Pakistan's flag carrier to not appeal EU flight ban, will review turnaround strategy -officials

ISLAMABAD, Sept 4- Pakistan International Airlines, the Islamic nation’s flag carrier, will not appeal against a six-month ban imposed on its lucrative flights to European locations, three officials said, in a blow to the ailing airline’s pre-pandemic turnaround plans. The European Union Aviation Safety Agency banned PIA from flying to the bloc in June over…

By Asif Shahzad

ISLAMABAD, Sept 4 (Reuters) – Pakistan InternationalAirlines, the Islamic nation’s flag carrier, will notappeal against a six-month ban imposed on its lucrative flightsto European locations, three officials said, in a blow to theailing airline’s pre-pandemic turnaround plans.

The European Union Aviation Safety Agency (EASA) banned PIAfrom flying to the bloc in June over safety concerns, days afterthe country grounded dozens of its pilots over allegedly dubiousqualifications.

“We’ve decided that filing an appeal at this stage will becounter-productive,” PIA spokesman Abdullah Khan told Reuters.

The deadline to appeal expired on Aug 31.

Two civil aviation officials told Reuters that all thestakeholders agreed that an appeal would be a futile exerciseuntil reforms in the regulatory framework and a full probe intothe pilots’ scandal were completed.

The civil aviation officials declined to be named. Thegovernment and the Pakistan Civil Aviation Authority did notrespond to requests for comment.

Opting not to appeal means the ban will remain in forceuntil the end of 2020 – a year in which PIA was to implement anew business plan aimed at making the company profitable by 2023- via a route rationalization, increasing flights and adding newsectors like Amsterdam.

With more than $4 billion in accumulated losses, PIA wasalready struggling financially when flights were grounded inMarch because of the pandemic. Just as it resumed operations inMay, a domestic PIA flight crash in Karachi killed 97 of 99people on board.

An initial inquiry pointed to a number of safety failures,and sparked a disclosure from authorities that nearly a third ofPIA’s pilots may have falsified their qualifications, promptingEASA, the U.S. Federal Aviation Administration (FAA) and otherregulators to ban PIA flights.

PIA had halted commercial flights to the United Statesbefore the ban, but was flying charter flights and had plannedto restart operations there soon.

The European ban hurt its revenues from overseas sectorssuch as London, Manchester and Birmingham that were to be acornerstone of PIA’s turnaround strategy.

BREAK-EVEN

The business plan put together by the PIA management lastyear saw those UK routes and new European destinations as key toits turnaround strategy, which also involved inducting at leastseven new aircraft to its fleet by 2022.

The year “2020 would be a break-even year followed by returnto profitability in 2023,” said the turnaround plan, reviewed byReuters. It has not been made public.

The expansion plans are now on hold, and the airline plansto revise its turnaround strategy in consultation with theInternational Air Transport Association (IATA), said PIA’s Khan.

IATA, which is to begin an operational safety audit of PIAthis week, said the audit process was standard practice afteraircrafts of registered airlines met with accidents.

In an emailed response to Reuters, Albert Tjoeng, IATA’sAssistant Director of Corporate Communications for Asia Pacific,said IATA could not confirm or discuss the body’s consultingprojects keeping in view commercial confidentiality.

“It’s a routine audit consequent to which each airline getsan operational clearance certificate. PIA teams are all gearedup for the audit,” said PIA’s Khan.

As stated in its turnaround strategy, PIA’s plans to divestnon-core businesses such as food catering and ground handlingremain on track and it is also set to hire an internationalconsultant to advise on legacy debt, said Khan.

The business plan noted that PIA’s share of internationalflight traffic into Pakistan had fallen to 27% in 2019 down from42% a few years prior.

Aside from operational issues, the report cited competitionfrom Middle Eastern airlines as one of the main reasons behindthe market share decline, and it proposed that Pakistan revisitits open skies strategy to allow PIA to be more competitive.

The recent bans however, risk further denting PIA’s marketshare with carriers such as Virgin Atlantic recently announcingdirect flights into Pakistan to fill the PIA void.

The new projections of PIA’s market share are beingcalculated, its spokesman said, adding the airline’s managementbelieves the decline on an annual basis will not be “asbrutal as predicted,” due to the pandemic slowing down globaltraffic.(Reporting by Asif Shahzad;Editing by Euan Rocha and Raju Gopalakrishnan)

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