Did you know that once, Pakistan International Airlines (PIA) was celebrated worldwide as a top-class airline? So much so that its slogan “great people to fly with” came from Jacqueline Kennedy Onassis, A.K.A. Jackie Kennedy, the wife of former President of the USA John F. Kennedy, when she arrived in London on PIA in 1962.
This was the airline that helped establish some of the world’s largest airlines. Fast-forward to today, and the tables have completely turned.
After years of mounting losses and mismanagement that turned it into a major liability, PIA was put up for sale and ultimately sold to Arif Habib. Once a source of national pride, the airline is now widely mocked, both internationally and at home, as service standards and performance have steadily deteriorated.
So how did an airline that once set benchmarks for the region fall this far?
Arif Habib Becomes the New Owner of PIA
The auction for Pakistan International Airlines Corporation Limited was conducted in two rounds at a public ceremony in Islamabad that was broadcast live on television and streamed online.
Three pre-qualified bidders took part: Airblue, Lucky Cement, and the Arif Habib Consortium.
In the first round, Airblue submitted a bid of Rs26.5 billion, well below the government’s reference price of Rs100 billion, and exited the race.
Lucky Cement offered Rs101.5 billion, while the Arif Habib Consortium topped the round with a bid of Rs115 billion.
Lucky Cement and Arif Habib engaged in a close back-and-forth before Lucky Cement raised its offer to Rs134 billion. Arif Habib countered with Rs135 billion, prompting Lucky Cement to withdraw.
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The Arif Habib Consortium was declared the successful bidder for a 75% stake in PIA.
Speaking after the auction, Arif Habib described PIA as a national institution that had once ranked among the world’s top airlines. He said the consortium planned to address the airline’s shortcomings through fresh capital investment and operational reform.
According to Habib, the immediate plan is to expand the fleet from 18 aircraft to 38 in the first phase, with a longer-term target of up to 65 aircraft depending on demand.
He also expressed confidence in PIA’s workforce and said existing employees would benefit from expansion and growth.
The government removed around Rs 33 billion in liabilities from PIA’s balance sheet and parked roughly Rs 650 billion in legacy debt in a holding company.
Additional incentives and concessions were also offered.
The sale also comes as Pakistan works to meet conditions under a $7 billion IMF bailout, with divestment of loss-making state enterprises a central requirement.
What Led to the Privatisation of PIA?
The move to privatise Pakistan International Airlines did not emerge overnight, nor was it driven by ideology alone. It was the outcome of long-running financial decay, repeated policy failures, and a political economy that left the state with few viable alternatives.
For years, PIA has operated on the brink of collapse.
Billions of rupees in annual losses, shrinking operations, mounting debt, and chronic mismanagement steadily eroded what was once one of the region’s strongest airlines.
By the time privatisation became unavoidable as the carrier was flying a limited number of operational aircraft and struggling to meet even basic obligations such as fuel payments and vendor dues.
The government, facing acute fiscal stress and bound by commitments under a $7 billion IMF bailout, made it clear it could no longer subsidise loss-making state-owned enterprises.
This fiscal reality collided with a deeper structural problem.
PIA was not simply just mismanaged but was also politicised. Over decades, successive governments used the airline as a vehicle for patronage, appointing politically connected executives, inflating payrolls, and interfering with operational decisions.
All this while executives enjoyed lavish perks while the airline’s balance sheet deteriorated.
There was even a time when Pakistan State Oil threatened to suspend fuel supplies over unpaid bills. PIA faced litigation abroad and the risk of aircraft confiscation.
In 2020, the airline was banned from flying to Europe and the UK following a pilot licensing scandal, cutting off some of its most lucrative routes and costing an estimated Rs 40 billion annually.
Against this backdrop, resistance to privatisation followed a familiar script.
Privatisation often carries real risks particularly in developing economies where public assets have historically been transferred cheaply to politically connected groups.
From Top Class to Third Class: The Rise and Fall of PIA
As already mentioned above, PIA was amongst the top airlines of the world. Be it technology, service and what not; it was leading the aviation business. And today it first struggled with even getting a Rs 100 billion bid. Why?
The Golden Age of PIA
Founded in 1955 from a merger with Orient Airways, PIA rose rapidly to become one of Asia’s most respected airlines.
From 1959 to 1965, Air Marshal Malik Nur Khan transformed the airline into a world-class operation. In 1960, he personally flew PIA’s inaugural Boeing 707 ushering in the jet age for Pakistan. This was the first Boeing 707 in Asia that was owned by PIA.
Under Nur Khan, PIA expanded aggressively and intelligently.
It launched routes to China, Europe via Moscow, and across Asia and the Middle East. It became one of the first non-communist airlines to fly to China and among the earliest in Asia to operate jet aircraft on long-haul routes.
Operational discipline, profitability, and service quality defined the airline.
In 1962, Jacqueline Kennedy flew PIA to London and famously praised the airline’s service, later associated with the slogan “Great People to Fly With.”
By the late 1960s, PIA had crossed one million annual passengers. By 1979, that number exceeded 3.5 million.
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Innovation followed reputation. PIA was among the first airlines to introduce in-flight entertainment. Its training programs became a regional gold standard, producing pilots, engineers, cabin crew, and managers not only for itself but for more than 40 other airlines.
Emirates, in its early years, benefitted directly from PIA’s technical and managerial expertise.
Even aesthetics mattered for them.
In 1966, French designer Pierre Cardin created PIA’s cabin crew uniforms, designs that became iconic worldwide.
For a generation of Pakistanis, joining PIA was a dream.
By the early 1980s, PIA operated across four continents, served 62 cities, and ran more than 100 flights a day. Take-offs occurred roughly every six minutes. Few airlines in the developing world could match that scale or discipline.
Decline of PIA
The decline did not happen overnight. Instead, it crept in as professional management gave way to political control.
Over time, the state treated PIA less as a commercial airline and more as a tool of patronage.
The airline’s prized assets were also mismanaged too. PIA owns the Roosevelt Hotel in Manhattan, a 1,025-room property occupying an entire city block in one of the world’s most valuable real estate markets.
What should have been a strategic asset was turned into a financial liability through poor decisions and neglect.
Meanwhile, the government expanded its footprint everywhere. PIA became one more casualty of a state that tried to do everything and managed little well.
What was once a training ground for global aviation became a case study in institutional decay.
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