After more than 4 decades of being strictly controlled on the routes that could be served, the United States passed the Airline Deregulation Act in 1978. That action spread to Europe and the Asia-Pacific region over time, working to reduce some of the regulatory aspects of the aviation industry.
In 1982, Pakistan created the Civil Aviation Authority to serve as a regulatory body because of influences generated by the International Civil Aviation Organization. The goal was to align the Pakistan aircraft industry to the activities and best practices seen throughout the rest of the world.
It wouldn’t be until the 1990s when the Pakistani government would adopt open skies policies, allowing domestic carriers to have the same control over passenger traffic as well. Part of this was due to a change in global aviation infrastructure, as international flights began to divert from Karachi due to deteriorating political conditions.
Interesting Pakistan Aircraft Industry Statistics
#1. In the 2016-2017 fiscal year, the Pakistan aircraft industry supported over 68,000 domestic commercial flights and almost 90,000 international flights. Another 77,000 non-commercial flights were also supported. (Pakistan Civil Aviation Authority)
#2. Over 21 million passengers were served by commercial airlines in Pakistan in FY 16-17, with about one-third of passengers being domestic-only. (Pakistan Civil Aviation Authority)
#3. Over 66.8 billion tons of cargo were handled by aircraft in Pakistan in FY 16-17, along with 194 million tons of domestic mail. Pakistani aircraft also handled over 14.1 billion tons of international mail. (Pakistan Civil Aviation Authority)
#4. Fuel cost is a major percentage of the total revenues of the aircraft industry in Pakistan. In 2013, for example, global commercial airlines had a fuel cost percentage of 31% of total revenues. Pakistan International Airlines, the largest provider of aviation services in the country, had a fuel cost of 54% of total revenues. (JCR-VIS Credit Rating Company Ltd.)
#5. Pakistan International Airlines currently controls 51% of the domestic routes which are available. Shaheen Air comes in second, with 24.2% of domestic routes. (Pakistan Civil Aviation Authority)
#6. PIA also controls 28.1% of international routes which have a destination involving Pakistan. Emirates has a 17% share, followed by Shaheen Air at 12.6%. (Pakistan Civil Aviation Authority)
#7. One of the newest airlines in Pakistan is Air Indus. In its first year of operations, it grew to command an 8.5% share of the market, carrying about 600,000 passengers. (Pakistan Civil Aviation Authority)
#8. The 12 largest airports in Pakistan saw double-digit increases in the amount of airline passengers served in 2015. Gwadar Airport saw the highest levels of growth that year, at 73%. Multan grew at 64%, Quetta grew at 62%, and Faisalabad grew at 61%. (Siasat)
#9. Hotel occupancy rates surged in Pakistan with the higher levels of passenger traffic, going from 35% in 2015 to 80% in 2016. (Siasat)
#10. One of the biggest issues facing tourism and travel in Pakistan, supported by the airline industry, is the presence of terrorist violence in the country. In 2015, there were 940 civilians killed in attacks. Since 2004, more than 400 civilians have been killed by terrorists each year, reaching a peak in 2012 when 3,007 civilians were killed. (Siasat)
#11. Over $750 billion was spend on air transport globally in 2015, yet the largest aircraft provider for the industry in Pakistan reported negative equity of Rs 167 billion in September of that year. (JCR-VIS Credit Rating Company Ltd.)
#12. For the Pakistan aircraft industry to continue providing adequate services, an additional 12,820 airplanes over the next 20 years, valued at $1.9 trillion, would be required. That would represent 36% of the world’s new airplane deliveries. (Pakistan Civil Aviation Authority)
#13. The economy of Pakistan is ranked 44th in terms of nominal GDP, but it ranks 140th in the world for per capita GDP, at just $3,149. (Pakistan Civil Aviation Authority)
#14. The average air traffic growth experienced in Pakistan with air liberalization has been as high as 35% globally, which would benefit the aircraft industry if additional open skies agreements could be reached. (Pakistan Civil Aviation Authority)
#15. From 2013-2018, passenger traffic in Pakistan has increased by more than 40%. (The Express Tribune)
#16. There is a race by the airlines to bring more customers to the industry by reducing the amount charged for fairs. Air tickets that would have cost Rs. 30,000 in 2013 are now priced at Rs. 10,000 today. (The Express Tribune)
#17. Industry providers in Pakistan are still operating on relatively low profit margins, often less than 3%, which is why a combined net loss is occurring so frequently, even with the higher levels of passenger traffic. (The Express Tribune)
#18. The largest industry provider, PIA, currently offers 15,000 direct employment opportunities. Shaheen Air, the second-largest provider, offers just 2,000 employment opportunities. (The Express Tribune)
#19. Pakistan has a total fleet of 80 aircraft to service a population of about 210 million people. In comparison, Dubai, Malaysia, Turkey, and Thailand have more than 1,000 aircraft to serve about 250 million people. (The Express Tribune)
Pakistan Aircraft Industry Trends and Analysis
As violence within Pakistan has decreased, the desire for visitors to return to the country has seen a correlated increase. The success or failure of the aircraft industry in Pakistan will be highly dependent upon how violence is contained, as two-thirds of passenger traffic originates from international routes.
At this time, even with the growth in passenger volumes, it is clear to see that the country is inadequately served by its own carriers. There are challenges with foreign carriers that must be solved as well. Although there is a lack of confidence in the political and governing infrastructures present in Pakistan, there is also a lack of confidence in the ability of domestic carriers to provide services too.
Even if nothing changes, however, growth rates for the industry could reach an average of 9% per year for the next 5-year period. New carriers will offset losses seen by the major carriers as they push forward with plans to serve small airports in the rural areas of the country.
If airports can upgrade their facilities to support arrivals and departures of A-380s, reduce hazards, and maintain investments in downstream industries, then the recent trends of growth may continue for the Pakistan aircraft industry. If these investments cannot be maintained, then it may be a challenge for this industry to survive the next 10-year period.