History

Birth of a Nation, Birth of an Airline

Air transport has probably never been more important to the development of a new nation than in
the case of Pakistan. In June 1946, when Pakistan was still in the offing, Mr. Mohammad Ali
Jinnah, the Founder of the upcoming nation, instructed Mr. M.A. Ispahani, a leading industrialist,
to set up a national airline, on a priority basis. With his singular vision and foresight, Mr. Jinnah
realized that with the formation of the two wings of Pakistan, separated by 1100 miles, a swift
and efficient mode of transport was imperative.
Orient Airways Takes to the Skies
On 23rd October 1946, a new airline was born. Initially registered as a pilot project in Calcutta,
Orient Airways Ltd. had at its helm Mr. M.A. Ispahani as Chairman and Air Vice Marshal O.K.
Carter as General Manager. The new carrier's base remained in Calcutta and an operating license
was obtained in May 1947.
Four Douglas DC-3s were purchased from Tempo of Texas in February 1947 and operations
commenced on 4th June 1947. The designated route for Orient Airways was Calcutta-Akyab-
Rangoon, which also happened to be the first post-war international sector to be flown by an
airline registered in India. Within two months of Orient Airways' operational beginnings,
Pakistan was born. The birth of a new nation generated one of the largest transfers of population
in the history of mankind.
Orient Airways, along with the help of BOAC aircraft which had been chartered by the
Government of Pakistan, started relief operations and transportation of people between Delhi and
Karachi, the two capitals. Subsequently, Orient Airways transferred its base to Pakistan and
established a vital link between Karachi and Dacca, the two capitals of the two wings of
Pakistan. With a skeleton fleet of just two DC-3s, three crew members, and twelve mechanics,
Orient Airways launched its scheduled operations in a fairy-tale manner. The initial routes were
Karachi-Lahore-Peshawar, Karachi-Quetta-Lahore and Karachi-Delhi Calcutta-Dacca. By the
end of 1949, Orient Airways had acquired 10 DC-3s and 3 Convair 240s which were operated on
these routes. In 1950, it had become increasingly apparent that additional capacity would have to
be inducted to cater to the growing needs of the sub-continent.
A New National Flag Carrier for Pakistan
Orient Airways was a privately owned company, with limited capital and resources. It could not
be expected to grow and expand independently. It was then that the Government of Pakistan
decided to form a state-owned airline and invited Orient Airways to merge with it. The outcome
of the merger was the birth of a new airline, through PIAC Ordinance 1955 on January 10, 1955.
In addition to transport activities, Orient Airways had established the nucleus of overhaul and
maintenance facilities and acquired trained pilots, engineers and technicians, measures which
proved to be a great asset for PIA during its teething phase.
PIAs First International Service
The year 1955 also marked the inauguration of the fledgling airline's first scheduled international
service - to the glittering, glitzy capital city of London, via Cairo and Rome. Initially, there was
much criticism, as the public could not comprehend or justify the need to operate an international
route when, in their opinion, other projects vital for a developing country should have been given
a higher priority. However, PIA's focus was, and continues to be, to serve the Pakistani
community at large. The provision of transportation to expatriates has remained one of the
foremost priorities of the national airline. Moreover, PIA earned substantial foreign exchange
through international services, which it invested in the purchase of aircraft and spare parts, as
fleet expansion was a grave necessity for the airline.
New Planes, New Directions, New Management
In 1956, orders were placed for two Super Constellations and five Viscounts which were to be
delivered in 1959. At this juncture, PIA possessed a small fleet which comprised of Convairs,
Viscounts, Super Constellations and DC-3s.
While Mr. M.A. Ispahani was the first Chairman of the new dynamic airline; it was the first
Managing Director of PIA, Mr. Zafar-ul-Ahsan, who in his 4 year tenure, got the ball truly
rolling and set the shape of things to come. The PIA Head Office building at Karachi Airport,
which houses all the major departments of the airline, was the brain-child of Mr. Zafar-ul-
Ahsan. In fact, on his departure from the airline, the employees presented him with a silver
replica of the building with the caption, "The House You Built".
In 1959, the Government of Pakistan appointed Air Commodore Nur Khan as the Managing
Director of PIA. With his visionary leadership, PIA 'took off' and within a short span of 6 years,
gained the stature and status of one of the world's frontline carriers. In aviation circles, this
period has often been referred to as the "golden years of PIA".
Development, expansion, and growth were keywords that the new management was committed
to. In March 1960, PIA launched its first Boeing 707 jet service on the London-Karachi-Dacca,
route which later proved to be very successful. This trail-blazing accomplishment resulted in PIA
becoming the first Asian Airline to operate a jet aircraft, setting trends for the future. In 1961, the
airline took on the mammoth task of initiating a cross-Atlantic service from Karachi to New
York. By this time, PIA had placed orders for more new aircraft, which included Fokker F-27s,
Boeing 720Bs and Sikorsky helicopters. Helicopter services in East Pakistan had gained
momentum by 1962 and expanded to include Sylhet, Chittagong, Dacca, Comilla and Ishurdi.
PIA's helicopter services carried over 70,000 passengers during the first year of operation. At the
time, it was regarded as a stellar operation, equal to any other in the world. Unfortunately, due to
two mishaps, the service was discontinued in 1966.
Historic Firsts and Unbroken Records
In 1962, finding the upper winds forecast favorable, PIA set out to break the record for the
fastest flight between London and Karachi. With representatives of FAI (Federation
Aeronautique International) on board to monitor the official timings, PIA completed the flight in
6 hours, 43 minutes, 51 seconds, a record which remains unbroken to this day.
In 1964, PIA achieved another historic first, regarded as a major milestones in the chequered
history of the airline. On 29th April, 1964, with a Boeing 720B, PIA earned the distinction of
becoming the first airline from a non-communist country to fly into the Peoples Republic of
China. PIA's first service to China was from Karachi to Shanghai via Canton. In 1964-65, PIA
expanded its fleet further with the addition of a fourth Boeing 720B and two Fokker F-27s.
Serious development had become a reality and the PIA team continued to move ahead with
ambitious plans and goals for the national flag carrier.
A collective pride and joyous buoyancy was pervasive within the PIA family. Riding high on the
crest of success, PIA became a household name in Pakistan in the mid sixties. The war between
India and Pakistan, during 1965, further tested the national airline. PIA played a major role in
providing logistical support to the Armed Forces by operating special flights using Boeings,
Super Constellations, and Viscounts. The Founder of the Nation, Mr. Jinnah had predicted that
the Pakistan Airforce would need the support of a civil airline in special circumstances, and this
came into evidence during the war.
In 1966, a system of feeder services linking eight new points in West Pakistan was introduced.
By this time, the airline's Viscounts were proving inadequate owing to traffic growth, and had to
be replaced by Tridents. The airline continued up the growth curve, receiving two Fokker F-27s,
two Boeing 707s and one Trident in the following year.
Style, Glamour, and Charisma
Around this time, the airline saw a change in the top slot. Air Vice Marshal, Asghar Khan took
over the reigns of PIA for a tenure of 3 years. A number of highpoints are attributed to this
period. The most colourful, if not the most significant, occurrence for PIA was the introduction
of a new air-hostesses' uniform designed by none other than the renowned French designer,
Pierre Cardin. Taking the aviation world by storm, this move, more than any other single factor,
imprinted PIA's name on the international market. The uniforms were an instant hit, both at
home and abroad.
Safety Management System at PIA
PIA is the first airline to get certified (initial certification) on Safety Management System (SMS)
by Civil Aviation Authority CAA - Pakistan. CAA Air Navigation Order (ANO 91.0032 issued
in September 2008) binds all airlines operating in Pakistan to have SMS. Well before the
issuance of this ANO, PIA initiated SMS awareness and implementation in July 2008. PIA
awarded initial certification on SMS in 27th February 2009 by CAA.
The Pursuit of Excellence through Technology and Quality Control
Not content with a number of historic firsts under its belt, PIA made history yet again, by
installing Pakistan's first computer, an IBM1401, in 1967. PIA's first Engine Overhaul Shop,
located near the Head Office building, was also completed and commissioned around this time.
The Ground Training School (GTS) now known as the PIA Training Centre, was first conceived
and developed during 1961-62. Interestingly, training was initially imparted in the T-shaped
building which has now become the PIA Dispensary, close to the Head Office building.
Besides visible development and growth in traffic and revenues in the sixties, PIA added
additional destinations, new equipment, and cutting-edge technology to support its ever
expanding operations. A new Jet Hangar for Boeings with a supporting airframe overhaul shop
was completed and commissioned in 1968.
In 1970, PIA set up its own Flight Kitchen in Karachi, which caters, even today, to the national
airline as well as other carriers. Over the years, with the airline's expansion and increased
capacity, the need for a second Flight Kitchen became imperative.

Problems facing by PIA
Financial Losses
Pakistan international airline is struggling with financial losses from past few years. It is also
facing of such breakdowns, delay of flights, routes problem and some other issues.PIA was the
most profitable in the starts decades. Basically PIA is under the ministry of Defense. But the
government has changed many of chairman and MDs in the past 5 years. The Government
keeps the people of its own interest. It is also unlived that PIA, which made world record to
cover the distance from London to Karachi in 6 hr 43 minutes and 51 seconds, which still world
record today. But what is the reason that this is going down and down, day by day.
PIA has, in all, 39 aircrafts in its fleet comprising of 4 Boeing 777-200 ER, 3 Boeing 777-300
ER, 2 Boeing 777-200 LR, 6 Boeing 737-300, 5 Boeing 747-300, 12 Airbus A310-300 and 7
ATR 42-500. A number of aircrafts have been grounded due to shortage of spare parts or
overhauling. These include Boeing 747s, Boisiseing 737s and Airbus A 310. It is generally
believed that PIA high-ups are responsible for the inconvenience of the passengers. The whole
system needs overhauling.PIA planes deprived of repairs, overhauling. The repair and
overhauling works of the aircrafts of national flag carrier have not been done overseas due to
financial crisis in PIA. Foreign companies refused to provide engine to PIA due to non-payment
of hundreds of thousands of dollars of dues. Sources said that over 15 planes of the national flag
carrier still remain grounded due to unavailability of engines and spares. This has badly affected
the PIA's flight schedule both on domestic and international routes. The sources disclosed that
PIA has not been able to pay $ 25 million of dues due to its financial crisis.PIA has not paid $ 6
million to Air France for engine repair; over $ 6 million remains unpaid to Singaporean company
Eagle Service Asia for the repairs of two engines while over $ 4 million remains unpaid to a
Jordanian company for repairs of five engines of Boeing 747 aircraft.
Political Involvement
PIA employed number of employees in last 3 years on the political basis. There is excessive
recruitment without advertisements. Even though Ministry of Defense and Chairman PIA did not
know that how many employees are working in PIA. In the question of media respondent,
Naveed qamar told that 18000 employees are working but the Chairman of PIA gave the answer
of same question that, 20000 employees are working in PIA. But both of them were wrong. They
do not even know how many employees working under them. According to fact:
No. of employees; Approved Position = 19159
Employed = 1289
On daily wages = 3058
Total = 23605
23605 employees are working in PIA and PIA has 40 aircrafts. And for one plane 590 employees
are working. Which is third time the international standard? It means that on the basis of
unnecessary recruitment, overstaffing issue is created by the PIA. According to international
standard 150-225 people are for only A plane. But in this firm situation is very worse the average
ratio of staff should not exceed 150-225 per aircraft while PIA enjoys more than 500 employees
per aircraft. It is overpopulated and needs to cut its coat according to its cloth. It needs some hard
decisions by the administration to run the system smoothly. Pakistan International Airlines
should give primary importance to the safety of the passengers and make efforts to avoid any
untoward situation. Several untoward incidents occurred in PIA in the last decade. It is necessary
to tackle with such incidents seriously to minimize the losses. The passengers should not suffer
in its custody.
Management Issue
Pakistan government is doing his job greatly to destabilize the firm and after this showing de-
stable firm and to sell the PIA to private authorities and by privatization, so as far government
could corruption of billions of rupees again.
The National Assembly's Standing Committee on Finance was informed here on Tuesday that
Pakistan International Airlines (PIA) losses had increased to Rs 142 billion and gap between
revenue and expenditure continued to widen. The PIA management conceded before the
National Assembly Standing Committee on Finance, which met with MNA Khawaja Sohail
Mansoor in the chair, that the number of employees (18,000) on the national flag carrier was
relatively higher as compared to other organizations. Moreover, the member of the committee
said that PIA flights were operating on economically non-viable roots due to political pressure.
Senior official of the Finance Ministry blamed the PIA management for the losses and termed
their non-serious attitude responsible for the crippling financial condition of the organization.
DG Debt Masroor Qureshi said that the Finance Ministry has on and off requested management
of PIA to bring everything in black and white before the Cabinet Committee on Restructuring
(CCoR) as well as business plan but the response, however, appeared non-serious.
Corruption
Senior officer of PIA is involved in corruption of procurement in different parts of PIA aircraft,
which causes massive destruction to PIA.
Reason of Failure
The committee was briefed by the PIA deputy managing director regarding reason for the current
state of affairs such as aging fleet, volatile fuel prices, exchange loss, interest on non-fleet loans
and aviation policies. He added that PIA has taken almost 66 percent businesses from narrow
body aircrafts and fuel financial effect on different aircrafts is approximately 54 percent of the
total cost.
The committee was further informed by the deputy MD that PIA had paid Rs 59 billion to Gulf
Airlines under the aviation policies.
The committee was told by the PIA chief financial officer that PIA has almost 23000 employees,
out of which 1,500 employees were drawing more than Rs 100,000 salary. The committee was
also informed by the deputy MD that PIA had 14 consultants, however, former MD and
chairman had reduced these appointments and now they were seven. He further informed that
about 45 general managers were still working in PIA and PIA has planned in its transformation
process to reduce non-operational areas, which will be done through normal attrition. He said
that HR rationalization plan will result in a cost reduction of approximately Rs 3.8 billion over a
period of five years. The committee has shown its reservation about the huge number of postings
of general managers, the committee was told by the PIA representative that employees cost to
PIA is 16 percent of the budget.
The PIA management informed the committee the reasons behind the losses to the national
carrier were aging fleet, volatile oil prices, exchange rate losses, interest on non-fleet loans, geo-
political situation, and delay in aviation policy, inconsistent policies and services on
commercially unviable routes. It was further informed that PIA's fleet loans amount to Rs 54
billion and financing cost of these loans is around Rs 1.5 billion and exchange rate loss has been
worked out at Rs 4 billion. The non-fleet loans are estimated at Rs 98 billion and their financing
cost is Rs 9.7 billion and exchange rate losses have been worked out at Rs 2.1 billion annually. It
was also informed that jet fuel price per US gallon was $123.5 in 2006, which has shot up to
$270.1 per gallon in 2011, projecting an increase of 119 percent. Similarly, exchange rate was Rs
61 a dollar in 2006, which has gone up to Rs 90 a dollar in 2011. The revenues of the national
carrier were Rs 43.6 billion in 2001, which have increased to Rs 116.6 billion by the end of
2011.
Ministry of Finance (Debt) director general has informed the committee that PIA could not
prepare its proper business plan and PIA management was not looking serious towards business.
He proposed that PIA should make its strategic business unit, said units should make separation
of non-core business activities from airline business through speedex, flight kitchen and ground
handling services etc.


General Model of OD Process
General model of OD process has following steps:
1) Entering & Contracting Stage
2) Diagnosis
3) Intervention development
4) Evaluation and institutionalizing change

1) Entering and Contracting:
To solve the bundles of problem and to change the fate of PIA, Minster for Railway Mr
Khawaja Asif decided to hire external OD practioners to work with internal consultants. For
this purpose OD consultants decided to have meeting with MD of PIA Mr. S.Muhammad Ali
Gardezi and also with the Board. The first and foremost task for OD consultants is to
understand the current structure of the organization and the issues. OD consultant also views
the secondary data and over view the financial conditions of PIA of previous data till its
Golden age.
Problems identified earlier
Financial losses
Political involvement
Management issues
Corruptions

Client and relevant client
Minister of defense and Chairmen of PIA is our Client, chairmen, MD, CFO and directors of
different units is relevant client.

2) Diagnosis
To analyze PIA current function and on the basis of it we need to design interventions. So for the
current functioning analysis and ODP will work with internal consultants to save time and get
instant insight to problem causing areas.
Visiting the main hub of PIA Karachi, Lahore and Islamabad/Rawalpindi to observe and collect
data for further narrow down to pin point
Once the observation made and data collected then a joint diagnosis of the organization will be
conducted which will include understanding organizations current strength and weaknesses,
growth opportunities, organization culture and values etc.
Now going ahead to develop intervention.


3) Intervention development
a) Improve Financial Conditions:
PIA need to take finances from government and set specific targets for the profitability. There is
a need to establish a proper team who is responsible for check and balance of these finances and
make proper strategies to implement the whole process in order to achieve profitability goals.
Aircrafts in the fleet need over haul and proper maintenance schedule should be maintained to
cater for any delays or accident. To increase its availability (frequency of schedule flights) PIA
needs to expand its fleet size so that customer retention may be maintained. In addition PIA
needs to explore more direct routes for enhancing convenience to its prestigious customers
To make the whole process transparent and free from corruption they must developed the
mechanism of external auditing.
b) Reduce Political involvement
In order to reduce political involvement, PIA needs to be autonomous body and recruitment and
selection must be monitored and purely on merit basis.
c) Solve Management issues
To solve management issues u need to have competent and purely qualified people not of fake
degrees one. For a good management, PIA management shall separately introduce the
department for performance management system and evaluations under the direct report of
General Manager Human Resource, Managing Director PIA. Apart from annual evaluations,
midyear reviews shall be introduced that create the habit among employees to understand the
advantages of evaluation system and also know the proper way of ratting. The placement of right
person at right place according to their designation and pay scale.
PIA need to develop proper training and development system to meet current job required and
also competent with market. Require proper trainings of their staff to deal with passengers
complaints handling, on ground and on board.

d) Corruption:
Reducing corruption u need NAB (national accountability Bureau) assistance. There must
be check & balance teams and external auditing must be improvised to overcome root causes of
corruption.
4) Evaluation and institutionalizing change
As the plan is implemented, new information, changes in the environment and other issues
always arise that need adjustment. In this phase the OD consultants along with the design team
will monitor the implementations and collect feedback to evaluate whether action plan is on track
or not and will fix any deviations. Also design team will conduct formal evaluation processes
and discuss their learning about organization structure and change.
To sustain the positive change for longer period of time u need ongoing monitoring system, to be
profitable PIA needs to proper auditing system and check and balance system and employee
should be appraised and awarded on performance basis.
Once it becomes autonomous body then political interference will be reduced and hiring will be
on merit basis.
Once u given training properly to management and brought positive change then they will offer
themselves for continuous learning.