PIA is Private but Taxpayers pay for it to Bleed!!!
Opinion
This article is by Mubasher Lucman, leading investigative journalist & talk show host.
We watched for over a decade as the national flag carrier—the airline that once taught Emirates how to fly and lit up the skies of Europe—was systematically grounded, butchered, and offered up as a sacrificial lamb on the altar of political opportunism and regulatory failure. On October 16, 2026, the final gavel fell.
The state officially washed its hands of Pakistan International Airlines (PIA), handing the steering wheel over to a private consortium led by the Arif Habib Corporation. The corporate press celebrated. Government ministries sighed in relief, boasting that billions in taxpayer rupees would no longer be flushed down the aviation toilet.
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But let me tell you the brutal, unvarnished truth that the sleek press releases are hiding: privatization is not a magic wand, and the sky-high price of this transition is still being paid out of the pockets of ordinary Pakistanis, even as the airline maps out an aggressive, multi-billion rupee operational rebirth.
Let us clear the air of one major misconception: the skies are open. The darkest cloud hanging over the airline—the catastrophic European Union Aviation Safety Agency (EASA) and UK airspace bans triggered by the 2020 pilot license scandal—is gone. The structural safety oversight reforms implemented by Pakistan’s aviation regulator finally paid off. The EASA ban was lifted in late 2024, the UK followed suit in mid-2025, and PIA’s flagship direct flights have fully resumed connecting Islamabad and Lahore to London Heathrow’s Terminal 4. The lucrative, high-paying Pakistani diaspora route is ours for the taking again.
Right now, the metal is actually hitting the tarmac. The airline is actively reclaiming its crown jewel routes. Direct from Islamabad to London Heathrow, flight PK785 cuts through the skies up to 5 times weekly, while the outbound PK786 handles the late-evening return leg. Down in Lahore, flight PK757 operates twice-weekly on its direct run to Heathrow, with PK758 pulling passengers back east. These are not hypothetical chart projections; these are active widebody routes operating out of Terminal 4.
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But don’t pop the champagne just yet. Route access is one thing, but the raw arithmetic of this privatization deal reveals a staggering financial ledger that should make every taxpayer's blood run cold.
Look at the actual numbers. The headline transaction value presented during the majority stake privatization auction stands at PKR 135 billion. Look closer. The private consortium is only paying a meager PKR 10 to 11 billion in upfront liquid cash to the Federal Treasury to buy the equity. The remaining PKR 125 billion is a mandatory capital injection balance. By the strict terms of the deal, that money doesn’t go to the state—it goes straight back into PIA’s own accounts to finance fleet expansion, cabin overhauls, and modern technology.
A PIA plane | File photo.
Meanwhile, what happens to the mountain of historic rot? To make the bride look pretty before the wedding, the government performed a massive financial sleight of hand. A jaw-dropping PKR 650 to 670 billion in legacy debt and liabilities was severed from the airline’s balance sheet and dumped into a state-managed "PIA Holding Company." Think about the sheer audacity of this math: the state receives PKR 10 billion in quick cash, but the Pakistani public inherits well over PKR 600 billion in old debt. In fact, under the 10-year restructuring agreement with commercial banks, the state will payout a whopping PKR 573 billion in total interest alone over the next decade. Taxpayers are being forced to budget roughly PKR 30 billion this fiscal year alone just to service the interest on a company they no longer even own.
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With this massive canvas cleared of past financial sins, the Arif Habib consortium has mapped out a rapid, aggressive fleet rejuvenation strategy utilizing that PKR 125 billion injection. The airline plans to scale its active fleet from a precarious 19 operational aircraft to 38 within three years, and ultimately up to 64 aircraft within eight years.
The immediate phase focuses on structural stabilization. Over the next eight months, the management is deploying capital to revive 8 currently grounded aircraft by procuring missing parts for its core fleet. The long-haul strategy hinges on modernizing their existing Boeing 777-200ER and 777-300ER widebody models. These are the multi-class workhorses trusted to carry the Heathrow loads, and they are slated for a comprehensive cabin modernization via Germany's Aerotec Group. This overhaul will install fully flat-bed business class seats and modernise the economy cabins to secure premium international traffic. To immediately plug gaps on premium long-haul routes while navigating global factory production backlogs, the consortium is also utilizing flexible wet-leases and pursuing secondary-market dry-leases for mid-life Boeing 787 Dreamliner widebodies. On regional and domestic trunk routes, the private management is shifting away from older aircraft, actively negotiating dry-leases for fuel-efficient narrowbodies, specifically targeting Airbus A320-200s, Airbus A321neos, and Boeing 737 MAX models.
This operational expansion triggers massive shifts in passenger capacity projections. Currently, PIA's crippled fleet hovers at a sub-critical capacity, flying roughly 4 to 5 million passengers annually. With the reactivation of grounded planes and the addition of leased narrowbodies, passenger capacity is projected to double to 10 million passengers by Year 3. By Year 8, if the full deployment of 64 aircraft is realized, PIA’s annual passenger capacity is modeled to hit a staggering 18 to 20 million seats, transforming it from a struggling point-to-point operation into a massive regional network carrier capable of competing with Gulf heavyweights.
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However, this corporate resurrection initially threatened to trigger a deadly crisis for the rest of Pakistan's aviation sector. To secure the privatization deal, the government granted the new PIA an unprecedented 15-year tax exemption on General Sales Tax (GST) for aircraft procurement, spare parts imports, and aviation fuel, alongside a 15-year income tax waiver on dividend payouts.
This exclusive fiscal immunity sent shockwaves through the domestic market, creating a brutally uneven playing field. Established independent private carriers—such as AirSial, Fly Jinnah, and Airblue—were left out in the cold to face a highly punitive tax regime, paying full duties on fuel, parts, and new aircraft leases while trying to compete with a newly tax-exempt behemoth.
The bloated national carrier, with around 507 employees per plane, has seen an increase of around 230pc in accumulated losses to Rs414bn during the last eight years.
Thankfully, sanity has prevailed. Following fierce pushback from private airlines and parliamentary committees, the government realized it couldn't save PIA by destroying the rest of the open market. In a critical policy shift, the law was revised to ensure that from July 2027 onwards, these 15-year sales tax exemptions on imported aviation machinery, parts, and aircraft leasing will apply across the board to all registered Pakistani carriers. This expansion doesn't just level the playing field; it paves the way for an industry-wide fleet renewal boom.
The excuses are officially over. The Arif Habib consortium has inherited a golden, debt-free launchpad, a tax-free runway, and a newly restored international flight matrix. They have bought a highly lucrative ticket to the world's primary hubs. Now, they must prove they can actually fly the plane—and finally return some of that wealth to the nation that subsidized their runway, while facing fair, fierce competition from a newly empowered private sector.
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This article is by Mubasher Lucman, leading Pakistani investigative journalist & talk show host.
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