Saudi Warns to PIA Over Unpaid Dues
Pakistan International Airlines (PIA) has received a warning from Saudi Arabia. The country is threatening to cease PIA flights unless they pay up to USD48 million in accumulated fees. This news poses a significant risk for tens of thousands of Pakistanis planning to go on their religious pilgrimage, Hajj, to Saudi Arabia.
Previously, the Saudi authorities had stopped PIA’s operations during the peak of the Hajj period four years ago. The reason? The primarily state-owned airline couldn’t keep up with its payment obligations. With approximately 50,000 passengers booked for the upcoming pilgrimage flights to either Madinah or Jeddah, PIA has hundreds of Hajj flights lined up between now and the beginning of August when the pilgrimage season wraps up.
Last week, an economic coordination meeting took place in Pakistan where the Finance Minister, Ishaq Dar, reportedly disclosed the latest warning from Saudi Arabia. The Pakistani government also issued a new reform directive for its national carrier. They emphasized that losing access to Saudi Arabia would not only inconvenience passengers but would also further tarnish PIA’s reputation.
Prime Minister Shehbaz Sharif, who reportedly attended the meeting, is leading the latest reform efforts. He has established a committee, under the leadership of Ishaq Dar, to formulate reform proposals and present them to the federal cabinet. Both Sharif and Dar pointed fingers at the previous government for the present challenges faced by PIA.
The government has now directed PIA to increase its fleet to 49 aircraft, believing that the added capacity might provide the financial boost that the carrier needs. Currently, according to data from ch-aviation PRO airlines, PIA owns 33 aircraft in its fleet, but only 22 are in service. In the first quarter of 2023, the airline incurred a loss of PKR38 billion Pakistani rupees (USD 132.8 million), marking a 171% increase from the loss recorded in the same quarter in 2022. The government partly blames the recent losses on the depreciation of the rupee against the dollar, along with the surge in oil prices and interest rates.
It’s clear that PIA is facing a critical situation. However, the government seems to be taking steps towards reform and recovery. The airline’s future lies in the successful implementation of these new directives and settling its international dues.
