So the talk in town is that Pakistan International Airlines (PIA) has been auctioned for Rs 135 billion to the Arif Habib Consortium. Sounds impressive, right? It does – until one looks behind the bidding. The government will receive only Rs 10-11 billion, roughly 8 percent of the total amount. The remaining 92 percent will be invested back into PIA by the buyer.
Calling it a “bidding process” feels extremely generous. It looks more like the state putting its own failure on exhibition. How?
Let me put it simply. Suppose I own an old house and sell it for one crore rupees, but agree to take only 8 percent of the price while the buyer keeps 92 percent to fix the house. Does that make any sense? Of course not. Yet this is exactly how PIA has been “sold.”
According to the consortium, this investment will fix PIA. The fleet will expand to 38 aircraft initially and later to 65, and the airline will finally become profitable. Fair enough. But here is the burning question: if PIA can become profitable after investment, why could the state not do this itself using taxpayer money?
The government frequently labels PIA a “white elephant”, a loss-making, money-eating institution. But not every public institution exists to make profit. Police stations are not profitable. Public hospitals are not profitable. Education systems are not profitable. Their sole purpose is to provide services, and they are funded by taxes for this very reason.
So what exactly is the purpose of tax in Pakistan? Ideally, it should provide citizens with schools, hospitals, transport, and emergency services. Instead, the country still relies on NGOs like Edhi and Chhipa for ambulances. That is not inefficiency; that is state failure.
This is where the debate moves beyond PIA. If a government of a third-world country has absolutely failed to run a small airline, cannot manage education, cannot deliver healthcare, and cannot even provide emergency services, then how can it be trusted to manage foreign policy, economic planning, and law and order? This is not a privatization problem. This is organizational rot. Changing the name on the door will not help when the people inside are fundamentally unfit to lead.
Assume, for a moment, that privatization works. PIA becomes clean, efficient, and well-managed. Seats are comfortable. Food improves. Everything is tip-top. But at the end of the day, the buyer is a capitalist group, and profit is the goal. Ticket prices will rise obviously. Once PIA raises fares, other private airlines like Airblue and Serene Air will follow. This has already been seen in the power sector, where private producers came in and electricity prices exploded.
Some argue that at least PIA is no longer the government’s headache. But here is the fun fact: the government is still taking responsibility for PIA’s debt. Losses remain public, while future profits go private. That is not reform; that is economic comedy.
One more detail deserves attention. PIA’s most profitable routes, particularly London and Manchester, were closed for nearly five years due to regulatory bans. Those closures played a major role in the airline’s losses. With these routes restored, the timing of privatization looks even more questionable.
In the end, the outcome is predictable. Air travel will be cleaner and smoother – but more expensive. The elite will fly. The middle class will return to buses and trains. And the government will proudly call this “reform.”
Behind the bidding stands a state so incapable that instead of fixing failure, it auctions it – and expects applause for the exit.
