Saturday, September 14, 2013

How to restructure PIA

PIA this year have floated a tender 3 times already for the dry lease of 10 narrow bodied A320/A321 or B738s but on all 3 occasions, it has been messed up through some form of outside interference.

Their B747 fleet after completion of Hajj 2013 operations shall be permanently grounded where as their A310s are now configured in a 227 seater all Y class cabin only. FRA and AMS have already been suspended with LBA next in line. I will not be surprised if both CPH and OSL too follow suit and mainland Europe is just left wit MXP and CDG which is operated 3 times per week using a B777 as ISB-MXP-CDG-ISB.

The A321-200 is the ideal replacement aircraft for the A310 for them to be used on the high density PAK-Middle East routes. This aircraft type can also be used to replace the A310 on their BKK-HKG services as the A321 can easily perform the 4.5 hour flight from PAK to BKK nonstop in both directions without a payload problem. The only route where it might face a hurdle is the 2 weekly ISB-PEK-NRT flight as PEK-ISB is a 6 hour 15 minute flight which can only be done with an A321-200 that has 1ACT (additional fuel tank) and not the standard model.

All being said though, it might not be a bad idea to completely shut down PIA write off the bad debts and start afresh with the B777s and ATRs being the only aircraft type of the current fleet being transferred over. The new PIA would have to get rid of the old dinosaurs of the current upper management team whose bad decisions have plagued this airline such the turn of the century. The long haul route network should focus only on UK, JFK, BKK and EY or EK via UAE and the Far East can be served via BKK with a code share with TG.

The core route network should encompass exploiting the higher yielding and higher volume PAK-Middle East market segment with A321s and B777s (mainly to JED/RUH and DXB only). The B777s configuration too needs to be changed to reflect reality i.e. having a J class cabin with 35 seats is fruitless for a non-premium branded airline like PK. It should maximum have 24 J class seats (all flat beds) on board its B772 and B773 fleet. The B773s though should have a 3-4-3 configuration in Y class (but not the B772 as they will be used on the longer flights primarily) in order to have great economies of scale especially on the higher volume PAK-Saudi flights + ISB/LHE-LHR/MAN.

JFK needs to be routed via SNN i.e. PAK-SNN-JFK-PAK so that the pax can clear U.S. immigration/customs easily at SNN and not have to endure the horror at JFK.

The restructured fleet of the new airline would look like this:

6 ATR 42-500s (from current fleet) seating 50 pax

4 B777-200ERs
2 B777-200LRs

*both of the above would be from the current fleet and should be able to seat 320 passengers (24J + 296Y)

6 B777-300ERs (3 active and 5 are an additional order placed over a year ago but I dont feel a need for there to be 8 in the fleet so 2 would be canceled)
*these shall be transferred from the existing fleet and should be configured to seat 434 passengers (24J + 410Y with a 3-4-3 arrangement) which in turn will be used on flights to RUH, JED, DXB and MAN exclusively !

12 A321-200s (with 1ACT preferably) seating 186 pax (12J + 174Y)

5 A319s seating 122 pax (8J + 114Y)

Total desired fleet strength is 35 aircraft which is ideal !

The 6 B77Ws I would use in the following manner:

1 aircraft for 4 weekly LHE-JED + 3 weekly LHE-RUH
1 aircraft for 4 weekly ISB-RUH + 3 weekly ISB-JED
1 aircraft for daily KHI-JED-KHI-DAC-KHI same plane service
1 aircraft for daily ISB-MAN
1 aircraft for 4 weekly LHE-MAN + 3 weekly ISB-BHX
1 aircraft for daily ISB-DXB + daily LHE-DXB

The 2 B77Ls would exclusively perform:

1 aircraft for 3 weekly KHI-LHE-YYZ-LHE-KHI
1 aircraft for 4 weekly KHI-LHE-SNN-JFK-LHE-KHI

The 4 B772ERs would perform:

1 SPARE aircraft to cover for the B77Ls and B77W
1 for daily PEW-DXB + 4 weekly PEW-RUH
1 for 3 weekly KHI-LHR + 4 weekly ISB-LHR
1 for 3 weekly LHE-LHR + half aircraft spare as cover

The 12 A321s would perform:

1 aircraft for 4 daily KHI-LHE-KHI
1 aircraft for 4 daily KHI-ISB-KHI
1 aircraft for double daily KHI-PEW-LHE-PEW-KHI
1 aircraft for 6 weekly PEW-AUH + 3 weekly PEW-DMM + 3 weekly PEW-JED
1 aircraft for 4 weekly LHE-KWI + 3 weekly LHE-DMM
1 aircraft for daily LHE-MCT + daily LHE-BKK
1 aircraft for daily KHI-BKK-KUL (to be timed the same as LHE-BKK so that pax from both KHI + LHE can connect via BKK to KUL hence making BKK a small scissors hub)
1 aircraft for double daily KHI-DXB + daily KHI-MCT
1 aircraft for daily ISB-AUH + daily LHE-AUH
1 aircraft for 3 weekly ISB-DMM + 4 weekly ISB-MCT
0.5 aircraft for daily LHE-DOH
1.5 aircraft as SPARE back up in case of AOG/maintenance for A321s and A319s

The 5 A319s would perform:

1 aircraft for daily KHI-MUX-DXB-MUX-KHI + daily KHI-UET
1 aircraft for daily KHI-SKT-DXB-SKT-KHI + 3 weekly KHI-DEL
1 aircraft for 3 weekly KHI-MED + 4 weekly KHI-BOM + 4 weekly KHI-DMM
1 aircraft for daily ISB-UET + double daily ISB-PEW + 5 weekly ISB-BKK (which would connect to BKK-KUL) +
1 aircraft for an additional daily flight each from KHI to LHE and ISB respectively + half an aircraft to act as SPARE back up

The above plan may not bring PIA back into profit mode, but it shall definitely bring a level of commercial efficiency, respectability, lower losses, higher yields and higher revenues versus the current cauldron that it is stuck in !

1 comment:

Anonymous said...

Sounds like a very sound business plan and one that's been thought of through a commercial lens.

This almost feels like a phase 1 of a plan to make airline more viable as a business i.e. clearing out the trash and getting the house in order.

Once that's achieved then focus can shift to more ambitious plans.

Benaam from HOP Forum