Internship Report Pia

TABLE OF CONTENT Contents TABLEOFCONTENT..........................................................................................................................1 PREFACE...........................................................................................................................................2 ACKNOWLEDGEMENT......................................................................................................................3 MISSIONSTATEMENT....................................................................................................................................6 STATEMENTOFETHICSANDBUSINESSPRACTICES.........................................................................................................7 INTRODUCTIONOFTHECOMPANY.......................................................................................................................8 Introduction......................................................................................................................................9 BriefHistory....................................................................................................................................10 ProfileofEmployeesandNumberofAircraft................................................................................................12 ProductLines...................................................................................................................................13 RooseveltHotel,NewYork...............................................................................................................13 ScribeHotel,Paris..........................................................................................................................13 MinhalHolidayInn,Riyadh...............................................................................................................14 CentreHotel,AbuDhabi..................................................................................................................14 ORGANIZATIONALSTRUCTURE.........................................................................................................................15 Organization....................................................................................................................................16 Organizational/CorporateStructureofPIAC.................................................................................................17 HIERARCHYOFPIACMANAGEMENT.............................................................................................................18 CorporateProfile...............................................................................................................................19 DEPARTMENTSOFPIAC..............................................................................................................................20 Network&RoutePlanningDepartment.................................................................................................21 AdministrationDepartment...............................................................................................................21 FinanceDepartment.......................................................................................................................22 MarketingDepartment....................................................................................................................22 EngineeringDepartment..................................................................................................................23

Pakistan International FlightOperationsDepartment.............................................................................................................24 AirportServicesDepartment..............................................................................................................24 CoordinationDepartment.................................................................................................................25 ORGANIZATIONAL STRUCTURE AT DIVISIONAL LEVEL.............................................26 History of Multan air port..........................................................................................................27 Financial performance...............................................................................................................28 SWOT ANALYSIS........................................................................................................................38 STRENGTHS................................................................................................................................39 WEAKNESSES.........................................................................................................................42 OPPORTUNITIES.....................................................................................................................43 THREATS..................................................................................................................................45 PEST ANALYSIS..........................................................................................................................48 PEST ANALYSIS..........................................................................................................................49 1.

POLITICAL FACTORS.....................................................................................................49

2.

ECONOMIC FACTORS....................................................................................................50

3.

SOCIAL FACTORS...........................................................................................................51

4.

TECHNOLOGICAL FACTORS........................................................................................51

Achievements and Recognitions................................................................................................53 Recommendations.............................................................................................................................56 CONCLUSION..........................................................................................................................................59

Pakistan International

PREFACE

All praise is to Almighty Allah for bestowing me with the wisdom to accomplish my task. etting practical knowledge in one of the major aims of MBA program. Department of business administration Bahauddin Zakariya University City Campus, Multan has followed policy of assigning different practical assignments to its students so a touch of real working environment can be given to the students apart from classroom studies to widen their perspective. PIAC is the national airline of Pakistan. The information has been gathered from different sources including the web site, web pages related to the airline, personal discussion with employees, and visit to the branch office situated in The abdali road Multan.I have included all the information obtained from the mentioned sources . As regards the preparation of this project, all the topics are added in a proper sequence, starting with the table of contents, including the history, overall view, company information, management hierarchy, flow of information, types of information systems, everything that was required for the completion of the project.

Pakistan International

ACKNOWLEDGEMENT

In The Name Of Allah the Most

I

Beneficent and the Merciful am, with the esteem depth of my heart, thankful to the Head of Department, Mr. Shoukat Malik, and to our teacher that all of them provided me an opportunity to have a practical knowledge of all that I

have studied in the course and are busy in polishing my interpersonal qualities. I have tried to accomplish the task assigned by the faculty to the best of my abilities, but still nobody can claimed that he is perfect and there can be a number of problems in this report that will be removed only by the guidance from the faculty. I welcome and appreciate the error picking and suggestions from the esteem members of faculty.

Here I would like to thank hole heartedly the respected employee of the PIA Multan office, Abdali road Multan I acknowledge them with thanks for their help. In my study of the organization. It would not be fair to mention the name of my collogue who has helped me in the compilation of this report as he was too busy in his own personal life but he stood up as a good friend and helped me in conducting the financial analysis of the PIAC ,so thank you Mazher Islam for your guidance and support. Salman ilyas MBC-o8 -40

Pakistan International

EXECUTIVE SUMMARY

P nation. In

akistan International is the largest air line of the country and the national flag carrier for the state of Islamic republic of Pakistan. It came into existence in 1947 by the advice of the Quaid Muhammad Ali Jinnah and ever since it has been serving the addition to the convenience of domestic flyers PIAC is serving its International

customers throughout the country and also at several overseas locations.PIA is a 3 star air line by skytrax international.

In this 6 weeks internship program, I have worked in different departments of the PIAC which include Operations, Admin, HRM, Sales and Promotion, Cargo And Finance

section of

PIA Multan and I have learnt a lot from these professional individual who have been working in their respective fields.

During my internship, I have found that in airlines concentration and consistency is of utmost importance. Your little mistake can create a big problem and can jeopardize the life of many individuals. i have worked one week in the above mentioned departments and I have come to conclusion that these guys are miracle workers. It seems like a in this advance all the jobs are done by computers but there are still many people who are working for the smooth operations of the PIAC. The statement feels true when we say that ‘it’s the man behind the gun that’s counts ‘.

This report contains the information and learning about UBL that I learnt during the 6 weeks internship period in PIAC.

At the end of this report, on the basis of my observations during internship, financial analysis and SWOT analysis of PIA is provided. Suggestions are also recommended as per learning from analysis. This report will provide a better and brief learning about Pakistan international.

Pakistan International

VISION PIA’s vision is to be a world class airline meeting customer expectations through excellent services, on-time performance, innovative products and absolute safety.

Pakistan International

MISSION STATEMENT AS A SYMBOL OF NATIONAL PRIDE, PAKISTAN INTERNATIONAL MUST STRIVE TO BE AN AIRLINE OF CHOICE OPERATING PROFITABLY ON MODERN COMMERCIAL CONCEPTS, CAPABLE OF COMPETING WITH THE BEST IN ITS ENTIRE

INTERNATIONAL AND DOMESTIC MARKETS CONSISTENTLY EXCEEDING CUSTOMER EXPECTATIONS. IT SHOULD BE A CHOICE EMPLOY DEPLOYING MODERN TECHNOLOGY IN ALL SPHERES OF ITS ACTIVITIES.

Pakistan International

STATEMENT OF ETHICS AND BUSINESS PRACTICES ✔ The Corporation’s policy is to conduct business with honesty and integrity and be ethical in all its dealings, showing respect for the interest of those with whom it has relationship. ✔ The Corporate complies with all laws and regulations. All employees are expected to familiarize themselves with laws and regulation governing their individual areas of responsibility, and not to transgress them. If in doubt, employees are expected to seek advice. The Corporation believes in fair competition, and support appropriate competition laws. ✔ The Corporation does not support any political party nor contributes to the funds of groups whose activities promote party interests. ✔ The Corporation in committed to provide services, which consistently offer value in terms of price and quality and satisfy customer needs and expectations. ✔ The Corporation is committed to run its business in an environment that is sound and sustainable. As a good corporate citizen, the Corporation recognizes its social responsibilities, and will endeavor to contribute to community activities, for betterment of society as a whole. ✔ The Corporation believes in and fully adheres to the principles of reliability and credibility in its financial reporting and in transparency of business transactions. ✔ The Corporation in an equal opportunity employer. Its employee recruitment and promotional policies are free of any gender bias, and is merit and excellence oriented. It believes in providing its employees safe and healthy working conditions, and in maintaining good channels of communications. ✔ The Board to ensure that the above principles are complied with, for which the Board has constituted the audit committee, to be supportive of compliance. ✔ The Corporation expects its employees to abide by certain personal ethics, whereby Corporation information and assets are not used for any personal advantage or gain. Any

Pakistan International conflict of interests should be avoided, where it exists it should be disclosed, and guidance sought.

INTRODUCTION OF THE COMPANY

Pakistan International

Introduction When Pakistan came into being on 14th August 1947 there was only one Airline in operation called “Orient Airways”. After some time two more airlines “Pakistan Air limited” and “Crescent Airways” started commercial operation. None of these small Air Service Companies could succeed to cover the requirements of the Air Traffic of the country. Ultimately two of these failed to continue their operation. In 1952 “Orient Airways” was the only operational company operating on domestic routes. The government and the people of Pakistan were sincerely struggling hard for development of their country with the aim to reach to the similar level of advancement as of other free nations of the world. Communication system is the basic requirement of country. So in 1955 the Government took an initiative and passed an ordinance to form an Air fleet under the name of Pakistan International Airlines (PIA) to meet the needs of domestic and international air traffic. PIA began operation on Karachi-Dhaka sector with three aircraft in 1955. Later PIA and Orient Airways, a private carrier, were merged to form PIAC (Pakistan International Airline Company). Over the years PIA gradually expanded its network and is now serving 83 destinations in four continents.

Pakistan International

Brief History PIA entered the international aviation with service from Karachi to London via Cairo and Rome. Until about the middle of 1956, PIA had been running in loss but in 1957, it should make profit. In 1958-59 PIA started modernizing its fleet as a result of which Boeing 707 was added to the PIAC fleet. PIA was the first airline to operate jets in Asia. New York-Karachi route was inaugurated in 1957. Boeing flight was introduced between two wings of Pakistan in 1961-62. PIA became first non-communist airline to fly to the People’s Republic of China and operated two services between Asia and Europe via Moscow in 1963-64. PIA made record operating surplus of Rs. 49.22 million (about 54.71% of paid up capital). In 196667 engines overhaul shop was commissioned and completed.

In 1967-68 first batch of PIA trainee pilots completed their training from PIA flying school and received commercial pilot’s license. A new jet hanger for Boeing was completed in 1967-68. In 1969-70 PIA started to extend engineering services, domestic operation, international operation, agreements were signed with other airlines like Yugoslavia Airline. Terminal facilities were expanded at Islamabad and Karachi and management agreement was signed with Air Malta under which PIA seconded a Management team to Malta in 1972-73. During this year wide

Pakistan International

body Douglas DC-10 was introduced. Full time chairman of the Board of Directors was appointed in 1973-74.

PIA earned Rs. 152.08 million profit, introduced pension scheme employees and added four more aircraft to the fleet during 1976-77. Technical services to Somali Airlines, Air Malta and Yemen Airways were started in 1977. Two subsidiaries were established and registered in the UAE to promote hotels. Boeing 747 was introduced in 1977. In house computerized reservations system (REPAK), New Flight Control System at Karachi Airport is the achievements of 1980-81. PIA introduced first time, “Direct Inward Dialing” telephone facility in Pakistan and installed Mini-Micro computers in PIA Head Office. Automation in budgeting finance revenue, and other important areas, was also introduced in 1982-83. International flights were started from Peshawar, Islamabad and Lahore. Night Coach

Service was introduced into the fleet of PIA ion 1983-84. Flight Kitchen of PIA, which was commissioned in February 1977 was extended and modernized in 198384. Five 737-A300 aircraft were introduced into the fleet of PIA in 1984-85. “Sohni” Executive class on all PIA B-747 aircraft on international flights was first time introduced by the corporation in 1985.

Auto ticketing flight kitchen at Islamabad routes on Civil Air Transport, were achievements of PIA in 1986-88. During the period many new routes were introduced including Twin Otter operation to Muzaffarabad and Rawalakot. Automated reservations and ticketing facility introduced at Larkana during 198990. Two women pilots were inducted in PIA for first time in the history from

Pakistan International

Lahore and International flights from Mohen-Jo-Daro airport (Larkara) were started.

Profile of Employees and Number of Aircraft Right now PIAC has more than 25000 employees out of whom about 17,500 are permanent, and remaining are working on daily wages. PIAC has 47 aircraft in its fleet details of which is as under: Boeing 747-300

6

Boeing 777-24ER 3 Boeing 747-200

4

Airbus A-300-b4

8

Airbus A-310

6

Boeing 737-300

7

Fokker F-27-200/400

11

Twin Otter

2

* Lease Aircraft ** PIAC also has 2 * B747-200 and 2 * B-707 grounded aircraft. PIAC also a way to replace its fleet. For the purpose, Aircraft Acquisition Committee (AAC) by the Board of Directors of PIAC. PIAC signed an agreement with Boeing Company for B777-200ER aircraft and also want to induct Airbuses, presently taken on lease. PIAC wants to replace its fleet in phases. In first phase, 2 * B747-200, 8 * A300 B4 and 11 * Fokker aircraft were taken off by replacing these aircraft with newly inducted 6 * B747-300, 3 * B777-200ER, 4 * A310-300 and 7 Turbo Prop aircraft. In the second phase, PIAC planned to replace its 2 * B747 Combo by inducting 2 * B777LR and 2 * A310-300 Freighter.

Pakistan International

Product Lines PIAC, the National Flag Carrier, is basically service-oriented organization and its product is space in the aircraft, which is sold to its customers for passenger or cargo in particular flight on a particular sector whether domestic or international. PIAC other than its original product i.e., airline industry also has PIA Investment Limited (PIAIL) which is a wholly owned company of PIAC and an initial investment of US$ 10 million was made in it by PIAC as 100% of the paid-up capital. The shareholding was altered in 1979 with the equal participation of H.R.H. prince Faisal, under a Shareholders’ Agreement. PIAIL was incorporated on 10th September 1977 at Sharjah (UAE) as a limited company under a decree issued by H.H. the Ruler of Sharjah. PIAC unvested in the following four hotels:  Roosevelt Hotel, New York  Scribe Hotel, Paris  Minhal Holiday Inn, Riyadh  Centre Hotel, Abu Dhabi

Roosevelt Hotel, New York Constructed in 1924, the Roosevelt Hotel is an historic classically styled NY City Hotel, with 1033 rooms, 27700 sq.ft of meeting and banquet space, a restaurant, two lounges and approximately 40000 sq.ft of rental, office and restaurant space. The 22-story property contains approximately 670000 sq.ft of gross building area.

Scribe Hotel, Paris The Scribe Hotel, situated on 1, Rue Scribe-Paris is rated as a 4 Star Hotel having 217 rooms. CN France SA (CNF) has leased the building to Minhal France SA (MFSA) (a Subsidiary of PIAIL) to operate the building as a hotel up to 31 December 2030.

Pakistan International

Minhal Holiday Inn, Riyadh Riyadh Minhal Hotel Company Limited (RMHC or the company) is a Saudi Arabia Limited Liability Company established in 1979 under Commercial Registration No. 10100181290 to provide Hotel and Restaurant Services. Currently, the company owns a Hotel in the city of Riyadh with 255 guestrooms under the management of Holiday Inn Worldwide operating as Minhal Holiday Inn Riyadh. The management agreement dated 23 April 1991 is between RMHC and Holiday Inn Riyadh limited for a period of 20 years.

Centre Hotel,Abu Dhabi A Joint Venture Partnership Agreement (JVPA) was executed between PIAC and (Late) Sheikh Hamdan and 8 June 1977 to convert an on-going construction of an office/apartment building into a hotel. The “Centre Hotel” was thus opened for business on 2 October 1979 as a first class hotel in Abu Dhabi. The capital contribution of the partnership in proportion of 51% (Dhs 48,712,951) Sheikh Hamdan and 49% (Dhs 46,802,638) of PIAC.

Pakistan International

ORGANIZATIONAL STRUCTURE

Pakistan International

Organization Corporation (PIAC) has been divided into different departments as shown in organizational chart. PIA is one of the biggest commercial organization in our country and has worldwide operation the corporation has network of flights around the globe to control worldwide operation, there is a department meant for overall management of PIAC. Administration Department consists of different Division and units. A Director heads each department, GM, each section, heads each Division by Manager and subsections and assistant managers control units.

Pakistan International

Organizational/Corporate Structure of PIAC

Pakistan International

HIERARCHY OF PIAC MANAGEMENT

Pakistan International

Corporate Profile

Pakistan International

DEPARTMENTS OF PIAC

Pakistan International

PIAC Airline has been divided into the following function units. Network & Route Planning Administration Finance Marketing Engineering Flight Operations Airport Services Cargo Sales & Services Precision Engineering Complex Flight Services Coordination Network& Route Planning Department This department carries out formulation and implementation of overall corporate plans. This department provides guidelines to each division/department to fix their goals and formulate strategies to achieve them. It has the following subdivisions: International and Civil Aviation Affairs Division Economic Planning Division Fleet Planning Division Administration Department Administration department is one of the pivotal departments, which is responsible for the administration of human resources and formulation of the corporate personnel policies; it has coordinating and regulatory body, which regulates relationship between management and employees. Further subdivision is as under:

Pakistan International

Human Resource Division Personnel Division PIA Training Center Policies and Remuneration Division Security Services Division Medical Services Division Industrial Relations Division Legal Services Division Sports Division Finance Department Finance department is one of the biggest departments in the airline, which is responsible for provision of efficient and effective accounting/budget. The feasibility of extending financial, administrative, technical facilities is control by this department. It is also responsible for internal auditor of PIAC. It has further divisions, which are as under: Planning and Budget Funds Management Accounting Internal Audit Subsidiaries Marketing Department It looks after development of Marketing Plans & Policies. This department performs all marketing functions. Subdivision is given below: North (KHE) Division South (KHI) Division UK (LON) Division

Pakistan International

USA & Canada (NYC) Europe (FRA) Division Saudi Arabia (JED) Division Asia Pacific (SIN) Cargo Sales Division Market Planning & Services Division Gulf (DXB) Division Passenger Sales Division Reservation & Yield Management Division Engineering Department This department takes care of planning, base/line maintenance and overhauling of whole of the PIA’s fleet. To keep pace with the new technology, it has a special branch named as “Development Engineering” to meet the future challenges in the sphere of avionics. Following are its further subdivisions: Planning and Project Division Quality Assurance Division Avionics and overhaul Division Base Maintenance Division Line Maintenance Division Development Engineering Division Power Plant Division Resource Management Division North Division Flight Operations Department This department coordinates the training, flight engineering, planning and scheduling of flight operations. It is responsible for all the activities of the flight

Pakistan International

operation in PIA and ensured central control over all flights. The department has been organized on the following line: Flight Engineering Division Standards Division Central Control Division Planning & Scheduling Division Technical Division Coordination Division Training Division North Division

Airport Services Department Customer Services Department has two subdivisions, which are given blow: Passenger Services Division As the name implies, this division is responsible to provide services to the passengers as well as aircraft at the airport. This subdivision in addition to the Passenger Services also possesses Facilitation & Planning, Technical Ground Support (TGS) and Terminal Services (KCI).

Flight Services Division This subdivision provides for provisioning of all in-flight services like food, cabin crew and field services.

Pakistan International

Coordination Department The purpose of Coordination Department, which is headed by Director Coordination, is to coordinate all matters received through Government of Pakistan.

Pakistan International

ORGANIZATIONAL STRUCTURE AT DIVISIONAL LEVEL

Pakistan International

History of Multan air port Multan Airport traces its origins to the British Empire, when the Royal Air Force used the open space to fly in and out of the Multan region during 1919. The area was used for aircraft that were able to land on gravel and grass surfaces; however, there was very little development to the area. In 1934, Imperial Airways started to use the airfield for civil aircraft flights since Multan was considered a strategic position within the Punjab province of India. It was not until 1938 that Imperial Airways started to operate a regular flight out of Multan. The flight would originate at Lahore, then fly into Multan, where it would continue its journey to Jacobabad and then Karachi. Following independence, the airline Pak Air started operations from the airport and the Multan Flying Club was formed. Since the formation of the national carrier, Pakistan International Airlines, in 1957 PIA started operations from Multan using the Douglas DC-3 aircraft. In 1963, due to growth of the number of flights and larger aircraft requirements, the runway, taxi-ways and aprons where carpeted using the material bitumen. A new control tower was constructed to meet the technological changes of new aircraft traffic control systems. In 1971, since PIA had acquired Boeing aircraft, the runway was extended to 9000' by 100' to handle heavier aircraft and more passengers. The terminal building was also extended in 1977 which also saw the operations of Boeing 720 aircraft operations from Multan. In 1980-88, the runway was strengthened and recarpeted for the arrival of Airbus aircraft especially the Airbus A300. During 1999, PIA as well as Aero Asia International gave Multan an international status by operating flights to the Middle East such as Dubai and Kuwait. To cater for the Multani population living or traveling to more lucrative destinations. In 2005, the local government and the CAA decided to upgrade the airport terminal and airfield to meet international standards with emphasis on the runway, terminal building, facilities as well as apron areas. On 15 December 2006, Shaheen Air started four weekly flights from Karachi to Multan. Shaheen Air was the first airline in the private sector to operate flights to Multan.The airport reported an operating profit of Rs1 Billion in 2007. The airport is also being considered for Hajj and umrah flights to Saudi Arabia which is expected to generate more revenue as well as growth of international routes out of Multan.

Financial performance The profitability of PIA as published in the 2008 annual report by Pakistan International Airlines Corporation with figures in millions of Pakistani Rupees. The following table suggests the key

Pakistan International financial results for the end of year period of the financial year. PIA explains that the loss was caused by two key exogenous factors that caused the continued loss in PIA's profitability: the weakening of the Pakistani rupee and the rise in crude oil prices during 2008. Operating Performance Year Revenues Rs Millions Profit/(Loss) Rs Millions 2008 89,202 (35,880) 2007 70,481 (13,339) 2006 70,587 (12,763) 2005 64,074 (4,412) 2004 57,770 2,307 2003 47,788 1,299

Business volume

Pakistan International

Pakistan International

Financial Analysis

Pakistan International

All the amounts are in thousand rupees. All the analysis has been done on data provided in the annual report by PIAC.

Liquidity ratio Current ratio Working ratio Quick ratio

Current Ratio:

Current Ratio= Current asset Current liabilities

2008 15039282 / 71707905 0.20x

2007 13251331 / 52049542 0.25x

2006 21032248 / 42635389 0.49x

Current ratio shows the relationship between current assets and he current liabilities and ability of the firm weather the firm is able to pay its current obligations. The current ratio of PIA is last three years was less than one (1) where as the thumb rule says that current ratio of any organization is should be two (2). So the current ratio of the PIA is very unsatisfactory.

Working Capital: Working Capital =Current Assets –Current Liabilities

Pakistan International

Year

Cur Assets – Cur Lib

2008 2007 2006

15039282 - 71707905 13251331 - 52049542 21032248 - 42635389

Working Capital (56668623) (38798211) (21603141)

Working Capital is the amount required by the organization to meet its current needs. Working capital of PIA for the last three years was in negative it means in the past three years PIA has no working capital.

Quick ratio:

Quick Ratio = current Asset - Trade Debts Current liabilities

2008 15039282-

2007 13251331-

2006 21032248-

(5757849+1418616)

(5012778+1043971)

(6521586+1100676)

71707905 0.10x

52049542 0.13x

42635389 0.31x

Profitability ratio: Net profit margin Gross profit margin Return on asset Return on Equity

Pakistan International

Net profit / Loss Margin:

Formula = Net profit / Loss Margin *100 Sales

2008 35880157*100

2007 13398706*100

2006 12422816*100

89201567 (40%)

70480434 (19%)

76435189 (16%)

Net profit loss margin shows the percentage of profit or loss for any organization with respect to sales so the profit loss margin for the last three years for the PIA was.

2008 2007 2006

40% 19% 16%

Gross Profit Margin: Formula = Gross profit *100 Sales 2008 3639290*100

2007 3924239*100

2006 171192*100

89201567 (4%)

70480434 (5.56%)

76435189 (2.23%)

Pakistan International Gross profit margin shows the percentage of gross profit with respect to the sales .gross profit ratio of PIA is very low as compared to the other air lines in the past three years which is not the good sign for the organization .low gross profit means no net profit but big loss.

Return on assets: Formula = Net profit Loss *100 Total assets

2008 35880157*100

2007 13398706*100

2006 12422816*100

139669867 (25.68%)

118773574 (11.28%)

131403846 (9.45%)

The return on assets for the PIA shows the percentage of profit or loss with respect of total assets for few years PIA was in consistent loss and in the last three years the return on assets are

2008

25.68

2007

% 11.28

2006

% 9.45%

Return on Equity:

Formula = Net profit Loss *100

Pakistan International Total Equity

2008 35880157*100

2007 13398706*100

2006 12422816*100

46701927 76.82%

11903558 112.56%

2425864 512.09%

The return on equity for the PIA shows the percentage of profit or loss with respect to total equities profit as well as equities was in negative in the last three years for the PIA. So the return on equities was not satisfactory.

Activity ratios: Debtor turnover Days sales outstanding Total asset turn over Fixed asset turn over TIE ratio

Debtor turnover: Formula = Net sales Debtors

2008 89201567

2007 70480434

2006 76435189

5757846 15x

5012778 14x

6521586 11.72x

Debtors turn over shows how many times the debtor are turn over for the last three years .debtor turnover for the last three years are following.

Pakistan International

2008 2007 2006

15x 14x 11.72 x

Days Sales Outstanding:

Formula =

365 Debtor’s turnover

2008 365

2007 365

2006 365

15 24days

14 26days

11.72 31days

This ratio shows in how many days the debtors of PIA are received, DSO in 2008 was 24 days, in 2007 it was 26 days and in 2006 it was 31 days.

Total asset turn over:

Formula = Sales Total assets

2008 89201567

2007 70480434

2006 76435189

139669867 0.63times

118773574 0.59times

131403846 0.58times

Pakistan International Total asset turnover shows that how many times the sales are generated with respect to its total assets.

Fixed asset turn over:

Formula = Sales Fixed assets

2008 89201567

2007 70480434

2006 76435189

124630585 0.71times

105522243 0.66times

110371598 0.69times

Fixed asset turnover shows that how many times the sales are generated with respect to its fixed assets. TIE Ratio: Formula = EBIT Interest

2008 (31337642)

2007 (5935076)

2006 (7594638)

8351648 (3.75x)

7135845 (0.831x)

6174350 1.23x

This ratio shows how many times any organization pays interest cost in one year for this calculation we can say that PIA for the last two years haven’t pay any interest expense where as in 2006the TIE ratio was 1.23 times.

Pakistan International

MARKET RATIO EPS (Earning Per Share): Year EPS

2008 17.79

2007 6.61

2006 6.62

In the last three years PIA Was baring Loses so there is no earning per share ,loss per share in the last three years are given above in the table.

Dividend yield Ratio:

No dividend has been paid in the last three years.

Pakistan International

SWOT ANALYSIS

Frame1

Pakistan International

STRENGTHS 1.LEADING MARKET POSITION PIA is one of Pakistan’s leading air carriers, with more than 800 daily flights. Around 150,000 passengers a month fly on PIA, making it one of the major operators in the domestic market in terms of passenger kilometers. PIA’s international market share was 43.5%, In the Domestic market, its market share was 69.4%. On a system-wide basis, PIA’s market share was 51.2% at the end of year 2007. Its strong market position is driven by consistently low fares as well as reliable service, frequent and convenient flights, use of new technologies like e-ticketing and self check-in terminals, comfortable cabins and superior customer service. 2.BRAND RECOGNITION

Pakistan International

PIA has high brand recall. It is recognized by travelers all over the country. PIA is a national airline, operating passenger and cargo services covering eighty-two domestic and foreign. PIA has earned the number one ranking in customer satisfaction. This strong market position gives the company a scale advantage and helps it strengthen its brand image.

3.SUPERIOR OPERATING STRUCTURE PIA has maintained its position as the low cost carrier. It has been first class Pakistani airline to use the latest technology. Factors’ contributing consists of different series of Boeing and Airbus and an efficient, high-utilization and pointto-point route structure. Flying one type of aircraft significantly simplifies scheduling, maintenance, flight operations, and training activities. PIA has continually achieved high asset utilization and employee efficiency. Superior operating structure serves as the primary competitive advantage of PIA.

4.NETWORK PRESENCE PIA enjoys a strong network in key domestic and international destinations. The company’s network includes three the major airports in Pakistan, as well as major international airport such as Dubai International Airport. Having a strong network means that PIA can generate traffic feed for both its domestic and international Flights.

Pakistan International

5.HUB AIRPORT AT KARACHI PIA operates from its hub in Jinnah International Airport, Karachi. Jinnah International is one of the world’s busiest airports in terms of number of passengers carried. It is also one of the largest international gateways to Asia. It is also the leading international air passenger (and cargo) gateway to Pakistan. The company’s strong presences in airports with heaviest traffic levels in Pakistan give it a competitive advantage.

6.EFFECTIVE USE OF TECHNOLOGY PIA has successfully incorporated latest technology in all its systems, giving it an edge over competitors. PIA takes credit for introducing most new technologies to the Pakistani market. It was the second carrier in Pakistan to incorporate the cticketing system and the second in South Asia to introduce self check in systems at the Jinnah International Airport, Karachi.

WEAKNESSES 1.

FORMULATION OF GOVT. RULES

The Basic flaw of this organization is its consolidation that is centralized system. The key policies, strategies and set of laws are designed by the upper management. The centralized system is one of the biggest obstacles of long term success of PIA. PIA centralizes structure lead to barrel between different level of management, decreased motivation, hard access to information.

Pakistan International

2.

HIGH DEPENDENCE ON PASSENGER REVENUES

Passenger revenues accounted for 87 percent of the PIA’s total revenue in 2007. Cargo services allow airlines to generate additional revenues from existing passenger flights. In addition, cargo revenues are usually counter cyclical to passenger revenues and have lower demand elasticity than passenger business, which allows airlines to pass on fuel price hikes to customers. 3.

DEBT

PIA has a significant amount of 42 billion debts. Current and future debts could have important consequences for stakeholders of the company. For example, debt could impair PIA ability to make investments and obtain additional financing for working capital, capital expenditures, acquisitions or general corporate or other purposes. Debts could also put PIA at a competitive disadvantage to competitors that have lesser debt and could also increase the company’s vulnerability to interest rate increases. 4.

RELIANCE ON OIL PRICES

PIA’s sustainability, growth and revenues directly depend on oil prices. A steep rise in oil prices can seriously damage the long term viability of any airline. Recently many airlines around the world went bankrupt due to rising oil prices. Airlines need to hedge against this risk by taking proper measures.

OPPORTUNITIES

Pakistan International

1.

HAVING THE MAXIMUM ROUTE AND FLEET

PIA is having the maximum route and fleet domestic and international destinations network in Pakistan as compared to its Competitors. Route and fleet expansion will positively impact the company’s operations by increasing revenues.

2. GROWING DEMAND FOR LOW COST AIRLINES The growing demand for air travel is driven by lower fares and consumer confidence. A survey by International Aviation Authority showed that ticket price is the number one criterion for passengers when selecting a flight, well ahead of the availability of a non-stop service.

3. CUSTOMER LOYALTY PIA’s frequent flyer and loyalty programs can help it retain customers. PIA’s Awards+plus (frequent flyer program) was established to develop passenger loyalty by offering awards and services to frequent travelers. Such schemes encourage repeat travel on PIA, as passengers seek to accrue the benefits given to regular travelers. This enables the airline to retain customers and reduce costs, as it does not have to spend money targeting new customers to replace those lost to other airlines. 4. SHIFTING CUSTOMER NEEDS

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The needs of air passengers are increasingly changing, as they are becoming more and more price sensitive. If PIA succeeds in making its prices more competitive, then the company will be able to gain significant market share.

5 .INDUSTRY RECOVERY Market analysts believe that the global airline industry will experience an upturn in fortunes over the next few years. This represents an opportunity for PIA, as it could generate increased revenues and command market share if it capitalizes on increases in demand.

THREATS 1.

HIGH INTEREST RATES

The past few years have seen State Bank of Pakistan impose high as well as low interest rates to check inflation and the overheating of Pakistani economy. Inflation in Pakistan may see another raise in the short-term. 2.

ACCIDENTS

There had been five accidents with PIA listed as below:

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• Pakistan International Airlines Flight PK 705 was a Boeing 720 – 040 B that crashed while descending to land on Runway 34 at Cairo International Airport on May 20, 1965 resulting in 119 fatalities. • Pakistan International Airlines Flight PK740 was a Boeing 707-340C that crashed after takeoff from Jeddah International Airport on November 26, 1979. All 156 aboard were killed. • Pakistan International Airlines Flight 268 was an Airbus A300B4-203, registration AP-BCP, which crashed on approach to Kathmandu's Tribhuvan International Airport on September 28, 1992. All 167 on board were killed. • PIA Flight 554 is the flight number of a Pakistan International Airlines (PIA) Fokker F27 that was hijacked on May 25, 1998. The flight started its journey at Gwadar in Balochistan after originating in Turbat, and was flying to Pakistan's southern port city of Karachi. The aircraft was carrying 24 passengers and 5 crew members. • Pakistan International Airlines Flight 688 (PK688, PIA688) was scheduled to operate from Multan to Lahore and Islamabad at 12:05 pm on July 10, 2006. It crashed into a field after bursting into flames a few minutes after takeoff from Multan International Airport. All 41 passengers and four crewmembers on board were killed. PIA has to continuously ensure utmost safety and security of its passengers. Accidents can adversely affect customer confidence in PIA and result in declined revenues intensifying competition.

3.

STRONG COMPETITION BY AIRBLUE

Pakistan International

PIA is now competing against carriers such as Airblue and Shaheen Airline. PIA remains Airblue’s strongest competitor because of the huge market it has gained over time, strong brand image and customer loyalty. PIA has started new low-fares subsidiary “PIA Express” to stop the Airblue market share growing to fast. Moreover, major legacy airlines have been focusing on restructuring costs, which has improved their competitiveness. With costs restructured, the legacy airlines are becoming more formidable competitors in terms of increasing capacity, matching prices and leveraging their frequent flier programs. Increasing competition could adversely affect the company’s margins. 4.

INTEREST AND FOREIGN CURRENCY EXCHANGE RATES

Fluctuating foreign currency exchange rates can have a significant impact on PIA’s earnings. For example, as PIA is providing its services to the UK. Negative or positive effects arise from exchange rate movements as change in expenses. Strengthening of foreign currencies against the British Pound will positively impact PIA and vice versa. 5.

DECLINE IN AIRLINE INDUSTRY

A number of factors have caused the current decline in the airline industry. For example, the threat of further terrorist attacks since September 11 and a fall in the number of business travelers have both caused passenger numbers to fall. These and other factors may continue to affect demand for air travel in the future, which will affect revenues of PIA. The threat of terrorism may discourage people from traveling by air and could especially reduce the number of passengers traveling on international flights.

Pakistan International

Pakistan International

PEST ANALYSIS

PEST ANALYSIS The macro-environment includes all factors influencing a company that are not within its control. These include political, social, economic and technological factors. These are known as PEST factors. A technique of analysis of the macro environment is PEST analysis. Environmental analysis should be continuous arid precede all aspects of planning. Since the airline industry is very much influenced by changes taking place in the environment and has undergone rapid and dramatic changes during the last decade, this analysis is especially important for PIA. Frame1

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1.

POLITICAL FACTORS

Political factors always have a great influence on the way businesses operate in the airline industry and the spending power of customers. In recent years it has been observed that government played an active role in increasing competition in the airline industry. A number of new airlines such as AirBlue and JS Air have been awarded licenses to enter the domestic market. Pakistan has achieved some political stability in recent years. If the management of PIA believes that the present government will perform well (consistently), then there will be more investment in the form of purchase of new airplanes and latest technology. The overall industry will grow resulting in more luxurious and comfortable flights. With the military takeover government policies have become more liberal. 2.

ECONOMIC FACTORS

Currently, Airlines industry has three major players: Pakistan International Airlines, an Airblue, Aero Asia and Shaheen Airlines. Their target market includes domestic travelers as well as Pakistanis living abroad particularly in the UK and USA. These countries have strong economies coupled with high purchasing power. Customers’ purchase behavior depends very much on prices of the competing airlines as well as services offered. As inflation rate is unstable in Pakistan, spending power of consumers has effected in the long term. In fact growth in

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Pakistani economy has resulted in an increase in spending power and has positively impacted the airline industry. Economically, the new millennium has been highly volatile; the September 11 attacks revolutionized the whole world. Consequently, there was a global depression in the North America, South America, Australia and Europe. However, in Asia especially Pakistan the effect in the short term was otherwise. The economy began to boom because of greater remittances from abroad and whole sum immigration by expatriates. As a result, demand for air travel in South Asia rose. Economic conditions of Pakistan are however improving. PIA has cost a advantage over its competitors because of its newly acquired, improved, long distance aircrafts from Boeing’ which give longer range and better fuel economy than any other jet currently produced. This cost advantage is a barrier to entry for new firms. However, this cost advantage will not be significant on domestic routes.

3.

SOCIAL FACTORS

The social arid cultural influences on business vary from country to country. The social structure of Pakistan is closely tied. The trend is now changing as the general public is educated and is pursuing professional goals. Customers are more aware of market conditions and available options and want to get best value for their money. They spend considerable time and money on entertainment hence increasing the need of in-flight entertainment systems. Also, word of mouth has a significant impact in the use of airline services. Hajj attracts a huge number of customers. The social environment of Pakistan is turning liberal with the new regime. The initiative to automate check-in and ticket booking process might not be very popular with the general public (even educated population) is still technology averse. E-ticketing might also face significant challenges as consumers are

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generally reluctant to provide their credit cards information over the phone and the internet. The consumers, however, have a warm reaction to the prospect of less costly but quality service flights. 4.

TECHNOLOGICAL FACTORS

Technology is vital for competitive advantage and is a major driver of the airlines industry. Major technological changes are taking place in the airlines industry with innovations in the reservations and booking systems. In-flight entertainment systems and auto check in counters are two examples of such innovations. Internet plays a key role in e-ticketing as consumer can easily reserve tickets or check the status of the flight. A key issue will be the extent, to which technological advancements (such as Internet) impact distribution and cost synergies from industry consolidation, can offset upward pressures on costs. PIA has always led the path of technological innovations by introducing new technologies ahead of its competitors such as its auto check-in counters which has helped it gain market share. It was the first airline in Pakistan to install Saber system followed by the market leader.

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Achievements and Recognitions PIA were the first Asian airline to receive the Boeing 737-300 PIA was the first airline to take delivery of the Boeing 777-200LR World Liner. First airline from an Asian country to fly the Super Constellation. First Asian airline to operate a jet aircraft. First Asian airline to be granted maintenance approval by the US Federal Aviation Administration (FAA) and the Air Registration Board, predecessor of the British Civil Aviation Authority (CAA). First non-communist airline to fly to the People's Republic of China, and operate a service between Asia and Europe via Moscow. First airline in Asia to induct the new technology Boeing 737-300 aircraft. First airline in the world to operate scheduled helicopter services. First airline to show in-flight movies on international routes. The first airline in South Asia to introduce auto-ticketing facility. The first airline in the world to fly to Tashkent, capital of the newly independent state of Uzbekistan. First airline in the world to start Air Safari with jet aircraft. First Asian airline to start flights to Oslo, the capital city of Norway. First airline in the world to induct the Boeing 777-200LR, the world's longest range commercial airliner. First airline in the world to take delivery of the Boeing 777-200LR World liner (Longer Range Variant). Pakistan International Airlines Flight Services Department was awarded the ISO 9001:2000 certification award during May 2006.

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First airline in Pakistan to operate a flight with an all female crew at command and in the cabin. First airline in the world to operate the Boeing 777-200ER, 777-200LR and 777-300ER altogether - all the three variants available on the market at the time. PIA Flight Kitchens in Karachi were awarded the HACCP Certification. PIA was given three awards in 2008: The "Brands of the Year" Award, "Consumers Choice Award" and "One The Best Airlines Award (Cargo)".

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Recommendations PIAC should use all modules of SabreSonic systems, as it’s the complete suit for any airline to improve efficiency.

SABRE complete airline solutions helps in: Operate Our Operate solutions consist of vital tools to help airlines manage daily operations so they can efficiently fly their schedules. Crew management Dining and cabin services Flight operations Flight planning Maintenance, repair, and overhaul Planning and scheduling Resource management Market Our Market solutions provide advanced tools for airlines to plan and analyze data, to determine how to best offer their schedule to customers and make the most revenue. Cargo management Fares management Inventory management Loyalty management

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Planning and scheduling Passenger revenue accounting Revenue integrity Revenue management

Sell Our Sell solutions help airlines increase sales by enhancing their ability to reach customers through their preferred distribution channels. Booking engines Channel distribution Customer relationship management Market data and analysis Reservations Shopping options Ticketing

Serve Our Serve solutions offer systems to improve the travel experience and ensure customer satisfaction, making it easy for travelers throughout their journey. Customer check in Customer processing Trip organization

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COSSAP – III should be web based (online) in order to save precious time in transferring of data. Proper computer training should be provided to the employees of the company accordingly. Government Corporation should be made independent under a new division of aviation in the ministry of communication. There should be clear distribution of work and only qualified person should be appointed on jobs. More motivation campaign should be introduced to increase employee’s efficiency. Refund facilities should be provided on airport. Management should give more attention on computer up gradation and implementation. Monitoring at all level to achieve the organization’s objective i.e., to gain maximum business/profit and provide better services to the customers and also increase in popularity of the airline The staff should be made more punctual to improve the productivity. In this regard strict disciplinary action is recommended against the defaulters. There should be proper downsizing/rightsizing in PIAC There should be improve service standards and that should be quality oriented There should be more advertisement in print & electronic media

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CONCLUSION Being a student of Business Administration is very useful for us to have some practical knowledge about any good organization. This internship not only gives us an opportunity to understand PIAC as a whole but also enhance our experience, thoughts and skills towards airline industry. While collecting information from officers of PIAC-Multan office, we learnt a lot and observe theoretical lessons of basic Management, and how this is being put in practice. PIAC, being a service organization, cannot afford lose any customers. Customer’s satisfaction is therefore the most important element of Airline. So to establish a good customer loyalty the PIAC has started many loyalty programs for the customers.

Finally, we further concluded that PIAC no doubt, has many positive points whereas it has a few weaknesses too. We have highlighted the weak areas and made certain recommendations. We are sure that these recommendations will be of some value to the Top Management of PIAC.

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References http://www.airlinequality.com/Airlines/PK.htm www.piac.com.pk www.wikipedia.com www.google.com www.historyofPIA.com

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Pakistan International

IMPORTANT DOCUMENTS

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PIA Network Countries Bahrain Bangladesh Canada

Cities Bahrain Dhaka Toronto

IATA Codes BHA DAC YYZ

Served since 1967 1976 1988

China Denmark France Germany Greece India

Beijing, Hong Kong Copenhagen Paris Frankfurt Athens Delhi, Mumbai

PEK , HKG CPH PAR FRA ATH DEL, BOM

1973 1974 1966 1962 1972 1955

Indonesia Italy Japan Kuwait Libya Malaysia

Jakarta Rome Tokyo Kuwait city Tripoli Kuala Lumpur

JKT ROM TYO KWI TIP KUL

1993 1957 1969 1966 1971 1972

Nepal Netherland Norway Oman Philippines Qatar

Katmandu Amsterdam Oslo Masqat Manila Doha Jeddah, Riyadh

KTM AMS OSL MCT MNL DOH

1983 1971 1999 1971 1989 1967

Saudi Arabia Singapore Sir lanka Thailand Turkey

,Dhahran Singapore Colombo Bangkok Istanbul Dubai, Abu Dhabi,

JED, RUH, DHA SIN CMB BKK IST

1966 1972 1965 1967 1967

U.A.E UK USA

Sharjah London New York, Chicago

DXB, AUH, SHJ LON NYC

1982 1955 1961

Uzbekistan

Tashkent

TSA

1992