The privatization of Pakistan International Airlines (PIA) has failed to launch.
Of six potential buyers, only one—a housing society led by former military officers—submitted a bid, and it was well below the Rs. 85 billion base price set by the Privatization Commission. Their offer: Rs. 10 billion, not in cash, but in plots within their housing scheme. The offer was rejected with the disdain it deserved. This embarrassment of what was once Pakistan’s pride is miles from its gilded age, when the sky was the limit.
PIA evolved from Orient Airways, set up by Jinnah’s friend and financier M.A.H. Ispahani. Under Air Marshal Nur Khan, PIA soared to heights unthinkable. It bought hotels in New York City and Paris, set up what is today the Pearl-Continental hotel chain in Pakistan, hired Pierre Cardin to design uniforms, ran watercooler ads in the foreign press, flew lucrative international routes, helped establish Emirates Airline, served fresh lobster in first class—and its airhostesses were treated like celebrities. Plus, it was profitable.
Today, PIA is a drag on resources and a source of national head-shaking. Privatization of state companies has always been controversial—MCB is a glaring example. But matters were made worse during the demagogical days of Chief Justice Iftikhar Chaudhary and his disastrous ruling in the Pakistan Steel Mills case; and we have not been able to shake off his poisonous legacy.
Next door, Air India was privatized two years ago with the controls going back to its founders, the Tata Group. (Air India’s iconic mascot was modelled after a Pakistani businessman, Syed Wajid Ali.) Both Air India and PIA faced similar headwinds: unions, an aging fleet, crashing service standards. With PIA, besides the slur that privatization has become, there is the added trouble over pilot licenses, which the previous government claimed were mostly doctored. In the aftermath of that scandal, the European Union’s Aviation Safety Agency revoked PIA’s authorization to fly to the bloc; the U.S. followed soon after.
PIA was to be the white whale whose sale would have pried open the maw of privatization. For now, it’s destined to remain a white elephant.