Transportation sector is most important sector of any economy and aviation industry is major part of this sector. In Pakistan the transportation and communication sector holds more than 10% share in GDP (Gross Domestic Production). The aviation industry can affect the other sector of the economy, e.g. the International Trade, tourism and socio-economic condition of the country.
Historically Pakistan International Airline dominates the major portion of aviation industry. The state owned PIAC establish in 1955 to conduct the domestic as well international operations. It enjoys the monopoly until the deregulation of aviation industry.
In 1993 Civil aviation Authority has open the aviation sector for private investor in order to boost the healthy competition for better traveling services at low price fares. As a result many private companies make induction in to industry. Most of them have left the arena due to heavy taxes of CAA, which would not sustain the cost structure of their companies.
Bhoja, Hajvery, Safe and Raji, wrapped up their operations years ago leaving the market open to the remaining operators, the national flag carrier Pakistan International Airlines (PIA) and private Shaheen Air International and Aero Asia.
A private company, Aero Asia, besides PIA is operating on international routes. The Gulf sector is another important and lucrative sector for airlines. Aero Asia is operating in this sector. The European especially U.K and North American destination are another profit making routes, PIA has made Investment of billion of rupees for acquiring the state of the art aircrafts for operations in north American sectors. International routes are major area of competition for up coming airlines. The CAA policy regarding the international routes are very open but require the minimum standards to be met before operating on international routes and must have experience of domestic operations before going to be international.
Recently two new private airlines, AirBlue and Royal Airlines have started their flight operations. The AirBlue is struggling to capture the share of domestic routes mainly the Karachi-Lahore-Islamabad sector. While Royal Air line is operating cargo flights and successfully operated on Karachi-Dubai sector.
Royal Airline is chain of international airlines and has been registered in Pakistan. It has acquired the license for cargo transportation and has planned to conduct domestic operations for passengers also.
The second new airline AirBlue has conducted the operation on Karachi-Lahore-Islamabad sector and is in stage of capturing the domestic market by offering compatible fares. AirBlue have offered discount on early booking and introduce the E-ticketing for the first time in the history of Pakistan.
The major focus of AirBlue is on customer comfort, it have trained its employee in foreign countries in line with providing the maximum customer satisfaction. The airline’s management has claimed that they would provide in flight entertainment not offered by other airlines.
Another land mark of AirBlue airline is innovative e-ticketing technology, through web base technology customer can make reservation on-line 24 hours a days and 7 Days a week. The convenience of air travel reservation by new system will enhance the customer satisfaction, and new innovative technologies would encourage other operators to introduce similar technologies for its survival in the market.
Another private airline SafeAir is going to start its operation soon in Pakistan, the company incorporated in Pakistan in 1999, but cancelled its operation soon, due to unpaid taxes of CAA, later on some foreign group have invested in order to re launched their operation.
Air traveling is still a luxury keeping in view the socio economic conditions of the people of Pakistan. So prices of tickets do not matter for the upper class due inelastic demand. In this scenario quality services can play vital role in attracting the customer base. Different loyalty programs offered by airlines are part of their strategy to retain its customers. The up coming airlines like AirBlue have focus on passenger comfort. They have out source caterer to offer exquisite cuisine to its customers. The call centers have been established to guide their customers 24 hours a day. In coming year the basis of competition would be how airlines deliver services that offer value for money.
Up Coming Scenario
Recently many developments have been taken place, India has open the air corridor for Pakistani airline, development of new port like Gawadar & Sialkot the rising cost of fuel and heavy taxes of CAA. In all these threats and opportunities the new and existing airline are going to operate and compete with each other not solely on price base but on the basis of services standards
Things, however, have started to pick up, the PIA has started operation to India and Far East, and the foreign carriers who closed their Pakistan operations are back.
Now the question arises that how new airlines would captured the market, before that three airlines were sharing domestic market among themselves. PIA were dominating the market by 75% and rest were enjoyed by Aero Asia and Shaheen Airline, in prevailing conditions the new entrance would either gain the share from currently operating airlines or create new customer base or combination of both. Let’s see how they survive in cut throat competition.