Boeing, Airbus Competition Puts Pakistan in a Fix

Pakistan International Airlines (PIA) must decide on more than which airplane to buy; it must also find a way to appease the country which produces that airplane. In an effort to help the ailing airline industry, the U.S. and France are using diplomatic power to force PIA to make a decision in favor of either Boeing (U.S.) or Airbus (France). For the moment, PIA has yet to make a final decision, though Airbus seems favored. With a lower price and a greater number of engines per plane, which reduces the worries of engine failure affecting flight safety, Airbus has a distinct advantage. But Boeing may still clinch the deal on account of the current friendship between the U.S. and Pakistan. - YaleGlobal

Boeing, Airbus Competition Puts Pakistan in a Fix

Masood Anwar
Thursday, August 22, 2002

KARACHI: The competition between the US giant Boeing and France's Airbus to sell their products to PIA has put Pakistan in a very difficult position as the governments of the two countries have now become involved in the deal.

At a time when the international aviation industry is facing the worst recession of its history and airlines in Europe and the US are going bankrupt, fleet replacement plan by the PIA will provide a cushion for their financial improvement. According to sources, Boeing is very much hopeful to clinch the deal as Pakistan is presently under complete US influence.

On the other hand, France has also used its diplomatic channel to garb the chance. "They (France) made it clear that in case of a deal with Boeing, they will review other contracts of supplies like spare parts of Mirage," highly-placed sources in the Ministry of Defence told The News. "It is the immense diplomatic pressure that has kept the model of the aircraft undecided," they added.

The PIA Board of Directors has met several times to reach any decision on the issue. However, the meetings every time ended without any decision. Now the Board is scheduled to meet again on Saturday in Islamabad. Chairman PIA Board Lt-Gen (retd) Hamid Nawaz, who is also the defence secretary, is also expected to address a news conference on Monday in Islamabad in this connection.

The national airline has planned to place an order for three new or slightly-used aircraft this month. Boeing has offered its 777 model while Airbus of France has presented A-340 models. Both the companies offered leasing facility at four per cent mark-up for the 80 per cent amount of the total price while the PIA has to pay 20 per cent in cash. The federal government has already allocated $150 million to the PIA for this purpose.

Sources said that PIA's engineering wing had cast its vote in favour of Airbus. Besides the big difference of $30 million in the prices of Airbus and Boeing products, the main thing that goes to Airbus' favour is the four engines installed in its aircraft. B777-200ER is twin-engine aircraft and in case of engine failure, it is not safe for travellers.

According to the sources, PIA faces various types of problems in the country: bird hitting is on top, especially in Lahore. This means, technically, PIA cannot operate 777 from Lahore airport. PIA has also got the facility of complete overhauling of engines installed in Airbus while in case of any repair and maintenance of B777, it will be compelled to send its aircraft to the JFK airport.

"Engine overhauling is not a small thing," an expert at PIA's engineering wing told The News. "About 62 per cent of the total budget is spent on engine section alone," he said.

Due to the twin-engine aircraft, PIA would be opting for the routes, specific with such aircraft, called Extended Twin Engine Operated Procedures Routes (ETOPS), the expert said. "These routes are comparatively longer than the normal routes, which simply means more fuel budget."

"Besides, under ETOPS, there are several restrictions of payload, fuel, passenger and cargo," the expert said. To attract the national flag carrier, Airbus has offered to transfer the technology.

Copyright Jang Group of Newspapers