Pakistan’s pain

“For us it is very difficult to compete with the emirates,” he complains, although he does concede the Middle Eastern carriers actually offer better and cheaper services, whereas PIA is struggling to modernise its 35-aircraft fleet due to a lack of funds.

PIA, he argues, therefore needs help from the government, including possibly putting “some limitations on the open-sky policy” that currently exists between Pakistan and the Gulf. Hildenbrand points to other countries such as Canada which are more restrictive and have put limitations on flights by Emirates and Etihad.

“Even European countries don’t open up completely. I am not against competition, but unlimited competition is also not possible,” he says.

Actually, it seems competition from the Gulf is the least of Hildenbrand’s troubles. The 40-year Lufthansa veteran who took charge of PIA in 2015, was put on an “exit control list” in March, effectively barring him from leaving the country while the government investigates the cost of an aircraft leasing deal and possible corruption. That decision came after the National Assembly was told that PIA’s debts now amounted to some US$1. 8 billion and that an aircraft was acquired from SriLankan Airlines at an exorbitant price.

The Federal Investigation Agency of Pakistan (FIA) is probing PIA’s leasing of the Airbus A330 which it used to launch a “Premier Service” to European destinations, reportedly Hildenbrand’s idea. SriLankan charged PIA a rate of US$8,100 per hour under the lease agreement when the normal rate is about $6,000 per hour.

Hildenbrand denies any wrongdoing and says the majority state-owned airline is losing about $30 million every month while the marketshares of the likes of Dubai-based Emirates and Abu Dhabi-based Etihad continue to rise as they add capacity, attracted by the potential growth in demand in a nation of nearly 200 million people. He has appealed to the authorities to help nurse the airline back into the black, saying it will take at least three years to return the company to profitability and transforming PIA’s fortunes will take even longer.

“What went wrong in 25 years you don’t change in half a year,” he said. “Impossible. ” Sadly, Hildenbrand is unlikely to be around to see that happen. PIA has already invited applications for a new chief executive to take the helm. Hildenbrand has had a roller-coaster ride in Pakistan. Widely lauded for his long experience in the airline business when he arrived, in July last year his $10,000-a-month salary was increased to $18,000.

Yet interestingly, although he has been working in what is one of Pakistan’s most high profile jobs for two years, he hasn’t even received security clearance from the country’s security agencies. He was also put on a similar “exit control list” last December while authorities looked into the lease of an Airbus A300 to a film company at a knockdown price. It was making a movie about Operation Entebbe, in which Israeli defence forces freed 250 Air France passengers who had been hijacked by the Popular Front for the Liberation of Palestine in 1976.

Also being investigated at the time was the sale of another aircraft to a German organisation for the low price of $54,000.

The German’s relatively short but eventful stay in Karachi may well be a salutary lesson for Western executives lured into the corridors of power in Asia. There, they have to deal with different cultural values and widely varying approaches to law. As was experienced by Jetstar Pacific in Vietnam a few years back when two of its Australian-born executives were prevented from leaving that country over hedging losses that would have been accepted as part and parcel of business anywhere else.

The majority state-owned airline is losing about $30 million every month.