PIA Privatization: For A Real Prosperity

PIA

PIA privatization has been on the government books for a long time. As a service provider it has been going from bad to worse. It is about time this resource hog organization was allowed to fly on its own for a change. The job of a private organization is to provide a better service to its customers than it’s competitors or it loses them to the competition. Losing customers means losing money and it’s something that brings most businesses back to their senses.

Government owned entities don’t operate on the same basis. Some politician, or a government appointed expert runs the show. Despite many changes and many experts the abysmal results stay the same. There is no dearth of excuses to keep PIA under government control. Slogans like the “national flag carrier” or “a strategic asset’ are all too common to justify this inefficient hoarding of resources.

The government keeps providing more funding, year after year, for the losses that keep the personnel and resources tied up the unproductive and wasteful activities. The economy keeps sputtering and a real growth is stifled. Had these resources been released some other brilliant use could have been figured out by the free market to redeploy the expertise and the resources at PIA.

Government ownership removes the gain or loss mechanism from the operations of the business. For a real business not making a profit causes a serious soul searching and change. In case of a public company almost always the need for more funding is emphasized. The problem with PIA isn’t that it doesn’t have good personnel or good leaders. The people and employees are excellent. What’s not excellent is the calculation and information problem that all not-for-profit entities face. Without a gain or loss mechanism to guide decisions, a guess has to be made as to how much resources to use for certain tasks. This lack of profit and loss information causes a kind of blindness. This blindness in turn makes government owned organizations perennially and incorrigibly unproductive.

A concrete example of the above would be PIA flying planes between infrequent routs. Routes that don’t have much demand but due to some logic of the bureaucracy the national flag carrier must continue to operate there. The logic goes that to keep the country connected PIA is essential. This argument is totally faulty. What it doesn’t clarify is that to provide this subsidized service the rest of the people in the country are penalized. The government has to borrow, tax, or print more money. All these put a heavy burden on the exchange rate and economic growth.

Having planes doesn’t keep a country united. East Pakistan wasn’t lost because there weren’t planes going there. A prosperous country automatically ends up uniting the people, as they have a reason to stay together, to work together, and to grow together. An economically stagnant  country on the other hand divides its people. They feel imprisoned, hopeless, and without the resources to turn their creative energies into something more productive and profitable.

Those who are employees of PIA are also being hurt badly because of it being a public company. Their salaries and benefits are reduced because so many other, less deserving people, are taking a cut from the total funds. Scores of politically appointed personnel have been inducted into the organization so much so that the benefits have been diluted for most.

The talented ones would be better off taking their skills elsewhere. The untalented need to upgrade skills and take responsibility of their shortcomings. It’s not the end of the world to learn and adapt and develop new skills. That is what life is about. Gone are the days of learning one skill and just milking it to infinity.

The way forward is simple, yet is not so easy. Making this leap of faith towards privatization scares those who’ve gotten used to the status quo. The fresh blood is itching to make a huge change in this country. It is high time PIA was privatized and its debilitating burden removed from the sagging shoulders of the citizens. Not only will it help the people and the nation straighten its back, but will also propel Pakistan onto a path of real prosperity.

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