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This blog is for students, managers and those lay people who are interested to contribute to, comment on or simply share their workplace problems and are keen to learn about issues relating to public finance, corporate finance and macro-economic management affecting their lives.

Monday, June 28, 2010

Don’t let it get buried under its own weight….

Pakistan’s national flag carrier, PIA,  is in the news once again, of course for wrong reasons as usual. As has been discussed in these pages, one element i.e. cost is sufficient to spell disaster for the company and write its obituary. It is a commercial organization having good number of customers that other competitors envy, despite worst service on ground and on board, yet it is making losses of billions of rupees; and the sad part is that these losses are being made good, or the airline is being kept afloat, or shall we say airborne, on taxpayers’ money. This is in times when this money is badly needed elsewhere in the economy.
It is very obvious that the airline is making decent revenues; its only problem is that it is sinking under the weight of its enormous and unheard of elsewhere, costs. If you have ever traveled the airlines you will be surprised because you have never seen any cost as compared to other airlines. Its food costs should be a fraction of what other airlines incur, it saves completely on beverages, quality of cabin service is the poorest, you are lucky if you get basic amenities like blanket and pillow during long flights. Yet, you have to make efforts to get your seats booked because the airline is thriving on two things; illiterate expatriate workers find it easy to interact with cabin crew and the airline is generous about baggage allowance.
The costs that are sinking the airline are incurred not on the passengers because passengers figure nowhere in airline’s priority. The costs are incurred on staff; no matter airline makes profits or losses, the employees have to be maintained with all the perks and privileges.
It is time that the airline, instead of living on the blood of poor masses, take some measure to cut the costs. IATA has provided guidelines of operational cost reduction initiatives (OCRI) in the areas of flight, technical and ground operations. It helps member airlines through various means including IATA guidance material, training courses, checklists and scorecards, KPIs, toolsets and benchmarks, on-site assessments (GO Teams), regional workshops, remote support, (benchmark data, website, telephone conference, etc.), conferences, implementation assistance.


  1. Can you OCRI when you have sold airline jobs? How can you fire those who are absolutely not required?

  2. Please read a related post in our other blog: http://fmeducation.wordpress.com