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karatecatman · Guest

www.thenews.com.pk/daily_detail.asp?id=65613

Replacing B-747s bad idea for PIA: experts

By Saad Hasan

KARACHI: The Pakistan International Airlines (PIA) is incurring huge financial losses on account of Boeing-777 being flown from Karachi with less than 16 per cent seat occupancy to the northern hubs of the country for onward dispatch to Europe and the United States. Also, the move to replace the tried and trusted B-747 aircraft with newer and more expensive aircraft is adding to the airline’s financial burden.

For every positioning flight from Karachi to Lahore and Islamabad, the airline suffers an operating cost burden of Rs1.2 million, excluding the revenue that could have been generated, people close to the PIA affairs told The News.

However, according to a PIA spokesman, the aircraft are rotated with a scheduled flight to and from the northern hubs, except where it is mandatory to bring it to Karachi where the airline’s engineering base is headquartered for maintenance work.

“All positioning flights are operated as per printed regular scheduled flights where booking is done and passengers as per capacity of aircraft and availability are accepted,” the spokesman told The News.

The PIA official said the operating cost of B-777 aircraft was being met in terms of recovery. He did not elaborate, however.

Well-placed sources said PIA had failed to meet its repayment schedule on installments of loans taken against the eight B-777 aircraft and had resorted to additional loans since the targeted revenues were never achieved. One of the factors that led to astronomical rise in total operating cost was the rise in maintenance expenses and the cost of serving on “dead” sectors which involved positioning flights to the northern hubs, they added.

Aviation experts say B-777 is a fuel-efficient aircraft, which if operated on dense capacity sectors and direct economical routes “is bound to yield revenues and make operations profitable.” They told The News “It is an ideal long-range aircraft, but it is totally unsuitable for medium-range flights of less than 6- 7 hours.”

The problems in strategy are causing heartburn within the airline. The trusted B-747 aircraft, which have been the mainstay of PIA’s business, are being phased out despite the fact that they still have the capacity to earn for the corporation.

PIA also has 12 A310s which are short to medium range aircraft with a capacity for 182 passengers and an underbelly cargo capacity of 8-9 tonnes.

The airline has six Boeing 747-300 and two Boeing 747-240 Combi aircraft. The 747-300 has a passenger capacity of 429 seats and underbelly cargo capacity of 16 tonnes, as compared with Boeing 747-240 Combi having a passenger capacity of 260 seats and main deck plus underbelly cargo capacity of 48 tonnes. The total operating cost of Boeing 777ER is Rs589, 513/hour while that of 777LR is Rs608, 384/hour. This in terms of total operating cost for Boeing 777 per hour per passenger seat comes to Rs1, 950/hour and Rs1, 791/hour, respectively.

Compared with this, the PIA fleet of 12 includes six owned by PIA and the other half leased through third parties. The total operating cost of the A310 is Rs414, 625/hour, which comes to a total operating cost per hour per passenger seat of Rs2, 253/hour.

PIA has two Boeing 747 Combi aircraft. It has a capacity to carry 260 passengers and main deck cargo carrying capacity of 32 tonnes together with an underbelly extra cargo capacity of 16 tonnes apart from passenger baggage.

The cost that works out for the Boeing 747-300 owned by PIA is Rs1, 923/hour†per passenger seat. The total operating cost per hour of Boeing 747-300 is Rs833, 066/hour, while that of Boeing 747 Combi is Rs849, 711/hour.

In spite of much higher fuel burn-off of B 747, the operating cost is comparable to more fuel efficient B-777 and A310s because the 747 is all paid for and the cost of servicing loans does not figure into it. Aviation experts say if an airline can manage it in terms of distance and financing, then B777 is the aircraft of choice.

However, given PIA’s financial predicament, it does not make sense to phase out its trusted B-747s with more expensive aircraft on loans. In addition, in Haj and heavy traffic seasons, PIA still needs B747s which are then leased at high costs.

Calculations right?

sri_bom · Member Joined: 22 Dec 2006 Posts: 2365 Location: Singapore

[Aviation experts say B-777 is a fuel-efficient aircraft, which if operated on dense capacity sectors and direct economical routes “is bound to yield revenues and make operations profitable.” They told The News “It is an ideal long-range aircraft, but it is totally unsuitable for medium-range flights of less than 6- 7 hours.”

Dont agree on the above as SQ uses 777 even on a 40 minute flight from SIN-KUL. A lot of SQ flights are less the 6 hours duration from Singapore. Ex. All locations in India, China, Thailand, Indonesia, etc.

Sri_Bom