ABSTRACT

Despite covering a large share of Pakistan aviation industry Pakistan International Airlines Corporation (PIAC) is facing financial crises and losses for a few years and the government is subsidizing it every year about Rs 456 billion. This study examined the different factors which affect the business of Pakistan International Airlines Corporation (PIAC). We disaggregate the business into operating revenue and operating cost to examine the separate effect on the PIA business. The factors which affect operating revenue (OR) are revenue passenger (RP), revenue passenger carried (RPC), revenue load factor KM (RLFKm) and revenue hour flown (RHF) Revenue ton KM (RTKm), and operating expenses (OE) are affected by PIA fleet number of plane (NOP), available seats (AS), routs Km (RKm), passenger load factor (PLF) and available ton Km (AtKm) and The empirical analysis is based on Autoregressive distributed lag (ARDL) co-integration approach from the period 2000-18. Empirical results and the study suggest that the main factors of low operating revenue, revenue passenger is low, non-feasibility of majors routs, low revenue per aircraft and high operating expenses due to high seat availability, passenger load factor due to which Pakistan International Airlines Operating expenses are greater than operating revenue. On thhe basis of results of operating reveune to increase Opreating reveune Pakistan International Airlines should increase revenue hour flown by reducing input like the staff of the Airlines. to increase the revenue load factor PIA, need a mass of passenger which is very low by providing good services and low fare compared to other Airlines, to increase RPC PIA should start flights based on geographic location, all these can increase the operating revenue of PIA. To reduce the operating Cost, to increase the chances of availability of seats is depending on fares and the fare of PIA is almost the same to market. PIA management should focus on services on the same fare or reduce the low fare to increase the seat availability and an increase in seat availability will reduce the operating cost. ATK is very low, PIA needs to stop operating nonprofitable routes and these routes should be operating by intra-Airlines agreement to increase ATK, all these will reduce expenses of PIA.