Operating Profitably

on Modern Commercial concepts and Capable of Competing with the Best in the
International as well as Domestic markets.”

6) VALUES:

6.1). Customer Expectations:

PIA is the most trusted name in the industry. The reason of
its goodwill is according the expectation of their customers that PIA has fulfilled always.
By providing competitive tariff, extensive care, and convenience to their valued and
potential customers.

6.2). Service:
PIA aims at providing valuable and unique services to its customers. They
are more personalized and courteous to their customers. The services are valuable and
rare; this is the reason why customers trust PIA.
28 Nov 2004, Pakistan International Airlines - PIA passed the IATA Operational Safety
Audit (IOSA) benchmark for global safety management The IATA Operational Safety
Audit (IOSA) is the benchmark for global safety management in airlines
KARACHI, 22 October 2007 – Abacus Pakistan officially launched Abacus Travel
Secure with AIG, providing local travel agents and travelers easy and convenient access
to AIG’s travel insurance policies. Available for the first time in Pakistan, Abacus Travel
Secure brings real time and immediate activation of travel insurance policies to the
Pakistan travel industry with a more streamlined and time saving application process for
travel agents

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6.3) Innovation:
PIA currently has a number of 43 fleets and aims at increasing this
numbers to 53 by the next few years.PIA is adoptive to changes and believe in innovation
that’s create new ideas and translating these ideas into action.

6.4) Reliability:
PIA is the most experience airline with its service with more than 53
years. This has built in PIA has become the most reliable airline. PIA is known for its
loyalty and consistency.

6.5) Safety:

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 The most challenging responsibility of any organization is to provide
complete satisfaction to its employees and customers together. This satisfaction rewards
favorable and easy working conditions.
The in-flight services are customers friendly and the organizational the organizational
environment is also employees oriented.

6.6) Cohesiveness:
PIA has 12 departments working in their own direction and also
provides a number of services including speedex courier service, catering etc. The most
impressive part is these all department and services are integrated in a cohesive way.
Services

PIA offers two types of services.

• Business Class • Economy Class

i) Business Class
It’s the only Business Class service that feels like First Class. A comfortable
seat makes all the difference on a long flight. PIA's Business Class Seats
elevate the concept of luxury to a new level, fully endorsing your decision
to choose PIA Business Class Sit back and relax in our exclusive Business
Class Lounges at the Karachi, Lahore, and Islamabad airports.
Our hospitable staff will ensure that you're well looked after during your
stay with us at the airport Business Class passengers arriving at Airport will
receive a warm welcome from PIA.
Our representatives will walk you right through all the arrival formalities
so that you don't have to stand in line or worry about clearance.

ii) Economy Class:

PIA’s economy class is also comfortable for
passenger as Business class. Economy Class offer seats with a 32-inch

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 pitch, adjustable footrests and "winglet" headrests for improved neck
comfort. The personal TV provides on-going entertainment including audio
and video on-demand choices.
Passengers enjoy the same caring service from our flight attendants, along
with skillfully prepared meals and a wide range of in-flight entertainment
options to choose from. Free newspapers are also provided to all Economy
class passengers.
The PIA in-flight magazine, Hamsafar, is provided to all passengers on all
international flights. Humsafar was introduced on PIA flights in 1980 and it
is published bi-monthly.PIA is providing its service in twenty-five cites of
Pakistan domestically which are as follows:
Giigit Quetta
Chitral Bahawalpur
Skardu Rahim Yar Khan
Saidu Sarif Dalbandin
Islamabad Sukkar
Peshawar Panjgor
Sialkot Sukkar
D.I,Khan Jacoababad
Lahore Turbat
Faisalabad Moemjodaro
Multan Gwadar
Zhob Pasni
D.G.Khan karachi

7) REVENUE COMPOSITION:
According to the latest report of
PIA, 87% of revenue generates from passengers, 8% of revenue generates
from cargo and remaining 5% consists of others. Fleet Pakistan
International Airlines fleet includes the following aircraft (as of May 2008)

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 8) MAJOR COMPETITORS:
PIA is holding the first position in
market. It has 48% market share. Its major competitors are Airblue and
Shaheen International Airline. Airblue has a market share of 35% while
Shaheen International Airline has 17% market share. People feel prestigious
to travel with PIA as compare to Airblue and others.

9) LATEST PRODUCTS BY PIA NAD QULAITY

ACHIEVEMENTS:

• Boeing-777 operating to middle east

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 • Flight Barcelona
• Linking Abu Dhabi and rahim yar khan
• Flights from D.I.Khan to Peshawar and Islamabad
• Early buy cheaper fly
• Bradford- Islamabad Nov stop! Pak & Glasgow
• Flight from Multan and D.G khan to Dubai
• Lowest business class fare paksitan Dubai
• Connecting Multan and Quetta, Islamabad with Chitral and
Nawabshah with Hyderabad.
• Promoting web ticketing and SMS booking, Ticketing delivery at
Door step

9.1) IATA Operational Safety Audit (IOSA) benchmark:

28
Nov 2004, Pakistan International Airlines - PIA passed the IATA
Operational Safety Audit (IOSA) benchmark for global safety management
The IATA Operational Safety Audit (IOSA) is the benchmark for global
safety management in airlines.

9.2) E-Ticketing:
KARACHI, 22 October 2007 – Abacus
Pakistan officially launched Abacus Travel Secure with AIG, providing
local travel agents and travelers easy and convenient access to AIG’s travel
insurance policies.

Available for the first time in Pakistan, Abacus Travel Secure brings real
time and immediate activation of travel insurance policies to the Pakistan
travel industry with a more streamlined and time saving application process
for travel agents.

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 9.3) 3Star Ranked airline :
SKYTRAX introduced the World Airline
Star Rating® programme in 2000 - the Quality Analysis system that ranks
airline product and service standards, based on professional evaluation by
airline audit specialists.

To achieve SKYTRAX Approved Airline™ status, airlines are subjected to

a very detailed Quality evaluation across all areas of their front-line Product
and Service standards by Skytrax - covering all areas that passengers will
"typically" experience during their trip.

SKYTRAX Approved Airline evaluation covers over 750 aspects of

product and service quality measurement, and is split across both airport
and onboard environments - airport services based around an airline's home
base airport.

QUALITY RANKING USED IN AIRLINE RATING SUMMARY

BELOW
= Excellent = Good = Fair
= Poor = Very poor

:: PIA PAKISTAN INTERNATIONAL ::

a 3 Star Airline

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 PIA Pakistan Int'l Passenger Comments

Home Base Airport Ranking = Karachi Airport

SUMMARY RANKING
Combined Quality of Product / Staff service in airport and onboard
environments
Business Class
Premium Economy Class
Economy Class
Airport Services
Check-In service - Business Class
Check-In service - Economy Class
Transfer Services - Business Class
Transfer Services - Economy Class
Arrival Services
Business Class Lounge - product facilities
Business Class Lounge - staff service
Onboard Features
Inflight entertainment may vary according to aircraft type
Cabin Safety Procedures
Inflight Entertainment
Amenities, Blankets, Pillows, Towels etc
Airline Magazine, Newspapers & other mags
Cabin Seat Comfort Seat Guide
Seating may vary according to aircraft type
Business Class - long haul
Business Class - short haul
Premium Economy Class - long haul
Economy Class - long haul
Economy Class - short haul
Onboard Catering
Business Class - long haul
Business Class - short haul

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 Premium Economy Class - long haul
Economy Class - long haul
Economy Class - short haul
Cabin Staff Service
Business Class - service efficiency
Business Class - staff attitude & friendliness
Premium Economy Class - service efficiency
Premium Economy Class - staff attitude & friendliness
Economy Class - service efficiency
Economy Class - staff attitude & friendliness
Responding to Passenger requests
Cabin presence through flights
Assisting Parents with children
Staff Language Skills

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 10)SWOT ANALYSIS

10.1) STRENGTHS:

i) . LEADING MARKET POSITION:

PIA is one of Pakistan’s
leading air carriers, with more than 800 daily flights. Around 150,000
passengers a month fly on PIA, making it one of the major operators in the
domestic market in terms of passenger kilometers.
PIA’s international market share was 43.5%, In the Domestic market, its
market share was 69.4%. On a system-wide basis, PIA’s market share was
51.2% at the end of year 2007.Its strong market position is driven by
consistently low fares as well as reliable service, frequent and convenient
flights, use of new technologies like e-ticketing and self check-in terminals,
comfortable cabins and superior customer service.

ii) BRAND RECOGNITION:

PIA has high brand recall. It is
recognized by travelers all over the country. PIA is a national airline,
operating passenger and cargo services covering eighty-two domestic and
foreign. PIA has earned the number one ranking in customer satisfaction.
This strong market position gives the company a scale advantage and helps
it strengthen its brand image.

iii) SUPERIOR OPERATING STRUCTURE:

PIA has maintained
its position as the low cost carrier. It has been first class Pakistani airline to
use the latest technology. Factors’ contributing consists of different series of
Boeing and Airbus and an efficient, high-utilization and point- to-point
route structure.

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 Flying one type of aircraft significantly simplifies scheduling, maintenance,
flight operations, and training activities. PIA has continually achieved high
asset utilization and employee efficiency. Superior operating structure
serves as the primary competitive advantage of PIA.

iv) NETWORK PRESENCE:

PIA enjoys a strong network in key
domestic and international destinations. The company’s network includes
three the major airports in Pakistan, as well as major international airport
such as Dubai International Airport. Having a strong network means that
PIA can generate traffic feed for both its domestic and international Flights.

v) HUB AIRPORT AT KARACHI:

PIA operates from its hub in
Jinnah International Airport, Karachi. Jinnah International is one of the
world’s busiest airports in terms of number of passengers carried. It is also
one of the largest international gateways to Asia. It is also the leading
international air passenger (and cargo) gateway to Pakistan. The company’s
strong presences in airports with heaviest traffic levels in Pakistan give it a
competitive advantage.

vi) EFFECTIVE USE OF TECHNOLOGY:

PIA has successfully
incorporated latest technology in all its systems, giving it an edge over
competitors. PIA takes credit for introducing most new technologies to the
Pakistani market. It was the second carrier in Pakistan to incorporate the c-

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 ticketing system and the second in South Asia to introduce self check in
systems at the Jinnah International Airport, Karachi.

10.2) WEAKNESSES:

i) FORMULATION OF GOVT. RULES:

The Basic flaw of this
organization is its consolidation that is centralized system. The key policies,
strategies and set of laws are designed by the upper management. The
centralized system is one of the biggest obstacles of long term success of
PIA. PIA centralizes structure lead to barrel between different level of
management, decreased motivation, hard access to information.

ii) HIGH DEPENDENCE ON PASSENGER REVENUES:

Passeng
er revenues accounted for 87 percent of the PIA’s total revenue in 2007.
Cargo services allow airlines to generate additional revenues from existing
passenger flights. In addition, cargo revenues are usually counter cyclical to
passenger revenues and have lower demand elasticity than passenger
business, which allows airlines to pass on fuel price hikes to customers.

iii) DEBT:
PIA has a significant amount of 42 billion debts. Current
and future debts could have important consequences for stakeholders of the
company. For example, debt could impair PIA ability to make investments
and obtain additional financing for working capital, capital expenditures,
acquisitions or general corporate or other purposes. Debts could also put
PIA at a competitive disadvantage to competitors that have lesser debt and
could also increase the company’s vulnerability to interest rate increases.

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 iv) RELIANCE ON OIL PRICES:
PIA’s sustainability, growth and
revenues directly depend on oil prices. A steep rise in oil prices can
seriously damage the long term viability of any airline. Recently many
airlines around the world went bankrupt due to rising oil prices. Airlines
need to hedge against this risk by taking proper measures.

10.3) OPPORTUNITIES:

i) . HAVING THE MAXIMUM ROUTE AND FLEET:

PIA is
having the maximum route and fleet domestic and international destinations
network in Pakistan as compared to its Competitors. Route and fleet
expansion will positively impact the company’s operations by increasing
revenues.

ii) GROWING DEMAND FOR LOW COST AIRLINES:

The
growing demand for air travel is driven by lower fares and consumer
confidence. A survey by International Aviation Authority showed that ticket
price is the number one criterion for passengers when selecting a flight,
well ahead of the availability of a non-stop service.

iii) CUSTOMER LOYALTY:

PIA’s frequent flyer and loyalty
programs can help it retain customers. PIA’s Awards+plus (frequent flyer
program) was established to develop passenger loyalty by offering awards
and services to frequent travelers. Such schemes encourage repeat travel on
PIA, as passengers seek to accrue the benefits given to regular travelers.
This enables the airline to retain customers and reduce costs, as it does not

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 have to spend money targeting new customers to replace those lost to other
airlines.

iv) SHIFTING CUSTOMER NEEDS:

The needs of air passengers are
increasingly changing, as they are becoming more and more price sensitive.
If PIA succeeds in making its prices more competitive, then the company
will be able to gain significant market share.

v) INDUSTRY RECOVERY:
Market analysts believe that the global
airline industry will experience an upturn in fortunes over the next few
years. This represents an opportunity for PIA, as it could generate increased
revenues and command market share if it capitalizes on increases in
demand.

10.4) . THREATS

i) HIGH INTEREST RATES:

The past few years have seen State
Bank of Pakistan impose high as well as low interest rates to check
inflation and the over heating of Pakistani economy. Inflation in
Pakistan may see another raise in the short-term.

ii) ACCIDENTS:
There had been five accidents with PIA listed as
below:

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 o Pakistan International Airlines Flight PK 705 was a Boeing
720 – 040 B that crashed while descending to land on
Runway 34 at Cairo International Airport on May 20, 1965
resulting in 119 fatalities.

o Pakistan International Airlines Flight PK740 was a Boeing

707-340C that crashed after takeoff from Jeddah
International Airport on November 26, 1979. All 156 aboard
were killed.

o Pakistan International Airlines Flight 268 was an Airbus

A300B4-203, registration AP-BCP, which crashed on
approach to Kathmandu's Tribhuvan International Airport on
September 28, 1992. All 167 on board were killed.

o PIA Flight 554 is the flight number of a Pakistan

International Airlines (PIA) Fokker F27 that was hijacked on
May 25, 1998. The flight started its journey at Gwadar in
Balochistan after originating in Turbat, and was flying to
Pakistan's southern port city of Karachi. The aircraft was
carrying 24 passengers and 5 crew members.

o Pakistan International Airlines Flight 688 (PK688, PIA688)

was scheduled to operate from Multan to Lahore and
Islamabad at 12:05 pm on July 10, 2006. It crashed into a
field after bursting into flames a few minutes after takeoff
from Multan International Airport. All 41 passengers and
four crewmembers on board were killed. PIA has to
continuously ensure utmost safety and security of its
passengers.

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 Accidents can adversely affect customer confidence in PIA and result in
declined revenues intensifying competition.

iii) STRONG COMPETITION BY AIRBLUE:

PIA is now competing
against carriers such as Airblue and Shaheen Airline. PIA remains Airblue’s
strongest competitor because of the huge market it has gained over time,
strong brand image and customer loyalty.
PIA has started new low-fares subsidiary “PIA Express” to stop the Airblue
market share growing to fast. Moreover, major legacy airlines have been
focusing on restructuring costs, which has improved their competitiveness.
With costs restructured, the legacy airlines are becoming more formidable
competitors in terms of increasing capacity, matching prices and leveraging
their frequent flier programs. Increasing competition could adversely affect
the company’s margins.

iv) INTEREST AND FOREIGN CURRENCY EXCHANGE

RATES:

Fluctuating foreign currency exchange rates can have a significant impact

on PIA’s earnings. For example, as PIA is providing its services to the UK.
Negative or positive effects arise from exchange rate movements as change
in expenses.
Strengthening of foreign currencies against the British Pound will
positively impact PIA and vice versa.

v) DECLINE IN AIRLINE INDUSTRY:

A number of factors have
caused the current decline in the airline industry. For example, the threat of
further terrorist attacks since September 11 and a fall in the number of
business travelers have both caused passenger numbers to fall.

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 These and other factors may continue to affect demand for air travel in the
future, which will affect revenues of PIA. The threat of terrorism may
discourage people from traveling by air and could especially reduce the
number of passengers traveling on international flights.

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 11) PEST ANALYSIS

The macro-environment includes all factors influencing a company that are

not within its control. These include political, social, economic and
technological factors. These are known as PEST factors.

A technique of analysis of the macro environment is PEST analysis.

Environmental analysis should be continuous arid precede all aspects of
planning. Since the airline industry is very much influenced by changes
taking place in the environment and has undergone rapid and dramatic
changes during the last decade, this analysis is especially important for PIA.

i) POLITICAL FACTORS:
Political factors always have a great
influence on the way businesses operate in the airline industry and the
spending power of customers. In recent years it has been observed that
government played an active role in increasing competition in the airline
industry. A number of new airlines such as AirBlue and JS Air have been
awarded licenses to enter the domestic market.
Pakistan has achieved some political stability in recent years. If the
management of PIA believes that the present government will perform well
(consistently), then there will be more investment in the form of purchase
of new airplanes and latest technology. The over all industry will grow
resulting in more luxurious and comfortable flights. With the military
takeover government policies have become more liberal.

ii) ECONOMIC FACTORS:

Currently, Airlines industry has three
major players: Pakistan International Airlines, an Airblue, Aero Asia and
Shaheen Airlines. Their target market includes domestic travelers as well as

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 Pakistanis living abroad particularly in the UK and USA. These countries
have strong economies coupled with high purchasing power. Customers’
purchase behavior depends very much on prices of the competing airlines
as well as services offered. As inflation rate is unstable in Pakistan,
spending power of consumers has effected in the long term. In fact growth
in Pakistani economy has resulted in an increase in spending power and has
positively impacted the airline industry.
Economically, the new millennium has been highly volatile; the September
11 attacks revolutionized the whole world. Consequently, there was a global
depression in the North America, South America, Australia and Europe.
However, in Asia especially Pakistan the effect in the short term was
otherwise. The economy began to boom because of greater remittances
from abroad and whole sum immigration by expatriates. As a result,
demand for air travel in South Asia rose.
Economic conditions of Pakistan are however improving. PIA has cost a
advantage over its competitors because of its newly acquired, improved,
long distance aircrafts from Boeing’ which give longer range and better fuel
economy than any other jet currently produced. This cost advantage is a
barrier to entry for new firms. However, this cost advantage will not be
significant on domestic routes.

iii) SOCIAL FACTORS:

The social arid cultural influences on
business vary from country to country. The social structure of Pakistan is
closely tied. The trend is now changing as the general public is educated
and is pursuing professional goals. Customers are more aware of market
conditions and available options and want to get best value for their money.
They spend considerable time and money on entertainment hence
increasing the need of in-flight entertainment systems. Also, word of mouth
has a significant impact in the use of airline services.

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 Hajj attracts a huge number of customers. The social environment of
Pakistan is turning liberal with the new regime. The initiative to automate
check-in and ticket booking process might not be very popular with the
general public (even educated population) is still technology averse.
E-ticketing might also face significant challenges as consumers are
generally reluctant to provide their credit cards information over the phone
and the internet. The consumers, however, have a warm reaction to the
prospect of less costly but quality service flights.

vi) TECHNOLOGICAL FACTORS:

Technology is vital for competitive
advantage and is a major driver of the airlines industry. Major technological
changes are taking place in the airlines industry with innovations in the
reservations and booking systems. In-flight entertainment systems and auto
check in counters are two examples of such innovations. Internet plays a
key role in e-ticketing as consumer can easily reserve tickets or check the
status of the flight.
A key issue will be the extent, to which technological advancements (such
as Internet) impact distribution and cost synergies from industry
consolidation, can offset upward pressures on costs. PIA has always led the
path of technological innovations by introducing new technologies ahead of
its competitors such as its auto check-in counters which has helped it gain
market share. It was the first airline in Pakistan to install Sabre system
followed by the market leader.

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 12)RECOMMENDATIONS FOR PAKISTAN
INTERNATIONAL AIRLINES

a) Decentralization:
PIA should decentralize its structure that would
lead to the easy management, increased motivation, easy access to
information and resolution of the conflicts (as they would be resolved by
the immediate manger time span would then reduced). Since employees’
issues regarding their behavior would lessen, so it would ultimately lead to
more satisfied employees that would result in enhanced productivity of the
organization.

b) Strategic Business Unit:

PIA should make its different departments
into Strategic Business Unit. Every SBU should have a defined business
strategy and a manager with sales and profit responsibility.
As PIA is a large organization, so it must be convert into SBUs.Different
factors should be determined for the success of SBUs which as follows. The
degree of autonomy given to each SBU manager. The degree to which an
SBU shares functional programs and facilities with other SBU's
The manner in which the corporation evaluates and rewards the
performance of its SBU managers

c) Transparent policy adoption:

PIA should adopt transparent policy
that employees should be promoted on merit basis. And Chairman of PIA
should be appointed from with in the organization. Union should support it,
it will motivate the employees and PIA will grow in profit.
PIA should not induct new employees till the time they are needed on the
basis of my personal observation at Rawalpindi station I have seen that a

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 task which can be performed by person PIA had 3 employees for that.PIA
should give bonus to the industrious and competent employees.

d) Employee Empowerment:
PIA should make efforts towards
empowering the employees that is going to lead to more employee
participation in the decision making process and also result in more
employee satisfaction and enhanced motivation. Apart from this, employees
would feel more independent to discuss the issues explicitly without
hesitation.
This would also enhance team work process at PIA as quality team and
cross-functional teams. The employees will work with more commitment
and dedication and every employee would work to his/her fullest due to
increased motivation.
However, with empowerment comes accountability, so it is suggested that
while they empower their employees, there should also be a “controlled
check’’ on them to ensue the correct usage of power delegated to every
employees within their circumscribed limits.

e) Overhead Costs:
PIA should also reduce its overhead costs that are
it should mange its resources: labor more effectively, so that with less input,
more out put can be achieved and the saved resources can be utilized in
other areas such as introducing more training courses for the employees so
that the quality of the workforce could be increased.
Hiring the services of expertise can improve the efficiency of their services,
so by saving the overhead costs, they can utilize that money for the
expertise services. So by analyzing the various segments of the organization
and making the right corrections, it can substantially improve the standards
of Organizational behavior.

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 f) Marketing policy:
PIA should adopt good marketing policies so
that it will bring higher profit and maximum utilization of its available
resources, Business sector should be attracted to operate at full potential.

g) Two-Way Communication:
The suggestions of the employees can
prove to be very effective in improving the operations, as they are the ones
who manage them. Therefore, a top-down approach should be replaced with
two-way communications. In this way, the employees would feel motivated
and valued, as they would be included in decision-making

h) Total Quality Management:

Total quality management should be
catered to within the work groups and implementation of various skill
enhancement programs for quality and productivity improvements such as
Six Sigma should be provided to its executive employees.

Other recommendations are as follow:

PIA should upgrade
its fleet as it’s causing the airline higher operating cost and PIA is incurring
loss .PIA should purchase new Airplane with twin engines these will reduce
the operating cost of PIA Airline should focus on the customer’s
satisfaction, refund process should be quick so that customer remains loyal
to brand.

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 There should be control on the increase of fares, as mediocre are in
majority in Pakistan, and it is highly difficult for to even think about the air
traveling. Management should think over it and at least they can start a new
packaged flight twice a week having 50% fares. Unnecessary facilities
provided to the Government Department should not be discouraged but
with drawn as it causes financial losses. Management should focus on
computerized system up gradation and implementation. Management
should hire the services of specialized IT personnel for their system
development and up gradation on time.

There should be clear and even distribution of work and only qualified
person should be appointed on jobs. There should be improved service
standards and that should focus on quality. PIA should offer its services of
reservation and seat confirmation with by SMS and flight confirmation
message should also be sent via SMS to the passenger.
PIA should give more incentives to its frequent flyer as it will generate
more brand loyalty by giving better incentives to the customers.

Comparison of PIA with Different Airlines

After conducting the research in the Preston University, EMBA students

have rated the different airlines in the following manner.

Attributes PIA Air Blue Shaheen Air

Destinations 6 5 4
Punctuality 5 6 4
Quality Food 5 6 5
Customer service 6 5 5
Economical 5 5 5
Technological Advancements 5 5 5
Services 5 5 4

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 Corporate image 6 3 4
Total Points 43 40 36

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 References
Sites
www.piac.com.pk
http://en.wikipedia.org/wiki/Pakistan_International_Airlines_destinations3
http://en.wikipedia.org/wiki/Pakistan_International_Airlines
www.google.com
http://www.historyofpia.com/
http://www.airlinequality.com/Forum/pia.htm
http://www.britannica.com/EBchecked/topic/438805/Pakistan/23702/Trans
portation-and-telecommunications#ref=ref387351
http://aviation-safety.net/database/operator/airline.php?var=4931
http://www.centreforaviation.com/news/2009/07/10/pakistan-international-
airlines-reports-second-consecutive-operating-profit-in-1q2009/page1
http://findarticles.com/p/articles/mi_m0EIN/is_2006_May_8/ai_n16347759
/?tag=content-inner;col1
http://wwwagse.informatik.uni-kl.de/teaching/pia-scenario/
http://www.abacus.com.pk/news_events/travel_secure.asp
http://www.asiatraveltips.com/news06/95-Abacus.shtml
http://www.etq.com/airsafety/

Journals, Reports, Magazines,

Vouchers & broachers
• Annual report of PIAC 2008
• PIAC in-flight entertainment magazine.
• New Frontiers in HRD By Monica Lee, Jim Stewart, Jean Woodall
• An internship Report on PIAC by Miss. Asiya Khan MBA LUMS. Lahore
6.(2006-2008)
• http://www.scribd.com/doc/13082382/Pia-Report?autodown=doc

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