PIA – Pakistan International Airlines

Strategic Management
Table of Contents

PIA’s Hierarchical Structure................................................................................................6

Organizational Structure......................................................................................................7

Human Resource Department..........................................................................................7

Marketing Department.....................................................................................................7

Finance Department.........................................................................................................8

Cargo Department............................................................................................................8

Information Technology Department..............................................................................8

Decision Making Criteria................................................................................................8

Goals and Objectives.......................................................................................................9

Internal/External Analysis.................................................................................................10

Internal Analysis............................................................................................................10

Resource Audit..........................................................................................................10

SWOT Analysis.............................................................................................................10

Strengths....................................................................................................................10

Weaknesses................................................................................................................11

External Analysis...........................................................................................................13

Opportunities.............................................................................................................13

Threats.......................................................................................................................14

Pestel Analysis of PIA...................................................................................................15

Political Factors.........................................................................................................15

Economic Factors......................................................................................................15

Social Factors.............................................................................................................16

Technological Factors................................................................................................16
 Porter’s Five Forces Analysis of PIA............................................................................16

Bargaining power of the customer.............................................................................16

Bargaining Power of the suppliers.............................................................................17

Threat of Substitute Products.....................................................................................17

Threat of New Entrants..............................................................................................17

Competitive rivalry in the industry............................................................................18

Competitive Analysis.........................................................................................................18

Competitors Analysis Framework.................................................................................19

Strategic Positioning..........................................................................................................21

4Ps Marketing Mix........................................................................................................21

Product.......................................................................................................................21

Price...........................................................................................................................22

Place...........................................................................................................................22

Promotion..................................................................................................................23

Strategic Positioning..........................................................................................................23

What (Core Competencies)........................................................................................24

Who (Customers).......................................................................................................24

How (Culture)............................................................................................................24

Why (Calling)............................................................................................................24

Current Models of Strategies in PIAC...............................................................................25

Industrial-Organizational View.....................................................................................25

Resource Based View....................................................................................................26

Current Strategies..........................................................................................................27

The Blue Ocean Strategy...........................................................................................28

 The Red Ocean Strategy............................................................................................28

Resource Audit..................................................................................................................29

Capabilities and their application......................................................................................29

Value Chain Analysis........................................................................................................30

Firms Infrastructure.......................................................................................................30

Human Resource............................................................................................................31

Technology Development..............................................................................................31

Procurement...................................................................................................................32

Inbound Logistics..........................................................................................................32

Operations......................................................................................................................33

Marketing and sales.......................................................................................................33

Services..........................................................................................................................33

Profitability....................................................................................................................34

Corporate strategy..............................................................................................................34

New Routes....................................................................................................................34

Technological Advancements........................................................................................34

Austerity Drive..............................................................................................................35

Acquiring new Aircrafts................................................................................................35

International Strategies..................................................................................................36

Product Life Cycle.............................................................................................................36

Introduction....................................................................................................................37

Growth...........................................................................................................................38

Maturity.........................................................................................................................38

Decline...........................................................................................................................38
 Problem Identification.......................................................................................................39

Administration...............................................................................................................39

Marketing.......................................................................................................................40

Human Resource Management......................................................................................41

Finance Department.......................................................................................................42

Solutions and Strategies.....................................................................................................43

Administration...............................................................................................................43

Marketing Department...................................................................................................44

Human Resource Department........................................................................................45

Finance Department.......................................................................................................46

Conclusion.........................................................................................................................47

References..........................................................................................................................48

Table of Figures

Figure 1: Strategic Positioning......................................................................................................23

Figure 1: Air Crafts........................................................................................................................32

Figure 1: Product Life Cycle.........................................................................................................37

PIA’s Hierarchical Structure

Board Of
Directors

CEO
Corporate
Human resource
Planning

Flight Operations Marketing

Airport
Finance
Services

Financial
Flight Monitoring &
Services
Appraisal

Work Store Purchases

Information
Technology Enginering

Quality
Coordination
Assurance

Precision General
Enginering Services
 Organizational Structure
Pakistan International Airlines is the national flag carrier of Pakistan under the
managerial control of the Secretary to the Government of Pakistan for Aviation. Its focal center
is in Karachi's Jinnah International Airport, while Allama Iqbal International Airport in Lahore
and Islamabad International Airport fill in as secondary centers. PIA came into being back in
1956 by the act of parliament which is known as ‘PIA ACT’. The act clearly stated that PIA was
to be governed by a total of 11 board of directors of which 8 were to be chosen by the federal
government and rest by the shareholders (Anon, 2016). PIA works on the organizational
structure of centralization with an autocratic environment where the top-level management is the
one in control with little to no authority to employees. The major departments of PIA include
marketing, finance, human resource, cargo and information technology department
(Maqbool,2015).

Human Resource Department

HR dept at PIA functions to hire, train, pay, motivate, maintain and ultimately retire
employees. PIA makes policies and procedures for the employees of PIA from induction level to
retirement. Human Resource Planning at PIA starts with the need for an investigation. HRP
organizers must consider first the information and abilities of the current staff are recognized by
building up an expertise stock for every worker. The next step is to estimate HR requirements for
future dependent on key objectives of the organization. Third step is to decide the gap in between
your future goals and your current position (Sci.Int, 2017).

Marketing Department
The head of the marketing department and its operations come under the senior vice
president of PIA, the SVP for the marketing department works as an advisor to the Managing
Director (MD) for the corporate plans and the implementation of long-term strategic gains. The
marketing department is further divided into two parts; Marketing for passengers and Cargo as
separate marketing techniques and strategy formulation is required to attract both sets of
customers, which are either traveling through PIA or are sending their luggage through PIA
cargo system (Maqbool, 2015).
Finance Department
The finance department at PIA is headed by the Chief Operating Officer; followed by the
finance manager and assistant finance manager. Further, the hierarchy includes agents for
different sections like revenue, payroll, refunds, reconciliation, and miscellaneous transactions.
The departmental duties include internal audit as well as the main managerial functions of
planning and controlling of budgets of the company. Besides, other major accounting functions
such as revenue and profit calculations, budget as well as Financial management is also a part of
finance department duties (Maqbool 2015).

Cargo Department
PIA Cargo moves a range of items across Pakistan as well as to various worldwide
destinations. The wares that PIA Cargo ships range from edibles, for example, meat, fish,
occasional natural products, vegetables, to materials, paper items, research center/careful gear,
vehicles, airplane parts and substantial apparatus (PIAC, 2020). Cargo department in PIA has a
total stake of 15% in PIA’s total revenue. Furthermore, there are two sections in the cargo
department which include cargo sale department and cargo handling department.

Information Technology Department

The role of IT department in PIA is extremely critical due to the fact that PIA is operating
two business which is the flight operation and cargo management system at the same time, hence
there is utmost need to identify any problems related to communication network or any sort of
computer related issues. PIA has two software’s; SABRE which is a software used for ticketing
and reservations and AVIVA which is a software for cargo management system.

Decision Making Criteria

PIAC is an administration organization affected by bureaucratic leadership. They follow
one-way communication system. Choices are constantly made by higher level management and
afterward reported to the lower staff to follow without considering their consent, following an
autocratic style of managing decisions in the organization leaders have absolute power over team
members. Even if the concern and involvement of team member is important but it is not
considered and everything is to be done as per the higher level of management states. Due to this
PIAC’s employees have a low task orientation which refers to employees not motivated while
performing their job, which also affects the sense of work ownership and creates difficulties for
employees to comprehend their tasks as the information flow to the top level is very slow in
organizations [ CITATION Sid10 \l 1033 ].

Goals and Objectives

The main goal for pia is to improve their operations and PIA has taken significant steps to
achieve that goal. The airline has lately been ensuring that flights reach on time, introduction of
new routes as well as the reopening of previous routes which were closed due to poor
performance of PIA. For example: a route from Lahore to London had been closed due to PIA’s
airplane unworthy of flying safely. PIA further aims to enhance their marketing strategies and
grab the chunk of target audience of comfort seeking travelers by introducing more leg space
while travelling in 2019. Moreover, PIA also aims to bring improvement in the financial sector
by hiring a new chief financial officer Mr. Khalil Ullah Sheikh. Hiring an experienced person in
finance would lead to PIA performing well in terms of profit maximization. Which is definitely
one step closer to the goal achievement for PIA.
 Internal/External Analysis
Internal Analysis
Resource Audit
The resource audit of a company is a part of internal analysis that is used to identify and
evaluate current state of organization’s resources and capabilities that helps identifying the
strengths and the areas that needs improvement. There are four dimensions extracted from the
tangible and intangible assets; physical, financial, human, know-how, and reputation.

SWOT Analysis
Strengths
First Mover Advantage

The greatest strength for this organization in terms of its establishment is that it is the
largest and official state airline of Pakistan having the first mover advantage in Pakistan. It has
the largest number of customers that use this airline for domestic and international travel
purposes. PIA has the maximum share in the market with 71.40% of the industry, Aero Asia has
share of 15.29% and Air Blue has 8.70% share in the Pakistan's Aviation Industry. So, PIA is the
most favorite airline of the nation and people believe in their services and love to travel with
Pakistan International Airline.

Network and Operations

PIA has kept up its situation as the ease transporter. It has been the top-of-the-line
Pakistani carrier to utilize the most recent innovation. Components' contributing comprises of
various arrangement of Boeing and Airbus and an effective, high-usage and highlight point
course structure. Moreover, PIA appreciates a worldwide solid organization and global
objections. This organization incorporates many significant air terminals in Pakistan, just as
significant worldwide air terminal, for example, Dubai International Airport. Having a solid
organization implies that PIA can produce traffic feed for the two its homegrown and global
flights. Currently, it has 37 international destinations/routes and 27 domestic destinations/routes.
Also, PIA has booking offices in all major cities both at domestic and international level
 Advancements in Airplanes

PIA is one of the airlines of the world, which have the airline coverage of maximum
areas of Asia, Europe, Australia, USA and most of the African countries. Along with this
coverage PIA is facilitating its passengers with all the necessities and technologies and providing
them with a safe, secure and enjoyable flight to any part of the world.
Secondly, PIA has one of the most modern and technologically advanced airplanes of the
world. In the beginning thus from 1954, PIA had very simple planes. However, with the passage
of time, it has improved its planes with different items. For example, PIA has changed all of its
fan or blade planes with jet engine planes. Also, for international flights, they have digital radar
system in the planes to secure their passengers safety and avoid any casualty. Earlier on they
provided the facilities of watching movies on a TV screen in the plane. However now they
provide the facility of personal TV screens at the back of each passenger seat of the plane. This
ensures privacy of the viewer and does not disturb those passengers who wish to rest or indulge
in any other activity.
Thirdly, PIA did its best with the government to upgrade its planes with the use of
modern technology. In the past PIA used the same planes bought in 1980s and 1990s. That is
why its performance was good. Fortunately, in the year 2003 PIA signed an agreement with the
Boeing Company to provide them with new airplanes. These include 777 jet engine planes.
According to the agreement PIA received three of these planes by 2005 and others were handed
over to them in the subsequent years based on the agreement. These new airplanes really
provided the customers of PIA great satisfaction because of the modern facilities.

Weaknesses
Insufficient employees and staff

The first point of the weakness of the PIA is that, there is no related staff in the airports
and also in the different stations. When different political governments come into power, they
employ people of their own choice in the PIA, usually those who voted for them during the
elections. The main factor that has weakened the performance of PIA is the recruitment of less
qualified people or inefficient people. These people are able to get away with their inefficiency
because they further hire qualified personal secretaries and assistants who carry out their duties
for them. Another factor is that even though most of the staff is highly educated, their
qualifications do not match their post. There are many employees in the PIA Peshawar airport
that are on a high post and possess degrees that are not suited for the post.
Also, there are very low rewards and appraisals for the middle and lower level of
management as compared to the pilots and there has been overstaffing in last 10-12 years. This
discrimination effect has caused PIA to lose competitive advantage over other domestic airlines.

Labor unions

The next main weakness of the PIA is that there are labor unions. In an organization labor
is very vital because all the employees cannot express directly. So, they share their views and
problems with one another and it is then presented in a formal manner to the concerned
authority.
However, these unions can sometimes prove to be troublesome if given too much support
or if they are created in a sensitive organization such as PIA. This problem has been there in the
PIA over a decade now. The labor unions had become very powerful and influential. The
president of the labor union is given a car, a driver and a residence. Still the president is also not
obliged to carry out his duties. This labor union system of PIA has become a great weakness for
the organization as it is continuously decreasing the brand value and customer satisfaction
related to this airline.
Debt and reliance on the oil prices

PIA has a significant amount of 42 billion debts. Current and future debts can have
important consequences for stakeholders of the company. Also, 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 this airline.

Inefficient centralized system

The key arrangements, procedures and set of laws are planned by the upper
administration in PIA. This centralized system is perhaps the greatest obstruction of long-haul
accomplishment of PIA. PIA concentrates structure led to barrel between various degrees of the
board, diminished inspiration, and hard admittance to data. Also, the procedures are so
inefficient that there are regular flight delays and customers have to wait for several hours in
order to travel through this airline. This issue has made PIA lose a large number of customers
and PIA has not been able to come up with strategies in order to get over this weakness.
External Analysis
Opportunities
Capturing the Asian market

The future chances of the PIA are to give modern facilities to the clients at a less
expensive rate. This is the significant way that PIA can cover a large portion of the Asian
market. The significant explanation behind this is that a large portion of the Asian nations are
agricultural nations and don't have an exceptionally consistent economy. So, all the customers in
these nations want to travel in a safe, secure and modern manner at a competitive price.
Subsequently, if the PIA starts embracing serious valuing it could have the option to catch this
market.

Rebuilding its value

In Pakistan, PIA has a lot of image building to do because it has not created an
impressive image in the market in the past few years. The main reasons were last minute
cancellation or late timings of the local flights. Also, the planes used for local flights were in
very poor condition. So now PIA has the opportunity to make use of modern technology to
ensure timely flights as well as purchase luxurious and affordable planes for domestic flights as
well.

Global crisis

After the advent of COVID-19 pandemic, there is a great demand for low-cost airlines as
people are not able to pay for the highly-priced tickets to travel through the airlines. PIA can use
this opportunity by decreasing its fare rates and creating a large demand in this situation of
global crisis.

Recruitment policies and Training programs

There is a great upraise in students that are studying aviation in Pakistan and are very
much talented then the existing employees of PIA. The company can use this opportunity of
increasing potential and use them to accelerate the success factors necessary for PIA and
generate higher revenues along with an increase in customer satisfaction.
 International delivery system

Speedex is the domestic delivery system used by PIA for locomotion purposes of several
shipments in the country. If this delivery system is expanded internationally, it can benefit the
PIA in many ways and is a great opportunity for PIA to generate good revenue out of it.

Threats
Strong Competition

The main threat for PIA is the emergence of the new airline companies. If we look in the
past, there was only one airline company in Pakistan i.e., PIA which was providing air traveling
facilities to local and international destinations. However, in the past few years' three new
airlines have emerged namely Aero Asia, Air Blue and Shahen Airline companies that share the
customers with PIA both locally and internationally. These companies face PIA with a great
threat. These airlines have adopted different tactics to capture the market share. These include,
low fare rates, scheduled and timely flights. As Pakistan is a developing country the people here
like to travel at cheaper rates with timely flights. In this case if the PIA is not able to satisfy the
needs of its customers efficiently, it has the threat of further losing its market share.

Higher Fare Prices

Pakistan is currently classified as a third world country. Therefore, the people here cannot
afford high prices for air traveling. They look for cheaper airlines or for alternative means of
transport to travel locally. This is quite a serious problem for an organization like PIA because it
cannot cut down its prices or does not adopt competitive pricing. Therefore, they are losing their
market share as well as reputation as the people view it as a highly priced airline. The third
company which is Shahen Airline emerged in 1993 and is doing tremendously well in the local
airline market as well as international and gradually taken over the market from PIA hence, the
market leader presently.

Higher Tax Rates in Pakistan

Higher tax rates in Pakistan are also a threat to a company like PIA which generates the
revenues in billions of rupees. More the income, more the tax company has to pay.
 Bad Reputation and Governmental issues

The company has a bad reputation including 5 major accidents of its airplanes. Increase
in technical failures has increased the distrust of customers in terms of safety. Also, the time
taken by embassy to accept VISA is so long that customers have started to shift over its more
efficient competitors.
Moreover, the political distress in our neighboring countries has an adverse effect on
airline industry and if this sector is capitalized by the government, its monopoly system can be in
a great danger. Also, PIA has a huge amount of debt to be paid that can be a threat to its resource
purchasing in the future.

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.

Pestel Analysis of PIA

Political Factors

Political variables do contribute a ton to the manner in which carrier businesses works
and it does impact the customer spending too. Throughout the long-term government Pakistan
has conceded licenses to the new parts in the market which incorporates Air blue and JS Air. The
political stability has its ups and downs in Pakistan yet as of late it has been steady and if the
Government can execute well, then they would have the option to contribute more on new
innovation which would prompt great quality in the business model of PIA.

Economic Factors

PIA has rivalry from a portion of the couple of aircrafts who joined the race, which
incorporates Airblue, Aero Asia and Shahen Air. These competitors work locally and
internationally as well. The Pakistanis living in abroad like UK and USA, these are solid
economies with high buying intensity of purchasers. The spending on aircrafts relies upon the
costs and the services that different airlines are giving. Because of the adjustments in expansion
rate, it has influenced the buying intensity of clients. Even if the economic conditions are
improving in Pakistan driving it to a growing economy, PIA has cost favorable circumstances
because of its great Boeings giving longer range and preferred fills which are better over
different airplanes and it has made it hard for new airlines to enter.

Social Factors

The general public has become more educated and has certain goals. They now know
how the market works and they have an understanding of the value of money. There is more
demand for in-house entertainment and people are willing to spend their money on it. Also, the
social media has become more popular which could reach hundreds of people and it could spread
bad word of mouth and reviews on the social media. Also, people are unwilling e-ticketing due
to security reasons.

Technological Factors

PIA has used many innovations in their technology, they had introduced the auto check-
in counters before their competitors could and had also established the e-ticketing service which
allows the customers to book their tickets and make reservations. There are also in-flight
entertainment systems for the customers. As the technology is getting advanced, they have to go
according to the changes.

Porter’s Five Forces Analysis of PIA

Bargaining power of the customer

The Bargaining power of customers is low in the case of Pakistan International airlines
due to following reasons.
 PIA has a monopoly in Pakistan and all the fare rates and other prices are decided by the
company itself without any involvement of the competitors or government in price rates
 There is a very low competition in the airline industry of Pakistan so customers do not have
much of options to travel through airline
 Due to several terror threats, many companies have stopped their airlines to operate from
Pakistan.
 In Pakistan, there is only one substitute for air travel that is by sea and it is pretty time taking
that most of the people do not bother to choose it in comparison of PIA.
Bargaining Power of the suppliers

The Bargaining power of suppliers is high in the case of Pakistan International airlines
due to following reasons.

 There are only two suppliers of public airlines in Pakistan that is Boeing and Airbus which
makes their bargaining power strong as PIA has not much of options to buy its resources
from.
 The employee ratio working for PIA is quite high than other airlines but they are not replaced
easily and spend a long tenure in the airline company.
 Several oil companies are giving fuel to PIA on debt making their bargaining power strong in
advance.
 The operations are controlled by the defense department and all ground rules are set by them
for PIA making its bargaining power low to these suppliers.
Threat of Substitute Products

This threat is quite low in the case of PIA as it is the only airline to travel over the seas
and the demand for such type of travel is low in the airline industry of Pakistan. The competitive
advantage that PIA has over its competitors is hard to beat as they are already operating on the
monopoly system and it is difficult for other airlines to acquire such a large travel area and spots
all around the world.

Threat of New Entrants

Threat of new entrants is also low in the case of PIA due to following reasons.

 PIA possesses a complete monopoly in international routes and it is the only airline company
in Pakistan that has a large number of routes than any other airline
 Moreover, it is a type of business that requires a large amount of capital and a sufficient
number of resources to run the business which is merely possible for a country like Pakistan
where the demand for air travel is already low and people are very limited on their
investments
 This business has slow rate of returns which makes it difficult for anyone to invest in such a
huge risk where the market is already limited on the basis of consumption
 There is a little threat of international airline companies such as Emirates and Qatar Airways
that have started operations in Pakistan and are providing the services to their customers
overseas. But as we discussed there is a very low ratio of people who travel internationally
making it difficult to compete with PIA.
Competitive rivalry in the industry

Today, Pakistan International Airlines has a good number of competitors such as Airblue,
Shaheen Airline, Serene Air and Askari Aviation but the industry is still dominated by PIA so
there is a very low rivalry in Pakistan airline industry due to several competitive advantages PIA
possesses such as large and expansive routes, a greater number of airplanes and a large number
of employees working for the airline company. Though, this trend can be changed if PIA does
not reduce its prices and making technological advancements in the organization.

Competitive Analysis
For a firm to remain competitive for a long time in today’s swiftly changing markets, it
must be able to have access to information about various environmental factors efficiently and
effectively[ CITATION Ros92 \l 1033 ]. And one of the important factors is nature of the
competition the firm has. Examination of the competition is a constant procedure which needs
identification and collection of information and then its evaluation to contemplate the possibility
of the competitor’s action.

In a competitive analysis the products and services of a firm are compared with that of
other firms on the basis of similarities and differences those firms have. The most explicative
part of starting a competitive analysis is choosing the write competitors to look over. In case of
Pakistan International Airline, we will divide the competitors in three segments.

First are the airlines which PIA gave birth to which are Air Malta and Emirates. PIA
helped these air lines by giving aircrafts on lease and providing technical and ground support in
1970s and 1980s respectively [ CITATION Saa16 \l 1033 ]. Second are the local air lines started
in Pakistan like Air blue, Askari air Pakistan, Serene air, Air Indus and a recently started Air
Sial. Third are the direct competitors which are the other international airlines operating in
Pakistan like Etihad Airways, Saudi Airlines, Qatar airways, Turkish Airways etc.
 PIA is the national flag carrier of Pakistan with fleet of 30 air crafts flying to 56
destinations in 26 countries of Asia, Europe and north America and 24 cities in Pakistan. More
than 14000 people work in PIA providing biggest ground support in Pakistan for many domestic
and international airlines.85% of the share of the company is held by government as it is a state-
owned airline and rest 15 % is owned publicly. IA also owns hotels in New York and in France
which are very famous. In 2019 PIA increased its revenue from 104 billion rupees to 148 billion
rupees which is a great achievement still there is room for more. The big staff of the company
have become a head ace as company does not need 14000 employees for only 30 air crafts.
Political interference and hiring without coalification because of political pressure have
destroyed the airline which was one of the best airlines in past. Moving on to the competitors of
PIA it is important to analyze the domestic airlines too.
Airblue is the Biggest Pakistani airline after PIA with a fleet of 10 aircrafts flying to 22
destinations including 10 cities of Pakistan. Air blue also started an e-cargo service to for air
freight market of Pakistan. Airblue is a privately owned airline with a revenue of $57.28 million.
Other than this Askari air Pakistan, Serene air, Air Indus and a recently started Air sial are also
operating in Pakistan mostly flying to one city to another or to some regional destinations. But
the main competitors of pia are the international airlines operating in Pakistan. As discussed
previously there are many international airlines flying to Pakistan but we will discuss three
important airlines. We will be using a framework presented by[CITATION Myc18 \l 1033 ] to
perform competitive analysis of PIA.
Competitors Analysis Framework

Saudia Emirates Turkish

Airline Airlines
Number of More than 59590 37670
employees 10000
Fleet 159 270 365
including cargo including cargo
planes
Founded 1945 1985 1933
Investors State Government Turkey
owned Firm of Dubai directly Wealth Fund, The
under the Investment Republic of Turkey
Corporation of Ministry of
 Dubai Treasury and
Finance
Privatization
Administration,
Open for Public
Acquisitions Non Non Non
Strengths/Weakness One of the world’s
five biggest airlines Best employer
of Asia and Africa 2020 by Forbes
Revenue $210 $28Billion $13.2
Million Billion
Target customers A fun and  individuals People who
excellent airline who are well- are looking for safe
that receipts travelled, or have hygienic flights to
passengers on ambitions to become explore new places.
short, cheap trips well-travelled, and
who also embrace
the opportunity to try
the unfamiliar
Positioning Benefit
oriented and offers
unique facilities and
services.

Strategic Positioning
Theoretically, strategic positioning is concerned with the way in which a particular
business distinguish itself from its competitors and delivers value to specific customer segments
(Wickham, 2001). It must reflect an idiosyncratic value chain that determines all business
operations and processes in a way that is hard to imitate for competitors (Porter, 2001). As an
organization that represents a country on its way, it is essential for it to practice such values and
culture that makes it different from other country’s national airline representators. PIA holds
immense value for Pakistan when it comes to strategic positioning in the airline industry as a
whole. Considering its history as the top airline ‘once’ in the world, it must have practiced some
strategies that made it the number one. Of course, it’s different time now and the world just
never keeps changing. As a strategist, positioning of airline industry specific to companies can be
analyzed just the way normal companies are: by applying marketing mix also known as 4Ps, and
the extended version of market analysis called 7Cs. Another interesting way to analyze strategic
positioning of a company was recently devised by Ronald Baker and Ed Kless, (2020). It extracts
information about positioning strategy in four parts: What (Competencies), How (Culture), Why
(Calling), and Who (Customers).

4Ps Marketing Mix

To market a service of airline industry, the marketing mix of different variables are
needed as a combination of the following interdependent and controlled factors.

Product
As a national flag bearer, the core product of PIA is the passenger transportation. It also
offers a number of services under its umbrella briefed as follows;

 PIA Cargo Service: The service is the main source of the country’s exports, that has
introduced Pakistan’s fruits and vegetables to the global market. The service holds a
significant position in the organization as it makes decent revenues by providing boost to
Pakistan’s variety of exports. In addition, PIA cargo also serves on-demand charter flights to
lift and deliver goods such as meat, livestock, relief goods, etc. within and outside the
country (Units, n.d.).
 PIA Speedex: It is the airline’s own domestic courier service across the country with a vision
for best customer service at the doorstep with the help of leading technology. The catch
phrases are: Speed, Reliability, and Affordability. The service offers same day, overnight,
second-day and seasonal products delivery (Tugcu, n.d.).
 PIA Businesses: PIA, previously known as Pakistan International Airlines Corporation
(PIAC) was converted after a conversion Act, 2016 (Act No. XV of 2016) from a statutory
corporation to a company governed by the Companies Ordinance, 1984. Hence, the new full
name of the company is Pakistan International Airlines Corporation Limited (PIACL). It
owns a number of subsidiaries under its name such as;
o PIA Investments Limited, Skyroom (Pvt) Limited, Abacus Distribution Systems
Pakistan (Pvt), PIA Holding (Private) Limited, PIA Poultry Breeding Farms (Pvt)
Limited, PIA Hotels Limited Companies, and Minhal Incorporated Sharjah (Tugcu,
n.d.).
 PIA Charter: It is a partnership between the company and the owner of the aircraft that binds
both parties in profit sharing and expense bearing. PIA finds the charter fleet through
 announcement of tenders to serve most valuable customers. The company holds the aircraft
and uses it for chartered flight operations locally, as well as globally (24News, 2020).
Price
To meet the demand and to facilitate different segments, the airline has opted two fare
classes and occasionally introduce low fare packages. Business, Economy Plus, and Economy.
The pricing strategy of PIA devises in Domestic and International routes. Although, the prices
are defined by the exchange rate of the country, as the prices for the international routes are
stated in US dollars. As per the domestic routes, the prices are still fluctuated based on the
foreign change rates, but stated in PKR.
Place
As the national flag bearer, PIA has not been able to place (position) itself in a way that
may have earned the desired position as per the vision statement of the company. Of course, the
situation was different in the past when PIA was an example and placed right according to what
it desired.
Promotion

PIA is seen little on television and print medium is used more as advertisement under the
name of special offers. The promotions are done through the network of travel agents in the
forms of special discount offers/deals, prior ticket bookings, promo codes (PIAC, 2020).

Strategic Positioning
“The essence of strategy is choosing what not to do.”, says Michael Porter.

The strategic positioning model developed by Ronald Baker and Ed Kless is taken from a
Spotify podcast that describes a company’s stand point by asking a few sets of questions under:
What, Why, How, and Who (Kless & Baker, 2020). The model they developed is shown in the
figure below:
 Figure 1: Strategic Positioning

Source: (Baker, 2020)

What (Core Competencies)

The question remains that what is that one thing that PIA does better than perhaps most
competitors. Considering the national flag carrier, the airline has been known for its best-in-class
customer service, unbroken records and historic firsts as far as the history is concerned. Now,
and from the very first day, the most highlighting competency of the airline is the national flag
on its tail. The representation of the country in the outer world. PIA has also made a name from
the experienced pilots with specialized knowledge and its food served during the flight (Tugcu,
2020). The customers of PIA look for the Pakistani hospitality and rich culture practiced in the
flights. For Pakistanis globally, their national flag bearer is a symbol of pride. The strategic
assets of the airline are the brand image, pilots, and investments in the major cities of the world
such as, Roosevelt Hotel in the heart of Manhattan, New York to name one.
Who (Customers)

PIA has been able to attract the customer class from lower middle to elite. As a national
airline, the company aims penetrate and position itself in the hearts of Pakistanis. As far as the
history goes, the airline achieved its goals and objectives not only for the people of the country,
but also in the outer world.

How (Culture)

PIA makes its distinguished thinking as a representative of the country. The most
differentiated factor of the airline as it operates globally, is that it shows the same hospitality,
values, and culture of the country in the airline not as a business strategy, but only for love of the
country and its image in the world. The dress code of the staff (air hostess) in the airline was
totally new introduction in formal dressing that complements the national dress Shalwar Kameez
("History of PIA - Pakistan International Airlines", 2020).

Why (Calling)

Beyond making money, an organization with national strategic importance has multiple
purposes to fulfill in order to make its own, and country’s position strong. As discussed above,
PIA was the pinnacle of everything in its capacity due to determined and sincere leadership. The
true essence of PIA was to build an airline as it was visioned.

In assumption, the strategic positioning of PIA can be explained in two parts. The first
one is the domestic positioning; the flag bearer holds significant position in the country due to its
relatively high prices as compared to local competitors. The target customer demographic;
average or more than average class travel across the country. The second one is the global
positioning; the prices are much lower in the international market due to its limited capacity of
services to the customers travelling in and out of the country.

Current Models of Strategies in PIAC

If a business wants to be successful in the marketplace, it is necessary for them to fully
understand what factors exert impact on the development of their company. Once they know
about both positive and negative effects within and outside the company, they can produce
suitable strategies to handle any predicted situation. Therefore, examining internal and external
factors is considered the most important task for an enterprise before launch any strategic
marketing plan [ CITATION Van20 \l 1033 ]. In case of PIAC, extensive research has already
been done in this report using several strategic models such as SWOT analysis, PESTEL analysis
and Porter’s five forces model. Now, for the examination of internal and external factors that let
this big airline company make its strategic decisions, PIAC’s Industrial-Organizational view and
Resource based view will be analyzed. Also, the strategic zone in which the decisions lie for this
company will also be discussed further.

Industrial-Organizational View

According to this strategy building model, the industry in which a firm chooses to
compete has a stronger influence on the firm’s performance than do the choices managers make
inside the organization [ CITATION Pou16 \l 1033 ]. So, the strategies using this model are
made keeping the information of the whole industry. Pakistan Airline Industry is expanding and
new airline companies have started to make their position in the market. If the increasing demand
of airlines these days is to be considered, it will be no wrong to say that factors like increasing
population of Pakistan and increasing income levels of people are the main reasons for it. These
demanding factors has caused a threat of new entrants in the industry to PIAC and this rivalry
will keep increasing in the coming years. PIAC, in the early times had this monopoly of having
the largest share of market and most used airline by the people of Pakistan but there has been a
shift in this demand of PIAC. Considering the new international routes and airlines such as Qatar
Airways, Kenya Airline, Austrian Airways and Turkish Airways, these companies have started
to give services on those international routes, which were acquired by only PIAC once.
However, PIAC has managed to keep its monopoly through increasing domestic airlines and
covering those international routes which are not yet covered by these airlines. Considering all
these factors, the I/O view does have a strong influence on the PIAC strategy formulation. In this
regard, PIAC has made strategies like increased prices than other airlines which is not quite a
good one but it surely gives the overview of sustained monopoly of PIAC in airline industry.

In case of airline industry, the firms competing within this industry has similar resources
under their control. Most of them have similar airplanes but vary in human resource. They have
similar ways of dealing with their customers but when it comes to PIAC, it lacks these
competitive resources as its customer-relationship management is not very effective as compared
to other airlines in the industry and it has history of accidents with the airlines that has affected
the customer loyalty of this company. So, when it comes to internal strategic decisions, I/O view
does stand with the PIAC strategic modeling as they are not that successful in the industry when
it comes to providing efficient services and these

Resource Based View

The resource-based model assumes that each organization is a collection of unique

resource and capabilities that provides the basis for its strategy and that is the primary source of
their return [ CITATION Pou16 \l 1033 ]. From the very beginning, PIAC has built a number of
resources for the company not only in the form of airplanes, but also in the form of human
resource. PIAC has been using its Airbus and Boeing airplanes for many years and considered
them their best resources. PIAC has the largest number of domestic flights and it also covers the
northern areas of Pakistan like Chitral, where no other airline has yet routed their airplanes. All
the strategies that have been made by this company including running the business on consistent
loss for many years is being done on the basis of its resources. So, it is well-considered that the
resource-based view was applicable in PIAC for many years. But this company faced an accident
in the beginning of 2020 and it shifted its view towards I/O view rather than using RBV further.
On 22 May 2020, a PIAC Airbus, crashed near Karachi airport with 99 people on board out of
which 97 passengers were dead. After that incident, the International Air Transport Association
issued orders to review the license of many employees in PIAC. To deal with this dilemma,
PIAC grounded its 150 pilots out of which seven were terminated later on. PIAC after doing all
these actions have made its image much better in the industry this year. Also, the company has
recently announced that it is going to lay-off half of its employees and reduce the size of human
resource. This an efficient decision of laying-off excessive employees within the company and it
will also reduce the expenses of PIAC.

PIA also discontinued previously profitable routes to the US, as the TSA forbade nonstop
flights from Pakistan to the US, and instead required costly diversions to European airports for
immigration clearance. This hurdle has affected the strategy building of PIAC as its resources
have no longer been useful for it completely and apart from having the resources, the company is
not able to fully use their capabilities to generate profit for the company.
 Recently, PIA shut down its courier arm, SpeedEx, whose infrastructure was scattered
over 74 domestic destinations, and laid off its 320 employees and it has been clear through these
factors that PIAC has been reducing its resources to keep the company in run and it is completely
focusing on its airline services which are also not in good shape for many years now.

Current Strategies

Pakistan International Airlines (PIA) is well on its way to improve operations with a new
management team on-board. The airline has lately been ensuring regular, on-time flying,
expansion to newer networks, and reopening of old routes. Consumers have been appreciating
the airline's revamp. [ CITATION PIA19 \l 1033 ]

In 2019, PIAC started a very difficult recruitment process and hired Mr. Sheikh to further
improve the organization's financial management. His recruitment was also the part of PIA’s
broad and strategic business plan to revive the airline. PIAC considered it smart move to hire
younger employees recently to improve the overall performance of the airline. Moreover, recent
positive changes in PIA included network expansion, improved flight timings, increased cargo
load factor, an online passenger service system, leaner structure, and greater transparency and
accountability in operations. However, this leaner structure has started to increase as PIAC is
laying-off more employees in 2020. Also, the advent of global pandemic adversely affected the
whole airline industry of Pakistan. For many months, the international routes have been closed
and there were no flights launched by any company. This situation was taken as an advantage by
PIAC and it will be discussed in the next section by putting the decisions of PIAC in two market
zones.

The Blue Ocean Strategy

Blue Ocean Strategy is referred to a market for a product where there is no competition or
very less competition. This strategy revolves around searching for a business in which very few
firms operate and where there is no pricing pressure [ CITATION Blu20 \l 1033 ]. In case of
PIAC, this blue ocean was held for several years in which the company operated for a long
period of time. In the beginning, PIAC had the monopoly in setting prices of the tickets and it
covered a large share of the market. But in recent years, the competition in the airline industry
has been increased with emergence of new airlines. Now the pricing system is being controlled
by all these airlines on the international level and PIAC international market share has been
reduced to 40%. So, it can be considered that there is no blue ocean for PIAC on international
routes these days. Also, the company has been recently banned for conducting its flights in
European region, United Kingdom and United States of America.

Not on international level, PIAC do enjoy the blue ocean it has created on domestic level
as it is the most used domestic airline in Pakistan having only one competitor i.e., Air Blue.
PIAC has access to several northern routes where no other airline is able to send their aircrafts
and through this strategy, PIAC has a 74% market share on domestic level and it is the major
success factor for this company. Moreover, after spending a disastrous time in lockdown, PIAC
has been able to reopen its international flights to United Arab Emirates. Many companies within
Pakistan are still trying to get their routes reopen and currently PIA is leading with the
advantage. PIAC has special aircrafts that can fly over mountains and in this competitive
advantage, they had set their monopoly in pricing and ticketing system.

The Red Ocean Strategy

Red ocean strategy is all about competition. As the market space gets more crowded,
companies compete fiercely for a greater share of limited demand. Now a days, the airline
industry of Pakistan is more of a red ocean with a single star, some cash cows and a question
mark firm and a dog firm if the industry is analyzed according to BCG matrix. PIAC is the star
firm of this industry having the largest market share and it has been contributing most in the
economy of Pakistan. In competition, Serene Air is considered as the cash cow of this industry as
they have also a huge market share but their market growth is comparatively low than that of
PIAC. The Air Blue has gained the status of a question mark firm as it has not much of market
share in its hands but it surely has a high growth rate due to its launch of domestic flights in
competition to PIAC. Last but not the least is the Vision Air with the lowest market share.

PIAC, after going through several losses, managed to survive in this red ocean by
increasing the number of flights per day and increasing the number of assets within the
organization. They already have the status of the oldest airline in Pakistan and due to subsidized
fares, they are providing their services at affordable prices. These prices are affordable on the
international routes and for the domestic routes, PIAC has its monopoly with increased prices. In
this red ocean, price strategy is the most used factor by this company and they also target their
customers by providing only halal food on their airlines. Also, the staff of PIA is very
cooperative with their customers but they lack the efficiency in time of the flights and overall
cost reduction of the firm. These inefficiencies led the PIA to lose its largest share in
international market within this red ocean of airline industry in Pakistan.

Resource Audit
The current resources of PIAC includes, 32 Fleets covering 56 destinations. They have
more than 13,000 employees and the company are generating a revenue of 147.5 billion PKR
annually. PIAC has a very unique set of fleets, known as ATR 42-500, which is able to cover
those routes on domestic level where no other airplane can reach. This aircraft is the biggest
reason of PIAC’s monopoly at domestic level. Also, it has the highest number of domestic fleets
currently operating. Also, the cargo system of PIAC is the biggest transporter of goods within the
country and internationally which gives the company a great advantage over other airlines. Apart
from aircraft services, PIA has Planetariums in Karachi and Lahore that enable the public to see
static aircraft as well as astronomy shows. The PIA Model Secondary School was also set up in
1990’s to provide high quality education to the children of PIAC employees at an affordable fee.
All these resources are converted into capabilities which is discussed in next section.

Capabilities and their application

Before Covid-19, having the highest number of aircrafts in airline industry, PIAC used to
operate over 100 flights daily which served over 18 domestic destinations and 25 international
destinations. With the increase in the demand of air transport service, PIAC increased its number
of aircrafts along with the number of employees to keep up with the demand of the customers.
But recently it has started to lay-off its employees and is more focused upon having authentic
and small number of human resources to run the operations. This well help the PIAC to get
efficient in-flight management, customer management and reducing costs for the company itself.

Inside PIAC, every system is built on foundations of a given standard translated into
policies and procedures for the organization to implement a standardized management approach.
All manuals, information management and communication system and training exposition have
to be synchronized with the organizational vision, in a way to ensure continual improvement and
enhanced customer satisfaction.
 On a corporate level, PIAC offers customized operational safety audits for small airline
operators, backed by a team of experienced internal flight safety auditors. It also provides
consulting services in investigations following a serious aircraft accident and consulting services
for flight and cabin safety. PIAC is also offering design, development, editing, and printing
services to commercial operators for the products like Passenger Safety Briefing Cards and
Flight Safety Publications.

ATR 42-500 being the valuable asset of PIAC has established a competitive advantage
for the company when it comes to fly over the areas which are unreachable for the current
airlines in Pakistan. All these capabilities are applied on a strategic level within PIAC to ensure
the growth of the company along with customer satisfaction.

Value Chain Analysis

Value chain analysis is the overall view that portrays the cycle by which firms acquire raw
materials, add value, and make an eventual final product that the firm at that point offers to
buyers. Concerning the same, firms take into consideration every stage and distinguish
approaches to build the chain's proficiency. Thus, a firm uses value chain analysis to comprehend
their financial position in the market and to learn the methods for building a specific corporate
strategy. Accordingly, primary and support activities identify a firm's value chain.
Firms Infrastructure
Pakistan international airline has been suffering from heavy losses from quite a time now,
however recent changes to companies’ policies and strategies have led to PIA’s performance to
enhance with the passage of time. PIA's income surged to Rs147.5 billion for the year 2019
when contrasted with Rs103.5 billion in 2018 indicating a generous development of 43% in 2019
while the losses diminished by 76% in 2019 as compared to 2018. The loss before interest and
taxation was also reduced by 59% as compared to 2018. First time in eight years that PIA has
been able to accomplish a gross profit of Rs7.8 billion against a net deficiency of Rs19.7 billion
in 2018 [ CITATION Waq20 \l 1033 ].
Human Resource
PIA is confronting nonstop misfortunes for the past few years. From HRM point of view there
could be a few reasons for this for example insufficient labor force or unmotivated labor force.
There is a total of 14,800 employees which are hired by PIA and the number is reducing day by
day as PIA’s financial resources are not enough to pay such huge number of employees
[ CITATION Wik20 \l 1033 ]. Presently the question emerges that why the labor force is
wasteful? There could be a few reasons for example absence of direction, poor training and
development, lack of monitoring, lack of honesty, lack of education. Another major reason for
PIA's HR department being a major failure is the firm's autocratic management system in which
employees are required to do the work they are told strictly and they have no influence or power
in the organization to make changes or to lead. However, things haven’t been going good for PIA
as PIA subsequently grounded 150 of its 434 Pilots on suspicion of having a bogus license in
June 2020 which led to US banning PIA’s flights to USA. Employing Capable, instructed, gifted
and spurred laborers reduces the risks in the organization. Labor force, capital, and innovation
are fundamental weapons by which PIA can compete with the competitive environment
[ CITATION BIz19 \l 1033 ].
Technology Development
PIA has always been known to use technology in their airplanes and IT systems that is very old
and depreciated. With a small number of airplanes; which includes around eleven airbuses and
twelve 777’s that are owned by PIA, they are failing to keep them up to the standards of a good
international national airline due to the fact that PIA is facing financial issues and are unable to
compete with developed airlines such as emirates and Qatar who have huge technological
networks and capitals available to be spent on their technology. However, Pakistan International
Airlines (PIA) has signed an agreement with Amadeus and  Sabre Corporation, giving PIA full
access to Amadeus' and  Sabre Corporation’s worldwide travel seller network. Through this new
mutual agreement, Amadeus as well as sabre corporation connected offices will currently have
the option to book PIA's international as well as domestic flights for the customers [ CITATION
Ama19 \l 1033 ].
Procurement
PIAC buys in-flight conveniences, inflight hardware, inflight sales request items, refreshments,
Wines, office supplies, and gear through private sector. PIAC takes IT items from private
associations through a bidding process. This work is done by the IT department and is also
responsible for the smooth flow of their data through their system. The engineering supplies
division of PIAC is the buying expert for the acquisition of airplane parts, non-airplane parts (for
example stimulators or extras) to help airplane support and activities [ CITATION BIz19 \l
1033 ].
Inbound Logistics
PIAC takes fuel from global providers and due to the fact that it’s under debt hence it's restricted
to take fuel it can financially afford; it has additionally taken sovereign assurance of GOP in
more than one circumstances so it is no doubt an assurance may not be valuable in future. PIA
takes planes mainly from Boeing. Finances in order to run the company comes from GOP and
Profit from operations.
PIA’s current aircrafts are shown below as follows:
Figure 2: Air Crafts

Maintenance of these planes along with ground checking activities (checking of planes before
departure) are claimed by PIAC itself and very much prepared and exceptional however due to
the recent Karachi crash of Airbus A320 on May 22nd in which 97 people were killed has put a
question mark on maintenance department of PIA [ CITATION Wik20 \l 1033 ].
Operations
PIA has introduced a new system of automation in which after flight reports are automatically
generated. It has also signed agreements with companied such as (Sabre) in order to enhance
sales. In addition, it has also enhanced graphical user interface of check in system at major
airports (Karachi, Lahore and Islamabad) which has made the overall queuing more efficient for
the customers. Certain improvements in PIA cargo systems have also led to increase their profits
from that sector as well [ CITATION Sab19 \l 1033 ]. Looking at the recent trend in losses
compared to 2018 the loss for PIA has been greatly reduced to 76% in 2019 as PIA is working
on their operations to make PIA a better airline [ CITATION Waq20 \l 1033 ].
Marketing and sales
PIA positions itself as a reliable transport provider in the minds of the customers. In addition,
PIA works on low priced flights to attract customers who have a low budget and want to travel
either across the world or within the country. Previously PIA did all the marketing using the
newspaper however as newspapers are becoming more like an old thing hence, they are
implementing new strategies to attract more customers for example; PIA has automated the
system of ticketing through implementing a new marketing strategy to support and facilitate its
customer [ CITATION Rao10 \l 1033 ].
Services
PIA operates a three-class configuration on its domestic routes: , Executive
Economy and Economy. On international flights, a two-class configuration (Executive Economy
and Economy class) has been introduced since January 2019. In January 2017, the airline started
trials on an on-board internet facility for the customers on domestic flights. The Internet
provided permits travelers to get to a determination of in-flight amusement content utilizing their
own cell phones. PIA offers individual screens on Boeing 777 trips with in-flight films, music,
and TV shows [ CITATION Wik201 \l 1033 ]. PIA is working on their efficiency to make the
pick and drop service for their customers faster with the help of the management information
system called as (SIS) [ CITATION BIz19 \l 1033 ]. The kitchen and catering have been
separated and privatized [CITATION BIz19 \l 1033 ]. Moreover, the HR department is working
hard in order to train the air hostesses through the introduction of new training programs for
plane crews for the sake of better services to the customers of PIA.
Profitability

Keeping the value chain in mind, the company is in deep and vicious cycle of debt and
has not been able to generate profits for years.

Corporate strategy
Corporate strategy is a long-term strategic plan which identifies the company’s long-term
approaches for strategic decisions, goals and ways to achieve those goals. It defines which
direction will head to and motivates its workers to achieve these goals. It set the basic timeline
which tells what to be achieved and when it should be achieved. However corporate strategy is a
continuous procedure and it should be flexible to respond to the sudden changes in the market
conditions and surrounding appropriately.

New Routes

In April 2019 Pakistan national flag carrier PIA Finalizes a strategic business plan for
2019 to 2022.This plan proposed the[CITATION Placeholder2 \l 1033 ]e strategies and
objectives to improve the performance of the company. It Plan added New routes that are more
strong and economically feasible of these routes are profitable Like Lahore to Bangkok and
Kuala-lampur, Sialkot to Sharjah, Islamabad to Doha and Lahore to Muscat. According to some
of the sources some other new routes are also being planned which will be started soon two of
these routes are Multan-Sharjah and Peshawar to Sharjah but because of breakout of the
pandemic operations on many of these routs have been delayed or stopped. Moreover, company
will terminate the routs which are expensive and are in loss and increase the frequency of the
routs which are short and profitable like Jeddah and Madinah. Some other routs have been
canceled because of the banned from the European aviation authorities. This ban was caused by
the speech of aviation minister in the parliament after the Karachi crash in May 2020.In this
speech he said that many of the licenses of the PIA pilots are assumed to be fake. This caused a
stir in media and PIA got banned from flying to Europe. This Incident gave a big dent in
company’s image and revenue.

Technological Advancements

Company is also moving toward technological advancements. In 2018Company replaces

its twenty years old inhouse flight management system Sabre with a new software from a
Turkish company HITIT[ CITATION Aim18 \l 1033 ].In past management have been taking
wrong strategic decision which caused a hard reaction from within the company and complaints
from the customers too. One of these decisions was to induct the Sabre. It was an expensive
solution to the problems and was not fulfilling the airline’s requirements but still company kept
on using it. Though the new system is also created problems at first. Many flights were delayed
and many incidents of mismanagements occurred in 2018 but changes were made in the software
to make it better. Company is also increased the use of social media for its marketing campaigns
which will decrease the marketing expense to some extent. This new system has made in flight
operations and cash flow more efficient. It has also improved the technical capabilities of the
staff.

Austerity Drive

PIA has also started an austerity drive and is planning eliminate costly activities for
example company has eliminate the unnecessary foreign and domestic visits by the manages and
other officials and has ordered to promote the use of technology for meeting like video calls and
online conferences. Company has also salvaged many of the company’s vehicles which will
decrease the fuel bills. Moreover, the extra payments and grants for extra assignments which also
includes overtime allowance have also stopped. Company is trying to eliminate the VIP
protocols culture too. Cost has been reduced by giving extra assignments to workers, asking
senior officials to check the flights and in many other ways.

Acquiring new Aircrafts

PIA is also focusing on increasing the size of its fleet so that the frequency of the flight
may be increased on the profitable routes to make company stand on its own feet once again.
According to Dawn newspaper is going to add eight new planes to its fleet. All these planes are
narrow body and have a capacity of 170 passengers and will be acquired on a dry lease of almost
six years[CITATION Muh \l 1033 ]. PIA will receive these planes in January 2021 without crew
which means that company will be utilizing the excessive flight crew for the new planes. The
induction of new planes will also decrease the number of ground crew for one plane as company
have almost double employees hired for one aircraft as compared to the standard set by different
aviation authorities. According to the spokesperson of PIA Abdullah Hafeez Khan this initiative
is also the part of the strategic plan presented in 2018.But company could not pursue it because
of low demand due to the pandemic. Company has a fleet of 37 till the date but after the
induction of new planes this number will go up to 45. The chief executive officer of PIA Air
Marshal Arshad Malik said that the 2018 plan includes the induction of 12 new plans to the fleet
till 2023.
International Strategies

PIA in 1960 was a role model for newly established international airline o the time, in
fact two of the airlines Emirates and Air Malta were started with the help of PIA. At that time
company achieved many milestones and set many records for example in 1960 PIA became first
Asian airline to induct a jet airliner in its fleet and started flying to London from Karachi and
PIA was the first noncommunist airline flown to China. But with the passing time, wrong
strategic decisions and political involvement destroyed PIA. Now Pia is much cheaper than many
other airlines internationally still many people do not prefer to travel with PIA. All this happened
because the of many small malfunctioning of the aircrafts. And deteriorating image of the
company because of the banns from different aviation authorities. Few months back PIA was
banned flying to Europe due to fake licensing issue of pilots which created a gap for new airlines
and in last two months three new airlines British airline, Virgin Atlantic and Pegasus of Turkey
started flight operation from Pakistan to Europe. Fairs for London went up drastically before ban
PIA’s return ticket for London from 3 major airport used to cost 500-650 pounds but rite after
ban price went up threefold to more than 1500 pounds.

PIA is now trying to make its image better by rechecking and approving the licenses of
its pilots. Company is also trying to get different safety certifications like IATA operational
safety audit team visited Pakistan for 5 days and expressed satisfaction on the safety report of
PIA, after they completed the audit. The main goal for the time being is to get certifications for
safety to request Europe’s agitations authorities to lift the ban. Till then company has increased
the frequency of the flights on other profitable routes like Sharia-Peshawar and Sialkot.

Product Life Cycle

Levitt, Theodore (1965) first explained the idea of a products rolling in the markets with
respect to their stages, whether they are in growth or decline stage, and how the market is
responding to a certain product or a company that offers similar types of products. A product life
cycle measures the amount of time a product/service goes from introduction into an
industry/market until it is taken off the preference. The concept is devised into four stages
namely: introduction, growth, maturity, and decline. At first, this concept was primarily applied
to tangible products, but with time, the services businesses were involved within the analysis
spectrum due to the fact that it was more or less same. As far as the services businesses are
concerned, the analysis is done the same way as for the traditional commodity selling businesses.
The analysis is pictured in figure given below:
Figure 3: Product Life Cycle

Source: (Sraders, 2019)

Introduction

This stage refers to the time when a product has been developed and released in the
market. This is the time when marketing and promotions are at high-stakes and the company
starts to get a sense of the consumers; preferences, likeliness, etc. The company bears high costs
due to the fact that there is little information of the product in the market, and consumers have no
prior information of the product(s) (Sraders, 2019).

Pakistan International Airlines (PIA) was at the introduction stage when the company
started back in 1950s. The country was recently founded and itself was in the introduction stage
for most of its department.
Growth

By this stage, the consumers are gradually getting to know about the product/service and
preferring to buy it. Moreover, the product/service also starts to attract the attention of the
competitors as well. Companies still invest in their marketing and promotional techniques to
even further their horizons in terms of expansion and growth (Sraders, 2019).

By 19070s, PIAC was at the growth stage when it was entering different countries. The
company was performing well in the airline industry with less competition and was considered to
be one of the best airlines in the world.

Maturity

Maturity stage comes in when the growth-rate of sales of the product/service starts to
slow down on the or even achieve a zero-growth rate: static sales. At this point of time, the
pricing plays an important role because competitors come up with similar product/services to
offer to the same industry or market. The pricing becomes competitive and profit margins that
were once fruitful at the growth stage also starts to decline (Sraders, 2019).

PIAC was at the maturity stage when the company was out in the world giving other
airline start-ups lessons and leasing them out aircrafts from own its fleet. But the problems grew
when people started to get more services in the aircrafts other than PIAC such as, food,
entertainment, etc (Tariq, 2013).

Decline

The decline stage refers to the point when sales starts drop significantly and the general
behaviour of the consumers changes towards other alternatives which leads to lessen the demand
of the particular product/service that the company offers (Sraders, 2019).

This paper revolves around the situation of a national flag carrier airline: Pakistan
International Airlines. An airline which performed well enough to raise the country’s standard of
service providing business in the world. The problems grew when people started to get more
services in the aircrafts other than PIAC such as, food, entertainment, etc. The loyalty of people
shifted towards airlines which were same in the size and provided value for money services just
in the price range of what PIAC was offering. Since then, the situation has been same for PIA,
the company is in the decline stage (Tariq, 2013).

Problem Identification
The problem identification of this paper as an essential part of the research is done
through the division of functional areas of Pakistan International Airlines. The main problems
identified within the organization and need to be catered as soon as possible are listed in the
headings below:

Administration

The administration department of the company is facing many principle and general
issues. Firstly, any organization which has been a flag carrier of the country and represents the
country in and outside in the world must be under personal care of the government. The major
fundamental issue here is that the PIAC has long been a victim of political and army
interventions. Every successive government has inducted totally unsuitable and unrelatable board
of directors which gave birth to unprofessionalism. Some of these directors even have no
knowledge on how the civil aviation is operated and they lack the basic concepts corporate
governance in confined areas of management, human resource, finance, or any other department
for that matter. Not only this, but most of the state-owned enterprises still are a victim of this.
The political intervention also gave rise to unjust and unqualified manpower induction in every
department that ultimately became a liability for the company (Shahid, 2017).

The second problem is related to the lack of relevant, qualified and confident leadership
that is ideally the face of the organization. Pakistan Aviation (2017) report suggests that the
PIA’s leadership is suffering from calamities of leadership and confidence. For many years,
CEOs of the company have ben changing frequently and in 2017, the acting chief executive
officer and currently chief operating officer Bernd Hildebrand protested of undue and continuous
interference by the board of directors and governmental authorities in operational and
administrative matters of the company. Also, some of the directors are said to be unfit for the
posts they are holding and have not been assigned any work but are still paid hefty salaries. It
was indicated the fact that almost all directors have no experience in running an aviation
company.
 Moreover, the employees of the company have formed unions with strong political
backing, which is common in almost all state-owned enterprises. It is unfortunate that these
unions intervene and exploit all the company matters. Misuse of company facilities,
blackmailing, not working on the assigned responsibilities and tasks are common within the
employees. They even pressure the management and want their intention and choice to be
considered in the decision making, employee posting, promotion, and even in assignment of
tasks. Pakistan Aviation (2017) claimed that these unions are paralyzing the efficiency and
effectiveness of the company. Recent amidst of the plane crashes have shattered the trust of the
people locally and even internationally. These disasters have shown adverse effects for the
credibility of the organization that European Union restricted PIA to enter in the respective
countries. All these administrative problems are connected with corruption that no state-owned
enterprise in Pakistan is complete without.

Marketing

Marketing is the process of understanding your marketplace and competitors, defining

your firm’s market positioning, pricing and services, promoting the firm to your target audience
and explaining how they might benefit by working with you [ CITATION Lee20 \l 1033 ]. Put
another way, marketing is about offering the right services with the right benefits to the right
prospects. Since beginning, PIA has been facing problems like over staffing and political
involvement. The employees working in PIA are very much demotivated and there is lack of
advance technology as compared to its competitors. However, PIA has maintained its image as
the reliable air transport service provider and has the largest market share in Pakistan. But with
the increasing competition, PIA cannot sustain its competitive advantages just on the basis of its
traditional national flag carrier image.

PIAC should focus on some marketing strategies to help the organization improve their
targeting methods and ensure a good pricing strategy to improve their customer retention. For a
long time, PIA is positioning itself as the ambassador of Pakistan airline industry but its
marketing strategies have not been up to the mark. PIA lacks a social media platform to advertise
its services and create a good image of itself. Most of their customers are aware about PIA as it is
the oldest airline in Pakistan but they are not aware of day-to-day improvements within the
organization.
 PIAC has contributed to the marketing department by establishing a marketing training
unit in which the employees can take a 2-3 weeks course. It hampers the need of marketing
department including passenger sales and ticketing, cargo sales and handling area. This unit is
also providing the training to external customers of PIA. This marketing unit covers the problem
of pricing strategy and handling sales but it does not help the organization to be in direct contact
or have a direct influence on their customers.

For that purpose, a company should constantly create news and content around their firm
so that a consistent brand image should develop and customers can rely on the day-to-day
improvements within the organization. In this way, customers feel more connected to the firm
and in case of airline industry, it is important for the organization to make sure that their
customers feel comfortable while using their services. PIA in this case, has made very less
efforts in the field of marketing and they are consistently relying on the traditional image they
have created in the minds of their customers and perceive that no matter what, the customers will
choose them for the travel. This traditional mindset is now changing and it is the era of
technology and what people see, they tend to believe it. So, for the marketing department of
PIAC following can be the solution for its improved marketing strategies and to be back in the
game with a strong positive influence of their brand on their customers.

Human Resource Management

The main Problem with PIAC today is the employee to aircraft ratio. Airline was
considered second worst in the world in terms of employee to aircraft ration just behind the
Sirayan airline in 2016.Company have over 14000 employees for a fleet of only 31 aircrafts
which make 500 employees for one aircraft as compared to the Emirates which have 300
aircrafts and almost 60000 employees. Other airlines like Air India have eliminated employees to
bring the ratio from 300 per aircraft to only 100 employee per aircraft. Same did Turkish airline
by bringing down the ratio to 100 employee per aircraft. This explain why the company is not
able to move ahead. The reason behind too many employees in PIA is political interference.
Political parties in past have been gifting the positions in PIA to their workers. Politics have
prevailed in PIA. Whenever the government try to do something about huge number of
employees the unions start protesting. In February of 2016 erupted violent protests because of
PIA conversion Bill that was presented in national assembly in 2015.Due to violent protests
government had to redraft the bill on request of opposition. And another bill for the job security
was passed instead. Amusingly the PMLN government which was calling for the downsizing of
the employees in PIA hired almost 1000 more employees instead. Which increased the burden on
the airline? Company has to pay extra salaries despite having low revenue. Most of the
employees are not well qualified and are unsuitable for their jobs. Due to these circumstances the
State-owned corporation have become a burden for the country as the circular debt of the country
also envelops PIA. Till 2019 PIAC had a total debt of 464 billion rupees and after adding the
exchange rate loss of 74 billion rupees it jumped to over 500 billion rupees and it is still
increasing. The company is seeking its debt to be taken off by government. The biggest factor in
this huge debt is the extra salaries that PIA has to pay to its employee every month. These extra
employees with less very little work to do are repeatedly joining in the troublemaking activities
that have a negative impact on performance of other employees. According to management many
workers do a little or nothing which demotivates the hard-working employees too. Without
solving this problem corporation cannot moving the direction of prosperity. Whether corporation
is going for a revamping, joint venture, Private partnership or even privatization, the company
will have to fire excessive employees.

Finance Department

The finance department is required to do two tasks which include planning and
controlling. These both are interrelated due to the fact that if there is no planning then there won't
be any controlling taking place as well. In this manner arranging and control move together. The
planning part in the finance department refers to Cash Flow and Budget preparation
[ CITATION UkE18 \l 1033 ].

Talking about PIA’s financial health, the CEO Marshal Arshad Malik stated in an
interview with Dawn news back in 2019 that current operational losses are at Rs3 billion per
month but this bleeding would be healed soon with the passage of time. The accumulated loss
has ascended to Rs431.1bn, while loans/borrowings have touched Rs247.7bn [ CITATION
Ami19 \l 1033 ]. PIA has been suffering from heavy losses from quite a time now, and PIA’s
finance department plays an important role in that due to the fact that they have been paying
salaries to employees who are incompetent. PIA has not been a creditable source of giving
information as even though it claims to have achieved breakeven but that is most likely not true
due to the fact that PIA did not issue any quarterly financial reports ever since 2017.

In addition, the major issue was that finance department was not successful in terms of
cutting down operational or fixed cost. The economies of scale were poor as PIA was overpaying
its employees who were not willing to work as well. Another issue was the overemployment
occurring within PIA. As per today PIA has 14,800 employees and that’s for a company who is
going through constant yet heavy losses every year. Duties in the finance department includes
cutting down the operational costs and that should’ve been done by making layoffs.

Lack of communication was also there within departments which caused a rise in
problems created for PIA as well. Moreover, higher end of PIA employees which mainly
included directors were getting paid more then 300,000PKR per month and were not even
assigned to any work which was an addition to fixed costs as well. With that being said, no
action had been taken against them even though they had been withdrawing their salaries for
more than one year. Retired PIA employees are however living a miserable life due to very
nominal pension [ CITATION PkA17 \l 1033 ].

Solutions and Strategies

Administration

Problems in PIA can be solved with the government’s intervention in only one matter:
lack of money. If it is a corporation, the government must let it work like corporation by
applying all the corporate governance standards and state of the art quality assurance methods
with reforms and restructuring. A lot of solutions can be proposed for the betterment of the
organization, but this face functional area of PIA needs to be tackled and amended first. The
main issue that needs to be catered first is the right type of leadership, and that starts with the
board of directors and then trickle this effect down towards the right type of employees. It is
basically recommended that appoint the people in the senior management who have prior
experience the aviation field. Although, this has been done when the new government came into
power back in 2018, but still, the fundamental issue of hiring and keeping the right type of
people has been a problem. In the administration side, the CEO is the face of the organization.
Hence, the board of director must not be allowed to see all the specific matters and only focus on
the corporate governance, and broad policy making. The CEO must be given full authority to run
the organization based on meritocracy and he/she must not encourage any political meddling
(Pakistan Aviation, 2017). Lastly, since the current situation of the corporation is in its worst
times with restrictions from the European Union over not following the standards and violating
the certifications of aviation, PIA must adopt all the safety and standard operating procedures in
order to get back on track.

Marketing Department

The internet era makes brands less durable in part because consumer habits have
digitized, creating new business models that have blindsided many traditional brands
[ CITATION Col20 \l 1033 ]. Recently, an article was published in Harvard Business Review in
which the authors introduced a new framework for the brand retention and to sustain a brand in
this dynamic environment where the red ocean strategies are the only source of survival. The
framework was known as MACE and it was comprised of four different attributes (mastery,
accessibility, cadence, ensnarement), which a brand should adopt in its business model to sustain
themselves for a long period of time. As discussed earlier, it is the era of internet and people
believe what they see and what they trust. There is a need for every brand even PIAC to adopt
such strategies which not only helps it to create a good brand image but also ensure its survival
with the increasing competition.

For the marketing department, Cadence is the primary solution for PIAC which includes
creating constant news and information around the company to constantly indulge the customers
with the brand. Firstly, PIAC should frequently release the news if they are introducing new air
craft in the organization or if they are updating their existing products. Even if they are
introducing new services in their flights, PIAC can source this news through different social
platforms like Facebook, Instagram or just tweet about it. Giving the first-hand information to
the customers will not only update the consumers but also help them to trust on the growth and
improvements made by PIA. Secondly, PIAC should maximize its promotional assets, such as
marketing videos, by editing long-form media into micro-content. People in today’s era are
getting used to watching advertisements which are posted on YouTube, google advertisements
and short ads on Facebook. PIAC can utilize this opportunity and create short ads which contain
either a positive message for the customers or just a bunch of information. In both ways,
customer’s perception can be caught and changed through this strategy.

Thirdly, PIAC should encourage the user generated content wherever possible. It is the
trend of new generation that they snap everything and everywhere they go and if it comes to
having a flight, there are lots of videos and images which are created during the flight period of
the customers. PIAC should encourage their customers to tag their pages on Instagram or
Snapchat wherever they are posting so that people can build a relation with the brand while
utilizing its services. Also, this new trend is handy and can channel the insides and outsides of
the firm within seconds to the whole world.

Finally, PIAC should be able to communicate everything with its customers and
everything also involves the failures of the company. Since its establishment, PIAC has
numerous failures and customers do not feel connected when they do not get the complete news
about the brand they are using. Same is the case with PIAC that it should channel everything that
is happening in the organization either it is of good interest or bad interest for the customers.
Having transparency does not harm the customer’s perception and in fact, it builds the trust of
customers on the firm. In easy words, sometimes bad PR can be transformed into viral social
media praise.

Human Resource Department

The solution to problem of excessive employees is not a rocket science but its
implementation is not so easy. According to the revamping plan presented in 2018 company is
considering adding new planes to its fleet and deal for 8 new planes have already been signed
Company will acquire these planes on dry leas of 6 years. Air Marshal Arshad Malik said that
company will add 12 to 16 new planes till 2023.This expansion plan can decrease the load of
extra employees is company do not hire new crews for the new planes. At this time 500
employees are working to support one aircraft by adding 16 new aircrafts this ratio will decrease
to a less than 200 employees per aircraft. But condition for this is that company do not hire even
Sigle more employee, however replacing an employee on bases of performances and skills can
be done. Company should utilize the best and more skillful of the existing employees for 12 new
aircrafts. In this way company will not have to fire employees from these aircrafts when it will
offer golden and shake. The employee ratio needs to be exactly equal to the international
standers or to the other big airlines. To make it possible employees need to be given the
opportunity of golden handshake means early retirement with additional benefits. Government
have been planning for providing a layoff package for PIA. The comity for restructuring the
organization have been made. This plan proposed that employees have been divided into core
and non-core operations[ CITATION Ahm20 \l 1033 ].Core operation includes security and
human resource and non-core activities include kitchen and engineering. But the main problem is
that on which bases company will be laying of these employees. Because it looks ureal that an
employee will leave his or her job without pension even when they are getting accumulated
amount in tradeoff but still employees will be reluctant in living job voluntarily so there will be a
need for a critical performance appraisal before layoff. Because of political involvement there
are chances of irregularities in performance appraisal.

 To reduce these irregularities company should do a third-party performance appraisal.

 Doing so third party should test for consistency means that first a manager would scale an
employee’s performance then historical record of performance appraisal to check for
inconsistencies.
 Personal and professional factors should be evaluated separately during appraisal.
 If an employee has complaints or reservations about the previous appraisal, they should
be allowed to consult the third party.
 Stronger appraisal should be done for the employees getting high salaries.
 The performance rating of one employee should also be compare with the overall
performance of the whole section or department.
 Employees should also be evaluated on the basses of how much will they contribute to
the progress of the company.
 Company needs more young employees because with the change of time and technology
the product of older employees has decreased.
 Another factor that should be considered while performance appraisal is multi-tasking.

In a nut shell there will be a need to look at and evaluate multiple factors to shortlist
the employees for layoff.
Finance Department

PIA needs to consider some finance options which includes investment bonds but that
will only be possible when PIA starts to do well in the market. Hence a thorough analysis and
market research must be done first. Another, financial tool that could be useful to PIA could be
Debt to equity swap which means PIA can sign contract with government and give some of its
assets to government and in return they could reduce the debts on them. PIA needs to heavily
focus and work on the concept of economies of scale where the main goal is to cut down all the
unnecessary operational costs in order to transform the inputs into outputs more effectively. Now
that includes making layoffs to people who are not contributing to PIA to be a better
organization. What will do is not only enhance the communication gap between departments but
reduce the likelihood expenditure incurring. The main goal as per now for PIA must be to go in
profits and PIA must work on some financial instruments such as leasing in order to buy new
aircrafts for the sake of making PIA a better airline with reliable facilities and safe flights. What
that will do is not just reopen all the closed routes due to poor quality aircrafts but also widen
customer base for the revival for PIA which used to do exceptionally well 20 years ago.

Conclusion
Founded on 11th March, 1955, Orient Airways and Pakistan International Airlines were
formally merged as part of the Pakistan International Airlines Corporation Ordinance and from
that day the government of Pakistan took major holdings of PIA. Since then, PIA has been
through a lot of ups and downs. It managed to grow its routes to many countries and destinations
and gained a huge competitive advantage over other airlines. It also established its own cargo
service and introduced a number of new fleets to the organization. But In 1990’s PIA began to
sustain operating losses and liquidity problems due to frequent pilot strikes, issues with various
vendors, over-staffing, and political interference in airline management. These losses are not yet
covered and this airline is operating on negative income. However, it also made numerous
strategies to cope up with the financial losses and continued to provide services but the
traditional strategies will not prove beneficial for this national flag carrier in the long run. With
the increasing competition and changing trends of the business environment, PIAC needs to
come up with strategies which can be proved profitable for this organization in the long run.
Once it was the pride of the nation but today this organization has limited itself to be the casual
airline service provider with a history of accidents and bad reputation. If the PIAC wants to shift
this trend, then only the true owner of this company, the government of Pakistan, can make it
happen by having regular updates of this firm and involving the new mindsets with ideas of
fulfilling today’s needs in the company. If Pakistan can improve itself in a field like Information
Technology, it will not be a problem for the government to raise this brand again with a new face
to show to this world with less problems and more strategic solutions.
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