Referring to the surprise operating profit of the airline in the first quarter of calendar year 2014 after a gap of four years, they said in way only because of the untiring and sincere WFC and the appreciation of Pak rupee. Programme like Fly Smart serves as an example as it was on Unions and Associations' suggestion that Chairman PIA Muhammad Ali Gardezi had constituted the committee to implement the cost-cutting measure on different fronts following the global trends.
Sadly WFC struck bad luck when its team leader lost his election at Palpa and the new executive committee that took over was not competent enough to carry forward the success "half achieved." The biggest chunk of foreign exchange payment in fleet debt had been booked at around Rs 108 to a dollar whereas when PIA actually made the payment the rupee had appreciated due to tireless efforts of finance minister and PIA saved a straight away Rs 10 on a single dollar, the debt amount runs in millions bringing huge benefit for the national flag carrier.
Besides, many cost-cutting measures suggested by the WFC during its short tenure helped the PIA management a great deal to reduce costs including 25.6 percent in administrative expenses and 80 percent decline in net loss during the quarter. Often aviation experts have accused the national flag carrier's huge employee base as the major ill, but surprisingly it is these unions' representatives that being a part of this way forward committee did manage to point out loopholes prevailing since years in the airline and most of the highly qualified high-ups simply overlooked these bleeding spots.
The airline has been struggling since last many years, specially when IATA airlines had one of the best years in 2010 and many airlines had overcome their financial problems in particular due to reasonable fuel prices, yet PIA drifted into deeper financial crisis due to its high cost per Available Ton Kilometre (ATK). Recent WFC recommendation proves that the bleeding and leakage could have been detected if the management was given to professionals, ie commercial aviation experts who could have done at-least fleet planning as per its revenue streams.
The committee points out that more than 60 percent of revenue come from flights of about 3-4 hours distance, including domestic, Mid East, and regional destinations for which the PIA fleet was non-compatible, but the moment WFC's advice was taken and narrow body fleet acquired the fuel bill reduced drastically.
The FLY Smart programme of the committee was a huge success as the committee had managed to put all three stakeholders namely Civil Aviation, Air Force and PIA on negotiation table to deliberate and finalise changes to ensure direct commercial routes between different destinations in the country.
PIA insiders said that under the said programme the Cabin Crew Patterns were rationalised in the month of November and December last year by which number of rooms were reduced to 2905 yearly, which accrued a saving of Rs 10.1 million to the national airline. The committee identified huge spares inventory of aircraft which were not in PIA service anymore and immediate measure of selling off for 46 million dollar inventory spare parts of B747-200, A-300 b/4 dc-10 Fokker b-707 had been ordered.
One of the best jobs, they said the committee did was to save PIA from huge annual loss of $5 to 7 million it has been paying to Air France in terms of penalties on late delivery and on damage of repairable parts under Customer Support Programme with Boeing 777. 'The agreement was signed between PIA and Boeing in February 2004. The components pool size is 646 components and total inventory cost is $28.9 million. Under the agreement, PIA was to send serviceable components within five days to Charles De Gaulle Airport, Paris.
Since the return time of five days was not humanly possible, PIA had been paying this huge amount in terms of penalties since long. The airline had also been paying millions of rupees on account of 25 percent customs duty on these components that was against the law but the management stayed unaware of that provision.
"The WFC committee after pointing out this huge loss started negotiating with Boeing and resolved this issue. It not only got this components return time revised but also filed indemnity bond by which PIA is likely to get back a major chunk of money from the penalties it paid.
On committee's suggestion 'the management operated a leased aircraft Boeing 737-800 on a route from November 20, 2013 to March 31, 2014. The said aircraft saved Rs 1.03 billion for the airline due to its low burn off against A-310. 'The committee undertook 30 senior ATR First officers' transition directly to Airbus A-310, which allowed bypassing narrow body Boeing 737. The said process was meant to save $1.3 million for the airline.
The objective behind this was to reduce the airline's expense in foreign exchange as simulation of ATR and Boeing 737 are undertaken in Far East and European countries, and the immediate restructuring of these sessions was expected to save above Rs 8 million. The committee also ordered a revised taxi uplift fuel on all aircraft which envisions an approximate savings of more than Rs 32 million a year.
The committee had not completed its work as quite many departments were still to be audited/scrutinised, and the committee had also decided to undertake a strict audit of all agreements regarding hotel and transport at all PIA domestic and international destinations while agreement with Sabre on different solutions was also on the committee's agenda.
The Way Forward Committee was formed in September last to undertake some out of box solutions to reduce PIA's expenses in operations without compromising safety. The committee comprised Captain Suhail Baluch as Team Leader, Secretary First Officer Syed Chakar Ali Shah, Aircraft Engineer Syed Zakir Farooq Deputy Secretary, Flight Purser Noor Laghari, Assistant Manager Anwar Hussain and senior Technician Obaidullah as members.