Pakistan International Airlines is the national flag-carrier of the Islamic Republic of Pakistan.

PIA was founded on October 23, 1946 as Orient Airways based in Calcutta (now Kolkata) in
British India. In 1955, Orient Airways was nationalized and merged with other airlines to form
‘Pakistan International Airlines.’ In the decades from the 1950s to the 1970s, PIA was ranked
amongst the best airlines in the world. This was acclaimed to be the golden era for Pakistan
International Airlines when it provided administrative and technical support to many other
airlines, including Emirates. Some of the aviation records set by PIA pilots in yesteryear still
stand to this day.

Today, PIA is wracked by many administrative and human resource related problems notably
corruption, inefficiency, favoritism, nepotism and overstaffing. Safety has also become a major
concern after numerous scandals relating to the qualifications of PIA personnel, the EU ban, and
the recent crash in Karachi in May, 2020, that killed 97 people.

Your assignment: Assume that you are a team member of an international management consulting
firm tasked by the Government of Pakistan for formulating a overarching strategy for turning around
the fortunes of PIA and restoring it to its former glorious status.

1. Start your submission by giving a brief historical narrative of how PIA glided into this sorry
state of affairs. This introductory part should be in one brief paragraph not exceeding 200
words.
2. Using the PESTEL (or PESTELE) model and other macro and micro-environmental factors
discussed in the online lectures, identify and discuss the recent trends that significantly affect
the working of Pakistan International Airlines. Your submission should be in bullet format;
the bullets must read as grammatically complete sentences.

From its early years of steady growth and expanding fleet, PIA is now a loss-making entity. This
is because over the years the airline had been making wrong decisions on the acquisition and
retirals of aircrafts. The airline has not been able to successfully implement an inventory
management program. This led to poor servicing of air sectors as new airlines with more
advanced aircraft increased the competition. Aircraft safety became a critical issue with the
rising number of accidents. Further, the earlier nonstop flight arrangement has been withdrawn
so that now flying through Europe to major destinations is more time consuming.
Today, PIA is wracked by many administrative and human resource related problems notably
corruption, inefficiency, favoritism, nepotism and overstaffing. Safety has also become a major
concern after numerous scandals relating to the qualifications of PIA personnel, the EU ban, and
the recent crash in Karachi in May, 2020, that killed 97 people.
2.
(P)OLITICAL FACTORS:
According to Ireland R. et al (2008), political factors always have a great influence on the way
where businesses operate in the airline industry and the spending power of customers.
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.
(E)CONOMIC FACTORS:
Currently, Airlines industry has three major players: PIA, an Airblue, Aero Asia and Shaheen
Airlines. Their target market includes domestic travellers as well as Pakistanis living abroad
particularly in the UK and USA. 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.
(S)OCIAL FACTORS:
Customers are more aware of market conditions and available options and want to get best value
for their money (Johnson & Scholar, 2001). They spend considerable time and money on
entertainment hence increasing the need of in-flight entertainment systems.
Hajj attracts a huge number of customers.
(T)ECHNOLOGICAL FACTORS:
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.
(L)EGAL FACTORS:
Airlines legislations and policies have a direct impact on the performance of PIA. PIA has
attacked new legislation which will force them to pay greater compensation to customers in the
event of overbooking, cancellations and delays.
(E)NVIRONMENTAL FACTORS:
PIA, as a symbol of national pride, should be a choice airline 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 employer deploying
modern technology in all spheres of its activities.