Full Details of the PIA – Turkish JV

Last week on The Networker, we covered the proposed PIA Turkish JV in detail. Today, we have got some extra details on the proposed broad ranging codeshare pact.

* The arrangement would be to allocate seat capacity and revenues of both parties in the applicable routes under one pool arrangement, where the earnings would be shared on the basis of seat capacity floated and prorated revenue.



* The proposal by Turkish ( TK ) was to offer PIA a 20 percent commission on PIA sales for sectors beyond Istanbul, if it overlaps the prorated fare on the sector ( excluding fuel surcharge ).

* PIA’s proposal was to stop operations to its present destinations in USA ( New York, JFK and Chicago, ORD ), Germany, Spain, Italy, France and the Netherlands. Instead PIA and TK would operate 21 weekly frequencies ( seven each out of Islamabad, Lahore and Karachi ) to Istanbul for onward carriage by Turkish.

* PIA further proposed to have the codeshare under said agreements on 15 percent commission to the marketing carrier on prorated fare ( including fuel surcharge ).

* At the end, the decision has been finalized to operate 21 weekly frequencies between Pakistan and Istanbul as follows
 

Karachi, KHI – IST

Four weekly TK. Three weekly PK.

Islamabad, ISB – IST

Three weekly TK. Four weekly PK.

Lahore, LHE – IST.

Seven weekly PK.

The frequencies could be re-evaluated and changed as fit with the cooperation of both carriers.

* Upon the JV’s implementation, PK will be suspending its flights to

New York, JFK

Chicago, ORD

Amsterdam, AMS

Barcelona, BCN

Frankfurt, FRA

Milan, MXP

However PK will be retaining its sales personnel at these stations.

* Regulatory authorities of Turkey and Pakistan would be approached for permission to operate the frequencies of the proposed routes under a Temporary Operating Permit subject to implementation and continuation of the commercial agreement.

* PIA will be also launching a new thrice weekly flight between Karachi and Houston via Istanbul. It is expected PK will receive freedom rights between Turkey and USA.

* PIA will be operating seven weekly frequencies between Istanbul and mutually agreed points in Europe under agreement with TK, in addition to or replacing TK’s existing frequencies.

* TK will be codesharing on PIA flights to Kathmandu, Bangladesh, Mumbai, Colombo, Malé ( see the Conclusion section below for note ) and other selected points east of Pakistan.

* The two airlines will be the respective reciprocal GSAs for each other in their home countries.

* The two airlines will also provide reciprocal ground handling and technical services to each other’s flights in their respective home countries.

* Where applicable, the airlines will exclusively use catering facilities of the partner airline.

* Where applicable, the airlines will have the right to position their cabin crew on the operating airline’s aircraft.

* The two airlines will occupy a joint Revenue Management on the agreed routes and will immediately integrate interjine e-ticketing.

* The two airlines will provide all lounge/transit/assistance facilities to each other’s passengers in their home bases.

Conclusion

From the outlook of it, this seems to be a much needed push for PIA which it had been long seeking for. But there remains great doubts as to the actual implementation of this JV due to a number of reasons.

Although there is a lot to be desired for PIA from this deal, it remains to be seen which benefits TK will gain from it. Not only does TK have a far better reputation for service than PIA, but also Pakistan emerges as a less than desirable point of transit to most passengers due to the nation’s security issues. A passenger will have a lot more hassle free, and more comfortable transit experience at the competing hubs of Dubai, Abu Dhabi or Doha.

Most of the destinations covered in this agreement by PIA ( the routes that will be operated by PIA and codeshared by TK ) are destinations either TK already has the capacity to serve ( eg: Houston ) or destinations TK had been planning to serve ( eg: Colombo ). Not just that, Malé – a point agreed to be codeshared by TK – is still not even served by PIA.

Last, but not least, PIA unions are known to be very powerful politically and have been able to revert many decisions by the management in the past – as a result of which, the carrier remains heavily overstaffed. The most notable of these is overturning PIA’s retirement plan of the ageing Boeing 747-200s and 747-300s, opposing the layoff of engineers who had been working on the types. Although, sources to The Networker inform that the PIA’s present MD is quite more politically powerful than the unions.

From the outset, the deal appears as if Turkish is giving away its stuff to PIA. However, if put through, this would be a miracle to PIA, giving it a much needed boost and the possibility to finally restructure its network. Miracles are known to happen, so let’s wait and see what will happen to this JV.

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