Branding PIA: is the national airline on the move at last?

[Abbas Ali]

PIA chiefs came and went with such frequency in the 1980s and ‘90s that wags took to saying that Islamabad had adopted a revolving-door policy for filling top management positions in the state-owned carrier. Losses mounted and efficiency plunged. At long last, however, we have a government that is taking steps to turn PIA around.

By Kaleem Omar

Pakistan International Airlines (PIA) has had its ups and downs over the years, though the downs have tended to predominate over the last couple of decades, reducing the once high-flying national carrier to a shadow of its former self. The 1990s saw PIA’s losses soar to record levels. The quality of its in-flight service deteriorated sharply. Maintenance problems grew by leaps and bounds. Flight delays became the order of the day and passenger complaints proliferated.

PIA chiefs came and went with such frequency in the 1980s and ‘90s that wags took to saying that Islamabad had adopted a revolving-door policy for filling top management positions in the state-owned carrier. During that period, PIA also suffered from chronic over-staffing due to the enforced induction into its ranks of hundreds of political appointees.

Things got so bad at one stage that PIA found itself lumbered with more than 90 general managers and a legion of lower-level managers. As a result, its staff-to-plane ratio soared to one of the highest for any airline in the world (526 per aircraft), pushing up operating costs and transforming PIA from “Great People to Fly With” into a bureaucratic white elephant.

The constant squabbling that the 1990s saw between a succession of chairmen and managing directors compounded the airline’s woes. The adversarial style of management left PIA ill-equipped to cope with exigencies of an increasingly competitive environment. It lost more and more market share, especially on the lucrative Gulf routes. At the same time, its fleet expansion programme, and the addition of new routes to its international network, slowed to a crawl.

At long last, however, we have a government that is taking steps to remedy the situation and turn PIA around. The government’s first move in this regard was to appoint former Pakistan State Oil (PSO) CEO and Managing Director Tariq Kirmani as PIA’s new chairman, chief executive officer and managing director in April last.

As PSO’s boss for five years. Kirmani was instrumental in transforming the state-owned oil marketing company into a model of efficiency and profitability, with an annual turnover of $ 4.3 billion and a market share of over 79 percent in black oil and 58.3 percent white oil.

PSO’s earnings over the last five years nearly tripled from Rs. 2.2 billion a year to Rs. 5.7 billion, maximizing shareholder value. During this period. PSO, added 1,250 outlets to its nationwide network, increasing the total number of its outlets to 3,800 – more than twice the number of its nearest competitor, Shell Pakistan.

Under Kirmani’s stewardship, and that of the late Shaukat Mirza before him, PSO became a blue-chip organization with a market capitalization of around Rs. 66 billion ($ 1.1 billion), contributing $ 651 million to the national exchequer in taxes and other imposts.

Jalees Ahmed Siddiqi, who worked under Kirmani at PSO for five years and succeeded him as PSO’ managing director, is continuing the good work done by Kirmani and the late Shaukat Mirza.

A winner of the Karachi Stock Exchange Top Companies Award, PSO was the first Pakistani company to become a member of the World Economic Forum – an annual gathering of government leaders and top corporate executives held in the Swiss mountain resort of Davos in January.

Now, PIA has become the second Pakistani company to acquire membership in the World Economic Forum. This one was of the initiatives taken by Kirmani as the airline’s new boss. In appointing Kirmani to head the national carrier, the government was clearly hoping that he would be able to revive PIA’s fortunes and turn it into a profitable airline again.

At a presentation on PIA given by Kirmani to Prime Minister Shaukat Aziz at a meeting in Islamabad on January 16, Aziz called upon PIA’s management to transform the national carrier into a world-class airline.

“A passion for change and improvement is required to achieve the objective,” Aziz said at the meeting, which was held to review PIA’s performance. Praising the airline’s recent performance in several areas, he said more needed to be done to make PIA a globally competitive airline of choice.

Aziz said high oil prices were adversely affecting the airline industry so there was urgent need to improve PIA’s productivity and competitiveness. He directed PIA’s management to take all necessary steps on a commercially viable basis, increase the frequency of flights and prepare growth and corporate restructuring plans. He also stressed the need to take cost-effective measures in procurement and in airline’s operations.

Kirmani informed the Prime Minister about PIA’s fleet expansion programme. The programme includes the replacement of ageing aircraft and the induction of 29 new planes.

Briefing the prime minister about PIA’s performance, Kirmani said that in 2005 the airline had achieved its highest productivity ever, revenues were up 13 percent over 2004, and a saving of Rs. 2 billion had been achieved in procurement due to the centralized procurement system introduced recently. He also briefed the prime minister about PIA’s new international and domestic routes.

As boss of new-WEF-member PIA, Kirmani was in Davos last month for this year’s meeting of the World Economic Forum, where he got a chance to talk to international corporate executives about PIA’s new “vision, mission and values.”

Says Kirmani, “For change to occur, what is required first and foremost is a new vision, a new direction, which is forceful and good enough to be acceptable to the majority, who alone can make the difference, can make change happen.”

He says, “Corporations, especially public sector corporations, tend to lose sight of their vision, which is left to exist in their books somewhere, and where only a few people know that it even exists. PIA also had such a vision wasting away in boardroom meeting minutes somewhere.”

He argues that a ‘Vision Statement’ must necessarily be followed by a ‘Mission Statement’, and that both of them must operate within a framework of certain ‘Corporate Values’ that an institution builds or defines for itself as being the basis of which it will function and operate.

In keeping with his management philosophy, one of the first things Kirmani did after becoming PIA’s chairman and CEO was to invite the airline’s employees to send in their own versions of this vision, mission and values that PIA should have and within which framework it should function as a commercial airline. The idea behind this move was to gather together the knowledge base of all the corporation’s employees and then proceed to define the Vision, Mission and Values of PIA as a corporation in which all the employees feel they have a stake.

Kirmani has also set up what he calls “Incubation Teams” made up entirely of MBAs newly inducted into PIA to bring fresh ideas and energy into tackling some of the major problems facing PIA. These problems have caused PIA to lose market share to its competitors. Its ability to stop the erosion depends on its ability to retain customers. They alone can provide the financial edge it seeks. One of the most important problems that these incubation teams are presently tackling is that of blocking of seats and fictitious bookings by travel agents, due to which PIA loses billion of rupees in revenue every year.

But perhaps the most important initiative of all taken by Kirmani has to do with brand management. While PIA has always been a recognized name in the country, in the region and at stations around the world on its network, brand management as a strategic management tool, a strategic concept, has never been given its due to importance in PIA, nor has it ever been implemented.

Nobody has ever seriously tried to make an airline a recognizable brand name throughout world. Even if some airlines have tried to do so, they have failed to make a worldwide impression. This is evident from the fact that in the list of world’s top 100 brands, there is not a single airline.

Some would argue that an airline is not supposed to be a recognizable brand name. But then, says Kirmani, that is precisely the challenge. “If Coca Cola can be the number one brand in the world, why can’t PIA, or, for that matter, Singapore Airlines, not be at least among the top 100?” says Kirmani.

It seems like a pretty tall order. “But does that mean that we who are in the airline business should not try?” says Kirmani. “The answer, very simply, is, no. It does not mean that. In fact, what it means is that the whole field is wide open, and the challenge, given certain pre-conditions, is surely surmountable,”

Warming to his theme, Kirmani adds, “The first thing for an airline to do, to be the first among the elite list of the top hundred brand names, is to have the desire to be a recognized and well-respected brand. The rest will follow.”

One wishes PIA and Kirmani, and, yes, the government, too, good luck in this national endeavor. Let’s hope they succeed in once again making PIA “Great People to Fly With.”

Source: The News (February 6, 2006)

[flyingsystem]

Nice article...Now wait and see what happens!

[PK777]

Very nice article. hope this is just a start of the path to recovery from the decade of destruction the past CEOs have left behind....