Pakistan is a country that is facing a financial crisis, and the aviation industry is not immune to it. The lack of financial stability in the country is throwing up several challenges for the airline industry. One of the biggest of these issues is the shortage of cash. As a result, Pakistan is struggling to make payments to international airlines to the tune of over $290 million, leading to concerns over the future of the industry in the country.
The problem started in 2017 when the country’s Supreme Court banned the use of local currency for making payments to international airlines. The ban was imposed as a measure to curb money laundering and to facilitate transparency in the aviation sector. However, the decision hit the Pakistani aviation industry hard as they are dealing with foreign airlines with whom they have contractual obligations.
Since the decision came into effect, Pakistan International Airlines (PIA), along with other locally-operating airlines, has been compelled to make payments to international airlines in US dollars. Given the currency fluctuation and the devaluation of Pakistani currency, it’s becoming harder for the industry to make these payments.
The situation has further worsened due to the ban on the use of credit cards issued by Pakistani banks to book tickets on international airlines. This has led to a significant reduction in the revenue generated by local banks from foreign airlines’ ticket sales. Moreover, foreign airlines have been engaging in direct sales of tickets to customers, which has further reduced the revenue generated by local banks.
The shortage of currency has created a precarious situation for the aviation industry in Pakistan. With the ballooning debt, the industry’s future looks bleak. The government has been pumping in millions of dollars in the form of bailouts to keep the industry afloat. However, the government’s bailouts alone cannot save the aviation industry from the dire financial situation it is in right now.
Some experts believe that the government has failed to take decisive actions to deal with the liquidity crisis faced by the aviation industry in Pakistan. They suggest that the government should have facilitated the aviation industry in Pakistan to boost their revenue. The airline industry generates significant tourism revenue and plays a vital role in the economic growth of a country.
Besides the government, Pakistan’s aviation industry needs to come up with innovative solutions to overcome the liquidity crisis. One possible solution could be to create a specialized fund to buy dollars from the State Bank and ensure a continuous flow of the foreign currency needed to make payments to international airlines.
To address these issues, the government is currently considering several measures. One of these measures involves setting up a task force to deal with the liquidity crisis faced by the aviation industry in the country. The task force will be tasked with identifying the underlying issues and formulating a plan of action to address the challenges faced by the industry.
Another potential solution is the development of a national carrier that can fill the gap created by a failing aviation industry in Pakistan. This approach can prove to be a more sustainable solution to the current crisis faced by the industry.
Pakistan’s current financial crisis has affected many sectors in the country, including the aviation industry. The shortage of foreign currency has created significant challenges for the industry, leading to many foreign airlines pulling out of the Pakistani market. Unless the government steps in expeditiously to address this issue, the aviation industry in Pakistan will continue to struggle to keep up with its operational and financial obligations.
In conclusion, Pakistan is going through a significant financial crisis, and the aviation industry is among the most affected sectors. The shortage of cash has resulted in debt, while the government’s failure to take decisive actions has made the situation worse. Pakistan’s aviation industry must look for innovative solutions to address the challenges it faces. A sustainable and productive approach to these challenges will ensure the industry’s growth, and promote tourism as well.