A complete economic turnaround of Pakistan International Airlines (PIA) is likely to be a long, turbulent journey. However, with a large number of Pakistanis continuing to choose PIA for air travel, it should not take long to assess whether the airline, under its new owners, the Arif Habib Consortium, is flying higher, serving more destinations and offering better service at affordable prices. Even if policymakers’ expectations ultimately prove optimistic, the current legal and contractual framework leaves little room for reversal. For better or worse, there is no going back.

The government is projecting the PIA deal as a major achievement. Market enthusiasts have been quick to hail it as a victory over anti-reform bureaucratic inertia, while political apologists argue that offloading PIA was unavoidable, portraying the airline as long defunct and a chronic burden on the national exchequer. The Pakistani public, however, remains unconvinced.

Past experiences with privatised entities, notably K-Electric, evoke mixed emotions and fuel suspicion about whether citizens genuinely benefit from the sale of national assets. Besides, many Pakistanis still associate PIA with national pride, despite declining service quality, shrinking routes, and persistent financial stress. There is passive discomfort over its transfer to stockbroker-turned-business tycoon, Arif Habib. While pilots and engineers anticipate operational improvements, workers’ representatives are actively opposing the deal, fearing job insecurity and a harsher work environment.

Defying sceptics of PIA privatisation, Prime Minister Shehbaz Sharif’s government executed what senior officials describe as a “master stroke of 2025”, by selling a 75 per cent stake in the national airline through an open, televised auction for Rs135 billion to the Arif Habib-led consortium. Under the terms of the deal, the government will receive Rs10bn in cash proceeds and retain shareholding valued at around Rs45bn. Arif Habib has stated that approximately Rs125bn will be injected into PIA’s rehabilitation and expansion, aimed at restoring its operational viability and growth prospects.

‘Greater private sector participation could support a more competitive aviation market, provided effective regulation ensures competitive neutrality and fair market access’

Setting aside the legal intricacies, complex economic mechanics, and internal sharing arrangements within the consortium, matters best left to experts, relevant stakeholders were reached for their views on the deal.

“Assuming the new owners manage to turn around a sick airline, there is no guarantee it will better serve public interest unless the government ensures robust competition in the aviation sector. Open competition among multiple airlines is essential to restrain fare hikes and improve service quality, while policy must also compel private carriers to serve under-served regions.

“Weak labour laws and poor enforcement make meaningful upskilling or reskilling of PIA employees unlikely. Even if mass retrenchment is initially avoided, workers typically face greater vulnerability in private firms than in public entities,” a young analyst commented anonymously.

Arif Habib, founding Chairman of Arif Habib Group, which acquired PIA last month, defended the transaction as “the best possible deal under the circumstances”, arguing that it benefits all stakeholders. He maintained that the initiative would improve service quality at competitive fares, while fleet expansion and induction of new aircraft would generate fresh jobs for aviation professionals.

In an exclusive note outlining gains for the state, Mr Habib said, “The privatisation values PIA at Rs180bn for 100pc shareholding. Effectively, the government receives Rs55bn for an entity with a net asset value of Rs9bn, while also shedding tens of billions of rupees in annual losses.”

On future prospects, he said Rs125bn capital injection would enable PIA to modernise operations, restore its fleet of 23 aircrafts to full service, and expand it to 38 aircrafts in the first phase, ensuring improved passenger service. He dismissed monopoly concerns, citing robust competition from domestic and international airlines in the Pakistani aviation market.

The Competition Commission of Pakistan (CCP), responded swiftly to the concerns, terming the privatisation of the chronically loss-making state-owned enterprise a potentially positive structural reform. From a competition policy perspective, it noted that such a move can “ease fiscal pressures and allow market forces to improve efficiency, service quality, and consumer outcomes”.

The CCP stressed, however, that private sector participation strengthens competition only if market entry remains open and fair. When airlines compete on commercial terms, passengers benefit from better services and competitive pricing, while employees may gain through skills development, higher productivity, and merit-based practices.

Looking ahead, the commission said, “Greater private sector participation could support a more competitive aviation market, provided effective regulation ensures competitive neutrality and fair market access.” The CCP also disclosed it is conducting a competition assessment of the civil aviation sector, with findings to be shared through public consultation.

Hidayatullah Khan, President of the PIA’s Collective Bargaining Agent, urged the government to include workers’ representatives in the process, arguing that employees are legally recognised and a key stakeholder. He opposed the sale on legal grounds, contending that the federal government acted unilaterally without consulting the Council of Common Interests or parliament, transferred it to a party with no prior sectoral experience, and denied employees their right to an offer in the privatisation process.

He voiced serious concerns over job security, medical coverage and pension benefits, noting that only 2,200 to 2,300 of PIA’s roughly 7,000 employees are workers, the rest are officers. “Is it legal or ethical to completely exclude the operators of the national carrier after decades of service?” he asked, urging the government to at least hear workers’ concerns and offer safeguards and a fair, generous severance package for those opting to leave under the new ownership.

Abdullah Jadoon, President of the Aircraft Engineers Association, said the group was not opposed to privatisation, though it considers the process unlawful. “Those implementing it are lawmakers, and the reasons are many,” he noted without elaboration. He said passengers may see the same or slightly improved service, but warned that fares are likely to rise, arguing that a Rs22,000 ticket from Karachi to Islamabad is unsustainably low. He added that employee wage could improve and prevailing bitterness within the workforce may gradually subside.

Nasim Beg, a senior executive at the Arif Habib Group, rejected the criticism, arguing that PIA’s accumulated debt was the result of years of losses and cash shortfalls. Instead of covering these losses through the budget and facing public backlash, successive governments, he said, pushed the airline to borrow from banks against sovereign assurances, shielding the taxpayers but burdening PIA with mounting interest. He maintained that the current government made the right choice by confronting this reality and attracting investors to inject fresh capital, rather than expecting new owners to absorb decades of accumulated losses.

Muhammad Ali, Adviser to Prime Minister on Privatisation and Chairman of the Privatisation Commission, along with other key members of the government’s economic team were approached, but did not respond by the deadline.

Published in Dawn, The Business and Finance Weekly, January 12th, 2026