Tuesday, October 20, 2009

Government Bailouts To PIA Versus Other Priorities

Via Mosharraf's Twitter feed, it appears our national airline lost 40 billion rupees in 2008 (in a post I wrote a couple of months ago, the figure cited was 35 billion). Since they're still around, it is safe to presume the losses were covered by the government or, put differently, by the Pakistani taxpayers' money.

I got curious, and decided to peruse our government's federal budget. If you go to page 19 of the report (page 22 of the entire PDF file), you will note the following things.

1. For the next fiscal year (2009-10), our government plans on spending Rs. 34.64 billion on "Public Order and Safety Affairs". These services include the courts, the police, fire protection, prison administration, and public order in general. So...

Police + courts + fire + jails = Rs. 34.64 billion
PIA bailouts = Rs. 40 billion

2. Under economic affairs -- a truly broad category -- you will find that

Agriculture + food + irrigation + forestry + fisheries = Rs. 38.30 billion
PIA bailouts = Rs. 40 billion

3. Moving along to page 24, you will find that

Housing and community development = Rs. 1.52 billion
PIA bailouts = Rs. 40 billion

4. On health, you will find that

Medical products, appliances, equipment + hospital services + public health services + research and development + health administration = Rs. 6.48 billion
PIA bailouts = Rs. 40 billion

5. On education (page 27), you will find that

Pre-primary and primary services + secondary education + tertiary education + "educational services not definable by level" (probably relating to Zardari's English and Math lessons when he got elected) + subsidiary services to education + administration + education services = Rs. 31.57 billion
PIA bailouts = Rs. 40 billion

These figures were so startling that I did a double-take on almost every one of them. I made sure I had the scale right, and kept asking myself, "Wait, a billion IS a thousand million, right?" That's what our government's priorities can do to you -- they can make you doubt your knowledge of elementary math because they're so out of whack.


somethingrichandstrange said...

....fucking hell!

FZ said...

jeez....what a waste

Spark said...

Incredible article, Ahsan. Especially the housing bit--I'm pretty cynical, but that shocks even me.

wasay said...

WOW! The losses make up almost 2% of the country's budget.

alybaba said...

The major problem with PIA is that they just have way too many patronage employees that they don't need. They have the worst revenue per employee stats than any airline I've come across. PIA Management came to my old firm (advisory firm that is known for airline restructuring and cost reduction) and talked about a possible engagement, but they felt it was too expensive.

Not only that, they didn't even sell the Roosevelt Hotel at the top of the market in 2007/2008 - that would generated significant cash ($1 billion or more). But of course, then our government representatives couldn't stay there. Now with the CRE market in New York falling off a cliff and declining tourism, the Roosevelt will no longer be profitable and adds a further burden on PIA's finances.

A said...

Well no just because they lost 40 billion doesn't mean they were literally given 40 billion in cash from the government to keep it going, but the GOP is probably guaranteeing the debt they are taking on to have enough cash to continue operating. Though it is still ridiculous for such a small airline to lose so much money.

NB said...

Great post dude.

roti fan said...

If PIA gets so much money, why is it still such a crappy airline?

Ahsan said...


I know what you mean. I consider myself fairly jaded, but these numbers were so out there that even I couldn't believe it.


I agree. I wrote much the same in the post linked above.


I know they weren't "literally" given 40 billion cash, but since they're backed by the government, those losses will be made up by the public sector and nothing else. If that wasn't the case, the airline would collapse tomorrow.

Roti fan:

PIA gets so much money BECAUSE it's such a crappy airline.

Anonymous said...

Just to add that in fact the 8 public corporations are this year making a loss of Rs 200 billion +.
These include a recent entrant to the list, i.e Pakistan Steel, and notables others such as Pakistan Railways, PIA & PASSCO.

Happy computing and comparing!

( some suggested comparisons/computations:

The Rs 200 billion loss vs the budget deficit

The Rs 200 billion loss vs the promised sums in the Kerry Lugar bill

The Rs 200 billion loss vs the spend on health

The Rs 200 billion loss vs the spend on education

The Rs 200 billion loss vs total income tax collection in the country

The cost of preserving jobs for the cronys and subsidised services vs the cost of running social services for all.


Hades said...

Heh!I assume the PIA food should be good.

foolsparadise said...

Do they serve Liquor in international flights?

Naqiya said...

@ hades: PIA food is so bad my husband had to almost be hospitalized after he had some.... and he never gets sick. i have distinct memories of a field trip in 7th grade to where the food is made - and needless to say i've never had PIA food since.