PIA Internship Report


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Hello Guys, The report that i have submitted was prepared by me along with my group members during my 6 weeks Intership @ PIA in 2010. we were given a project of conduting a surey at Jinnah Terminal's international departure lounge from passengers to know the reasons behind PIA's downfall.

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PIA Internship Report

  1. 1. AbstractThe report includes the information about Pakistan International Airlines, the introduction ofthe PIA and the problems which are being faced by national flag carrier, the purpose of selectingthis topic is to know the reasons that why PIA an airline which was one of the best airline of theworld and the strong pillar of Pakistan’s economy, why it is facing loss from many years? Thepassengers are continuously switching to other airlines and PIA is consistently going down, whatare the reasons behind this? The survey results are also included in the report that we conductedat Jinnah Terminal Karachi, during the survey we met with different passengers where wenoticed their complaints about PIA, the complete information is also included in the report. Inthe end we have added some suggestions which can help PIA in recapturing the lost passengers. 1|Page
  2. 2. Introduction:Pakistan International Airlines Corporation, commonly known as PIA is the flag carrierairline of Pakistan. The airline, with its head office on the grounds of Jinnah InternationalAirport in Karachi, is one of the largest airlines in Asia, operating scheduled services to 24domestic destinations and 39 international destinations in 25 countries across Asia, Europe andNorth America. Its main bases are Karachi, Lahore and Islamabad/Rawalpindi.The airlines secondary bases include Peshawar, Faisalabad, Quetta, Sialkot and Multan, fromwhich 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%). Itemployed 18,043 people as of May 2008.History:Pakistan International Airlines, or PIA for short, can trace its beginnings to the days whenPakistan was not an independent state. In 1946 Muhammad Ali Jinnah realized the need for anairline network for the forming country and called upon the help of an industrialist Mirza AhmadIspahani to develop a flag carrier for the nation. Meanwhile, an airline called Orient Airways,registered in Calcutta, was formed on 23 October 1946. In February 1947, the airline broughtthree DC-3 airplanes from a company in Texas, and in May of that year the airline was granted alicense to fly. Services were started in June from Kolkata to Sittwe and Yangon. This was thefirst post-war airline flight by a South Asian registered airline company. Two months after thisservice began, Pakistan was formed. Orient Airways began relief flights to the new nation and,soon after, it moved its operations to Karachi, where it began flights to Dhaka on 7 June 1954. Inaddition, the first two domestic routes in Pakistan were established, from Karachi to LahorePeshawar, and from Karachi to Quetta to Lahore. PIA L1049C Super Constellation at London (Heathrow) Airport in 1955The Government of Pakistan, realizing the operation was failing economically, proposed thatOrient Airways merge into a new national airline. On 11 March 1955, Orient Airways mergedwith the governments proposed airline, becoming Pakistan International Airlines Corporation.During the same year the airline opened its first international service, from Karachi to London 2|Page
  3. 3. Heathrow Airport via Cairo International Airport and Leonardo da Vinci Airport in Fiumicino,Italy, using three newly-acquired Lockheed L-1049C Super Constellations. The DC-3s continuedoperating the domestic services in Pakistan. In May 1956, PIA ordered two further SuperLockheed Constellations of the latest L-1049H version and five Vickers Viscount 815. In 1959,Malik Nur Khan was named Managing Director.In March 1960, PIA became the first Asian airline to use jet aircraft when Boeing 707 serviceswere introduced. The aircraft were wet leased from Pan American and in 1961 services werebegun to John F. Kennedy International Airport in New York City. In 1962, orders were placedfor Boeing 720s, Fokker F27s and Sikorsky helicopters. One of PIAs Boeing 720s broke a worldrecord that year, when it flew from London to Karachi non-stop in 6 hours and 43 minutes duringits delivery flight from Seattle, piloted by PIAs senior Captain Abdullah Baig, a record unbrokento this day. During 1962, services to East Pakistan (now Bangladesh) were proving to bedifficult; therefore PIA placed their Sikorsky S-61 helicopters on these routes until 1966 whenconditions improved. In 1964 PIA became the first airline from a non-communist country to flyto the Peoples Republic of China. As the Indo-Pakistani War of 1965 broke out, PIA helped thePakistani forces with logistics and transport. In 1966, the Viscounts were phased out, substitutedby four Hawker Siddeley Tridents. However, as growth surpassed the need for these aircraft,they were later sold to Civil Aviation Administration of China.The 1970s saw the resumption of transatlantic flights and new destinations. It once again aidedthe Pakistan Army by transporting soldiers to East Pakistan in the Indo-Pakistani War of 1971and lost a couple of its aircraft to Indian Air Force fighters. In 1972 it applied to operate to Libyaand an agreement was signed with Yugoslav airline JAT. In 1973, McDonnell Douglas DC-10sarrived and were used by the airline before they were replaced by Boeing 707-300s. In 1974 airfreight services started, as well as a cargo service to New York City under the name, PakistanInternational Cargo. In 1975, PIA introduced new uniforms for air hostesses. These uniformswere chosen through an open competition, the winning entry was a design by Sir Hardy Amieswho was designer to Her Majesty Queen Elizabeth II. A Convair CV-240 in the 1950s at Karachi airportIn 1976, leased Boeing 747-200Bs came into service. In 1979, the airline bought their firstBoeing 747-200BM aircraft. Also in 1978 the airline provided help to Somali Airlines, Air Malta 3|Page
  4. 4. and Yemenia and established a hotel management service in the United Arab Emirates. PIAleased two of its own Boeing 720s to Air Malta during the 70s.The 1980s began with the opening of a cargo centre in Karachi and the delivery of a new aircraft,Airbus A300B4-203. In 1981, a duty-free sales service was inaugurated. During 1982, the first Cand D checks were carried out on the fleet in Karachi. In 1984, domestic night coach fare servicewas introduced to offer lower prices for low-income passengers. In 1985 the PIA Planetariumtourist attraction was inaugurated in Karachi and later in Lahore. In the same year, five Boeing737-300s joined the fleet making PIA the first Asian operator of such a type. Two former PIABoeing 720Bs now form part of the Planetariums exhibition at Karachi and Lahore. In late 1987and early 1988, flights were introduced to Malé and to Toronto Pearson International Airport,respectively. In 1989, the first women pilots started their career on passenger airplanes.During June 1991, PIA received the first of six Airbus A310-300 aircraft on from AirbusIndustries. In 1992, flights started to Tashkent and in 1993, to Zurich, Switzerland. In addition,PIA became a user of the Sabre, Galileo and Amadeus global distribution systems. During 1994,PIA added Jakarta, Fujairah, Baku and Al-Ain to its destinations. Air Safari flights werelaunched in the same year using Boeing 737–300 aircraft over the Karakoram Mountains. In1995, PIA received a Boeing 747 flight simulation system and a used Air France A300 aircraftwas bought. In 1996 the airline leased Tupolev Tu-154 aircraft, and re-opened services to Beirut.PIA only used the Tupolev Tu-154 for a short time to deal with the demand during the summerof 1996. In 1999, PIA leased five Boeing 747–300 aircraft from Cathay Pacific to replace itsaging Boeing 747-200M fleet. The aircraft wore a new livery with a handwork Pashmina tail onwhite body and large Pakistan titles on the front fuselage. The livery was applied to some of thefleet during the 90s but due to copyright problems the livery was dropped. The Boeing 747-300sremained in the new look but with a plain green tail with PIA titles. The other aircraft in the fleetwere repainted in the 1990s livery. The Fokker F27 was once the backbone of PIAs northern area flights in the 1990s 4|Page
  5. 5. Domestic Network of PIA Domestic Network of PIAIslamabad - Rawalpindi (Benazir Northern AreasBhutto International Airport) Hub o Gilgit o SkarduNorth West Frontier Province Sindh(NWFP) o Hyderabad o Karachi (Jinnah o Chitral International Airport) o Dera Ismail Khan Hub o Peshawar (Peshawar o Moenjodaro International Airport) o Sukkur Focus City Punjab Balochistan o Bahawalpur o Dalbandin o Dera Ghazi Khan o Gwadar o Faisalabad o Panjgur o Lahore Hub o Quetta o Multan o Turbat o Rahim Yar Khan o Sialkot 5|Page
  6. 6. International Network of PIASouth East Asia North America Malaysia Canada o Kuala Lumpur o Toronto Thailand United States o Bangkok o New York City (JFK)Southwest Asia Europe Bahrain o Manama Denmark Kuwait o Copenhagen o Kuwait City France Oman o Paris o Muscat Italy Qatar o Milan o Doha Dammam Netherlands Saudia o Amsterdam o Jeddah Norway o Riyadh o Oslo United Arab Emirates o Abu Dhabi o Dubai o Sharjah 6|Page
  7. 7. ORGANIZATIONAL STRUCTURE OF PIA CHAIRMAN PIACSA to SecretaryChairman Managing Director PIAC Director Precision Chief Operating Director Coordination/ Engineering SA to MD OfficerDirector Airport DirectorServices Director Flight Operation’s Administration Director Network & Director Flight Services Director Finance Route PlanningDirector Cargo Sale Director Engineering Director Marketing& Service 7|Page
  8. 8. Departments of PIA:PIAC Airline has been divided into the following function units.  Network & Route Planning  Administration  Finance  Marketing  Engineering  Flight Operations  Airport Services  Cargo Sales & Services  Precision Engineering Complex  Flight Services  Coordination 8|Page
  9. 9. SWOT ANALYSIS OF PIA:Through the technique of "SWOT" one can analyze the present performance conditions of anorganization and its weaknesses. Also the opportunities it can grab in the external environmentand the threats it faces. This technique serves as a base for sound recommendations andconclusions. We will use SWOT analysis technique in order to come up with conclusion aboutPIA.  Strengths  Leading Market Position  Brand Recognition  Advance Maintenance Facilities  Network Presence  Hub airport at Karachi  Weakness  Debt Burden  Frequent Changes In Management  Government Influence  Reliance on Oil Prices  Opportunities  Explore new destinations/ routes  Customer loyalty  Shifting customer needs  Industry Recovery  Threats  High Interest Rates  Low cost airlines in domestic competition.  Entry of International Airlines  Decline in airline industry 9|Page
  10. 10. Problem Statement:The problem that we are discussing in our ARM report is that why PIA is facing loss from manyyears? Why it is not generating profit and contributing in country’s economy? Intact it is noteven able to generate sufficient revenue to run its operations every year government feeds PIAwith special funds, there are many of the reasons which are causing loss to PIA, we havegathered some data from different pages that shows the current financial position of PIA,The Figure shows the financial position of PIA of last two consecutive years i.e. 2010 and 2011,we can see that PIA has suffered from loss in these years, but the most important and the morealarming thing is that its loss in last year i.e. 2011 is more than the previous year i.e.2010, whichshows that PIA which already is facing huge loss is not yet even able to control the losses but itis going even more worst, so nobody knows what will be the next 2-3 years in PIA’s life, if wesee the track record of PIA apart from the data of these last two years we can see that PIA is notjust facing loss from last few years but from many years it isn’t performing well as it should bedoing so, though it’s the biggest Airline of the country and we can say it is among the seniorairlines of the world so it should have been competing with one of the best Airlines of the worldand it should have been having the ranking of at least 4 Stars, 10 | P a g e
  11. 11. From the above figure we can clearly see the performance of PIA of its last 30 years, in thestarting years it has generated some profit or we can say a minimal profit, but if we see speciallyafter 2002 and 2003 till now PIA has drowned into the sea of loss, because in these years the lossthat PIA has faced, it has never faced before, PIA is even not able to generate its own operatingexpenses so this one is the Crucial situation that PIA is facing from last few years. We all knowhow much senior airline PIA is and how bright past and it was people’s one of the favoriteairline, but unfortunately PIA wasn’t able to sustain its brightness and because of many reasonsnow people are avoiding to travel on PIA which in result has decreased the PIA’s market sharespecially on international routes, here is a graph that shows the market share of PIA both oninternational routes and on domestic routes. 11 | P a g e
  12. 12. PIA Info - 2010The graph shows that PIA is only able to get 39% of international market share which is verylow being the national flag carrier it should have been having more than 60% of the market sharebut because of many reasons PIA is not able to get the major share, while in domestic marketPIA has captured the major share and the reason behind this is that there are only two otherairlines operating in Pakistan other than PIA and both of them are not much better than PIA sopeople prefer PIA on those, another graph is presented that shows the share distribution ofairlines on international routes. PIA info - 2011The above graph shows that PIA has 31% of market share in Pakistan on international routes,while remaining 69% is divided in other foreign/local private airlines, means PIA is available butstill international airlines specially of gulf countries are coming and picking a major number of 12 | P a g e
  13. 13. passengers from Pakistan and taking them to other countries even where PIA flies which is aserious concern for PIA and the reasons behind this situation are many.PIA is not just offering the service of taking passengers from one place to another, it offers manyother services as well, eg:  Cargo  Engineering  Passengers  Flight Kitchen  Others – Speedex Courier ServiceThe revenue generation of PIA from different departments is shown in the following graph, PIA info - 2011The above graph shows that major source of earning of PIA is passengers movement, while theother departments which are mentioned in the graph are capable of generating more revenue butirresponsible behavior of employees and corruption has shortened their revenue an senioradministration could increase the revenue generation of these departments and that increasedrevenue from all the departments could help PIA in decreasing its losses. The graph shows thatonly 5% of the revenue was generated from the cargo service which could have been much morebecause PIA and its cargo department is capable of generating more revenue but they were nitable to generate because of many reasons, eg: Planes conditions, Competition, High Charges,Low Orders following graph is showing the information about the capacity and utilization ofcargo service department, 13 | P a g e
  14. 14. The graph clearly shows the capacity and the utilization of cargo service, the capacity is higherand the utilization is lower which has resulted in low revenue generation which means loss toPIA, so the management must try to utilize more of its capacity to earn more revenue.The factors which are affecting PIA and leading it towards the side of loss are many, one of themajor factor is increasing fuel prices, the fuel prices are increasing day by day which arecausing loss to PIA specially when it gets fuel from foreign suppliers then PIA has to pay inDollars while it gets the amount of ticket purchased by the people in rupees so the gap ofcurrency exchange is again loss to PIA. The condition of most of the planes of PIA is not sogood which demands in repeated maintenance which again is loss to PIA and due to the worstcondition most of the time the planes of PIA are grounded and because of the flights getdelayed or cancelled which results in trouble to the passengers and then next time when theyavoid travelling from PIA and choose any other airline to travel and in this way PIAcontinuously looses its passengers, following is the graph that shows what costs PIA, 14 | P a g e
  15. 15. The above graph shows that the major cost of PIA is its fuel and one thing which is alwayscriticized about PIA is that it is over employed means huge number of people are employed andthe salaries of those employees are causing loss to PIAResearch Objectives : To find out the reasons behind the poor performance of PIA from many years To know the insights To get customer’s idea about PIA To suggest PIA that how it can improve.Statements Of Hypothesis : Null Hypothesis H0Poor Quality Service Does Affect the Market Share of PIA. Alternate Hypothesis H1Poor Quality Service Does Not Affect the Market Share of PIAResearch Methodology and Data Collection Method  Secondary Data  Primary Data Questioners Individuals In depth Interviews Survey results 15 | P a g e
  16. 16.  Secondary Data : The main source of gather secondary data is internet and Pakistan International Airlines yearly officials report, also we have gathered data from PIA”s Head Office Primary Data : Primary data we have gathered through survey small size questioners and also we conducted informal Individual in depth interviews from Air Travel agents on the basis of these sources we measure survey results, This is the Questionnaire, we designed for our survey at Jinnah Terminal Project – ARM Airline: Group Size: Destination: PIA wasn’t Considered, Reason; Price Service Schedule Suggestions Filled By: Adnan Ahmed/ Abdul Salam 16 | P a g e
  17. 17. Survey:The survey was conducted by both of us the group members Abdul Salam Shaikh and AdnanAhmed Memon, at the gate of International Departure Lounge Jinnah International Airport Karachi,we spent a whole day there and took the survey from a sample of more than 100 people which weretravelling to different countries using the international airlines, we took survey from them to knowtheir reason of not selecting the PIA.After the survey we found that main problem lies in the service of PIA that is why people areswitching to other airlines, Again in service we got different complaints in service. Eg. Theairhostesses and other staff of plane treats the passengers really badly, they don’t listen to them theydon’t ask whether they need anything or not, the other complaint regarding service was of airportstaff of PIA, that the staff doesn’t help them inreaching the plane and once when they are landed they face so much trouble in getting their luggage,They have to stay for so many hours at airport to get their luggage, while some passengers told thatother airline’s staff treat them very nicely and help them in each stage till they sit in the plane or tillthey get their luggage and leave airport. Also another very common complain was of the staff of PIAoutside Pakistan people complained that the staff of PIA outside Pakistan is so rude and they treateven the old aged passengers just like their servants. So these were some complaints about theservice of PIA that we got from the passengers during survey.The other main problem is of high prices and Delays. As we observed while conducting the surveyat the terminal that most of the passengers were from low class and they were mostly travelling toUAE and Saudi Arab for labor work, and it is for sure that a labor class person will always look forlow cost airline, even the upper class also consider the price factor sometimes, and as alreadydescribed if we look at fares of PIA and compare them to other airlines then we will get a cleardifference of huge pricing. And it is clear also that the airlines of Middle East are getting thepassengers from Pakistan just because of low pricing.The Major Complaints of Passengers: The price differences in international carrier and PIA. Attitude of crew is not good. They do not support passengers if they are in trouble. Website is not user friendly. Many passengers complained that the flight schedule is not properly mentioned and credit card acceptability issue is there. 17 | P a g e
  18. 18. Delayed flights of PIA No luggage safety Agents of PIA are not promoting PIA. At the time of selling the tickets they themselves preferring other airlines such as Emirates. No respect given to diamond card holder.Individual In Depth Interview:The Individual In depth we conducted from Air travel agent which is located at BadarCommercial Area Defense phase 5 Karachi Name of Air Travel Agency : A. M Travel Agency Name of Air Travel Agents : Arif Ali Morejo and Abdul Naeem RubbaniTravel Agents Ideas: PIA service is not as much competent as other Airlines Offering Delayed Flights Airport Staff and Flight Staff behavior problem Language problem Contact Card of the Travel Agent 18 | P a g e
  19. 19. Conclusion:The final conclusion of the whole report is that people of Pakistan want to travel through PIA butthey say they are compelled to travel from other airlines because of above reasons, so its now thetime when the management and the Government of Pakistan need to take some serious stepstowards the uplifting of PIA, because Pakistan at this time is facing economical and inflationsproblems so if PIA can get dependent then the day is not far when it will start contributing in thecountry’s economy by adding its revenue in it.Suggestions: 1. PIA should not discourage its loyal customers by degrading them with their attitude 2. Fares should be matched with other competitive airlines if not less 3. Conditions of airplanes should be improved 4. Food quality should be improved. Equipments are needed for flight kitchen but PIA’s top management is not supporting it. Equipments should be arranged in order to make flight kitchen more effective and it will in return increase the reputation of PIA. 5. Frequency of flights should be increased. It will create a huge impact because passengers are demanding more frequent flights to travel. If they can not catch one flight so they can catch another easily. 6. Fleet size should be increased by adding new planes, as thy can attract those passengers which are not travelling on PIA because of its old fleet. 7. Government influence should not be there as it is also considered as one of the biggest reason of PIA’s downfall 19 | P a g e
  20. 20. Bibliography:  www.piac.com.pk  www.wikipedia.org  www.airliners.net 20 | P a g e
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