Internship Report on PIA (2)

by Commerce Solutions in Internship Report

Introduction

When PIA came into being in 14th August, 1947 there was only one airline in
operation called Orient Airline. After some time two more airlines Pakistan Air Limited
and Cresent Airways started commercial operation. None of these small air service
companies could succeed to cover the requirements of the Air Traffic of the country.
Ultimately two of these failed to continue their operation. In 1952 Orient Airways was
the only operational company operating on domestic routes.

The govt. and the people of Pakistan were sincerely struggling hard for development
of their country with the aim to reach to the similar level of advancement as of other
free nations of the world. Communication system is the basic requirement of country.
So in 1955 the Govt. took an initiative and passed an ordinance to form an air fleet
under the name of Pakistan international airlines (PIA) to meet the needs of domestic
and international air traffic.

PIA began operation on Karachi-Dhaka sector with three aircrafts in 1955. later PIA
and Orient Airways, a private carrier, were merged to form PIAC (Pakistan
International Airline Company). Over the years PIA gradually expanded its network
and is now serving 83 destinations.
BRIEF HISTORY

PIA entered the international aviation with service from Karachi to London via Cairo
and Rome. Until about the middle of 1956, PIA had been running in loss as a result of
which Boeing 707 was added to the PIAC fleet. PIA was the firs airline to operate jets
in Asia. New York-Karachi route was inaugurated in 1957. Boing flight was introduced
between two wings of Pakistan in 1961-62. PIA became the first non-communist
airline to fly to the people's republic of china and operated two services between Asia
and Europe via Moscow in 1963-64. PIA made record operating surplus of Rs. 49.22
Million (about 54.71% of paid up capital). In 1966-67 engine overhaul shop was
commissioned and completed.

In 1967-68 first batch of PIA pilots completed their training from PIA flying school and
received commercial pilot's license. A new jet hanger for Boeing was completed in
1967-68. In 1969-70 PIA started to extend engineering services to other airlines like
Royal Nepal Airlines Corporation. Engineering services, domestic operation,
international operation, agreements were signed with other airlines like Yugoslavia
Airlines. Terminal facilities were expanded at Islamabad and Karachi and management
agreement was signed with air Malta under which PIA seconded a management team
to Malta in 1972-73. During this year wide body Douglas DC-10 was introduced. Full
time chairman of the board of directors was appointed in 1973-74. During 1974, two
720 B were given to air Malta on lease. Weekly all Boeing service was introduced to
New PIA earned Rs. 158.08 million profit, introduced pension scheme employees and
added four more aircraft to the fleet during 1976-77. Technical services to Somali
airlines, air Malta and Yemen airways, were started in 1977.
Two subsidiaries were established and registered in the UAE to promote hotels.
Boeing 747 was introduced in 1977.

In house computerized reservations systems (REPAK), New Flight Control System at

Karachi Airport are the achievements of 1980-81. PIA introduction first time. "Direct
Inward dialing" telephone facility in Pakistan and installed Mini-Micro computers in PIA
Head Office .Automation in budgeting finance revenue, and started from Peshawar,
Islamabad and Lahore.

Night Coach Service was introduced in 1983-84. Flight kitchen of. PIA, which was
commissioned in February 1977 was extended and modernized in 1983-84. Five 737-
A300 aircraft were introduced into the fleet of PIA in 1984-85 "Sohni" Executive class
on all PIA B-747 aircraft on international flights was first
Time introduced by the corporation in 1985.

Auto ticketing, flight kitchen at Islamabad routes on Civil Air Transport, were
achievements of PIA in 1986-88. During the period many new routes were
Introduced including Twin Other operation to Muzaffarabad and Rawalakot.
Automated reservation and ticketing facility introduced at Larkana during 1989-
90.two women pilots were inducted in PIA for first time in the history of Pakistan to
operate passenger flights in 1989-90. 1990-91 direct Haj flights from Lahore and
international flights from Mohen-Jo-Daro airport (Larkana) were started

YEAR-WISE PROGRESS/EVENTS
DEPICTING PROGRESS OF PIAC
1954
Pakistan international airlines established.

PIA's first super-constellation (Ap-Afq) registered on April 24, 1954.

PIA started its regular service from May 10, 1954.

Direct service introduced between West and East Pakistan (now Bangladesh)

1955
Pakistan international airlines corporation formed with merger of PIA and Orient
Airways.

PIA entered the world of international aviation with service from Karachi to London
via Cairo and Rome.

1956

Engineering base takes shape. First super constellation engine overhauled at PIA's
own shop. Extensive training programmes launched.

Orders placed for two Lockheed super h constellations and three with option of five
Vickers viscount turbo prop airliners.

1957

PIA starts making a profit. Until about the middle of 1956, it had been running at a
loss of about Rs. 10 million annually.

1958-59

First two viscounts began operating and traffic increased on all domestic and
European routes.

PIA started modernizing its fleet by replacing the caviars with turbo prop viscount
with turbo viscount aircraft.

1959-60
Boeing 707-320 "international" introduced on the London route.
 Because the first Asian airline to operate a jet (by leasing one from pan American
world airways).

1960-61

First three of five Fokker F-27s received and order placed for three Boeing 720B jet
aircraft.

Karachi New York service inaugurated.

1961-62

Operating revenues increased by 39% over previous year. 87.7% of all flights
operated on time or within 15 minutes of schedule.

First Boeing 720B received in January.

1,379 students completed 22826 student hours in PIA's integrated Ground Training
School.

1962-63

Integration of Boeing 720B fleet completed. Order for three Sikorsky S6 in

helicopters placed.

Boeing 720B introduced between the two wings of the country.

1963-64

Became the first non-communist airline to fly to the People's Republic of China, and
operated a service between Asia and Europe via Moscow.

Commercial, unsubsidized helicopter service operated through East Pakistan (now

Bangladesh).

1964-65

Fourth Boeing 720B aircraft arrived. Two more Fokker F-27 aircraft were received just
after the close of the year.

Record operating surplus of Rs. 49.22 million 54.71% of paid up capital was made.
1965-66

A system of Feeder services linking eight new places was introduced in West
Pakistan.

Pierre Cardin uniform for air hostesses introduced.

1966-67

An IBM 1401, the first computer in Pakistan, was installed in PIA.

Engine Overhaul shop was commissioned and completed.

More aircraft, two Boeing 707-340s, one trident 1E and two F-27, were added to the
fleet.

PIA Air Academy started functioning.

1967-68

One more Fokker F-27 and one Boeing 707 received.

First batch of PIA trainee-pilots completed their training from PIA flying school and
received Commercial Pilot's License.

A new jet hangar for Boeings and a supporting airframe overhaul shop/
commissioned and completed.

1968-69

Fourth Boeing 707 received.

Order placed for a Boeing 707 flight simulator.

Passengers carried on domestic services crossed the million marks.

1970-71

Order for one more F-27 placed.

 Flight kitchen in Karachi inaugurated.

1971-72

Transatlantic service resumed.

Close circuit television system installed at Karachi airport.

Agreement signed with LAA for domestic operations in Libya.

Agreement signed with the Yugoslav airline JAT for lease of three Boeing 707 aircraft.

1972-73

Terminal facilities at Islamabad and Karachi expanded.

Management agreement signed with air Malta under which PIA seconded a
management team to Malta.

PIA contacted to purchase three long range wide body Douglas DC-10 Series 30
Aircraft.

Became the first airline to introduce a second route to People's Republic of China
over the Karakoram ranges.

1973-74

A full time Chairman of the Board of Directors appointed.

Two DC-10 30s were added to the fleet.

Two 720Bs were given to Air Malta on lease.

1974-75

Three Boeing 720B aircraft were added to the fleet.

Third DC-10-30 was added to the fleet and a fourth ordered.

A weekly all time freighter-Boeing service to New York was introduced.

Facility established for testing CF6-50 engines and components of DC-10 aircraft.
 Freighter service introduced.

A new uniform for PIA air hostesses was introduced.

1975-76

DC-10 introduced on domestic routes.

Two Boeings 747 acquired on lease and successfully inducted on transatlantic route.

1976-77

A new corporate identity programme implemented.

PIA earned a record operating surplus of Rs. 152.08 million.

One DC-10-30, two B-707 aircraft and one 720B aircraft were added to the fleet.

1977-78

Option to purchase two B747s was exercised.

Two PIA subsidiaries established and registered in the UAE to promote and manage
hotel projects abroad.

Technical assistance provided to Somali Airline, Air Malta and Yemen Airways.

1978-79

Induction of two additional Boeing 747s and four A300 aircraft.

Cut-over of domestic stations to in-house computerized reservations system, REPAK.

Opening of Air Cargo Centre at Karachi Airport.

Establishment of new downtown sales office.

1980-81

Wide body hangar and related workshop commissioned.

International stations cut-over to the in-house computerized reservations system-

REPAK.

Opening of Air Cargo Centre at Karachi Airport.

New flight control system opened at Karachi Airport.

1981-82

Weekly service to Abu Dhabi and Dubai from Peshawar inaugurated.

PIA was rated as the leading and the most efficient airline for the year 1981 Hajj
operation.

Duly free shopping complex inaugurated at Karachi airport.

1982-83

PIA earned an all-time high operating surplus of Rs. 441.00 million.

Another DC 10, Airbus and 707 were added to the fleet.

First ever "C and D" checks were carried out on Boeing 747 AND DC 10 respectively.

PIA introduced "Direct Inward Dialing" telephone facility first time in the country.

Mini-Micro computers installed in PIA Head Office.

1983-84

Automation budget, finance, revenue and other important areas introduced.

Islamabad New York flight via Istanbul inaugurated.

Night coach services between Lahore and Karachi and Islamabad and Lahore
introduced.

Foundation of PIA Township laid at Karachi airport for the employees.

Extension and modernization laid at Karachi airport for the employees.

Extension and modernization of the PIA flight kitchen undertaken.

1984-85

PIA set up first ever planetarium of Pakistan at Karachi.

PIA introduced feeder service in the country.

Five Boeing 737-300 aircraft inducted into the PIA fleet.

PIA's revenue, for the first time, exceeded the Rs. 10,000 million.

1985-86

Introduction of Sohni executive class on all PIA B747 aircraft on international flights.

New uniform for the airhostesses introduced.

Fourth flight introduced to New York.

1986-87

PIA started flights to New York.

Fifth weekly flight to New York introduced.

PIA introduced auto-ticketing facility.

1987-88

Flight kitchen at Islamabad inaugurated.

PIA hosted first international course on civil air transport.

PIA inaugurated services to Toronto.

Sixth weekly flight to New York introduced.

Up gradation of China and Singapore operation to Boeing 747.

1988-89

Introduction of twin otter operation to Muzaffarabad and Rawalakot.

1989-90

Two women pilots were inducted in PIA, for the first time in Pakistan's history to
operate passenger flights.

PIA introduced the first ever direct Hajj flights from Lahore to Jeddah.

1990-91

PIA introduced a new international flight, Peshawar- Jeddah via Lahore.

A direct Lahore Bangkok flight introduced.

Advanced boarding facility introduced.

Hi-Tech A310-300 aircraft inducted into PIA fleet.

PIA's new corporate identity introduced.

1991-92

PIA flight to Tashkent introduced.

Peshawar added as fourth point for Hajj operations.

Agreements signed to link PIA reservations with Sabre, Galileo and Amadeus-Global
Distribution Systems, (GDS).

Achieved record revenue of Rs. 20 billion and unprecedented operating surplus of

Rs. 1.58 billion.

1992-93

PIA introduced flights to Zurich.

Flight to Sharjah resumed.

Direct flights between Islamabad and Singapore and Lahore and Kuwait introduced.
A300 B4 Simulator installed.

1993-94
 Flights to Jakarta, Almaty, Ashkabad, Baku, Al-Ain, Fujairah and Parachinar
introduced.

Air Safari flights introduced.

Agreement signed for acquisition of B747-200 simulator.

Ras-ul-Khaima introduced.

PIC turns profitable.

PIA's organizational structure undergoing change.

1994-95

Boeing 747-200 simulator installed.

Purchase option on one used Airbus A300-B4 Aircraft on Lease from Air France
executed.

Hajj operation from Sukhar and Multan carried out for the first time.

Agreement signed for installation of SATCOM System in Boeing 747 and Airbus
A -310 Aircraft.

Tours Promotion Activity upgraded to Divisional level.

Cargo system revamping started.

1995-96

Helicopter service introduced from Islamabad, Abbottabad, Lahore and Sialkot to

promote tourism.

1996-97
Additional frequencies provided on Katmandu by operating four frequencies per
week with Boeing 737 air craft.

Capacity increased to Saudi Arabia by additional PEW-RHU-PEW and ISB-LHE-JED v.v.

flights.

PIA flights to Yangon introduced.

1997-98
Second weekly Boeing 737-300 flight on PASNI- SHARAJAH- PASNI sector was
introduced.

A new twice weekly flight with A-300/a-310 aircraft was introduced on Quetta
Peshawar Quetta sector.

The Athens flight was suspended and then re introduced.

PIA withdrew first class facilities on international flights effective 1st June 1998. The
airline will operate with business and economy class only.

1998-99
An agreement to acquire five Boeing 747-300 aircraft on dry lease was signed with
Cathay pacific airlines. A Hong Kong based carrier, on March 18, 1999.

PIA introduced B747-300 services effective may 01, 1999 on UK and Saudi Arabia
routes.

Effective may 01, 1999 regular shuttle service was introduced on KHI-ISB-KHI and
KHI-LHR-KHI routes with flights every three hours in each direction.
Direct flights from Faisalabad and Multan to Dubai introduced from May 01, 1999.

OBJECTIVES OF PIAC

According to PIAC Act 1956, following are the main objectives of PIA Corporation.

I. To provide and further develop safe, efficient, adequate, economical and properly
coordinated domestic as well as international air transport system.

II. To operate any air-transport service or any flight by aircraft for a commercial or
other purpose, and to carry out all forms of aerial work.

III. To acquire, own, run, manage or participate in the running of management of, any
hotel or business connected therewith.

IV. To provide for the instruction and training in matters connected with aircraft or
flight by aircraft of persons employed or desirous of being employed either by the
Corporation or by any other person.

V. With the previous approval of the Federal Government, to promote any organization
outside Pakistan for the purpose of engaging in any activity of a kind which the
Corporation has power to carry out.

VI. To acquire, hold or dispose of nay property, whether movable or immovable, or

any air transport undertaking.

VII. To repair, overhaul, reconstruct assemble or recondition aircraft, vehicles or other

machines and parts, accessories and instruments thereof or therefore and also to
manufacture such parts, accessories and instruments whether the aircraft, vehicles or
other machines are owned by the Corporation or by any other person.

COMPANY'S MANAGEMENT

Organization

Corporation (PIAC) has been divided into thirteen departments as shown in

organizational chart. PIA is one of the biggest commercial organizations in our country
and has worldwide operation, the corporation has network of flights around the globe,
to control worldwide operation, there is a department meant for overall management
of PIAC. Administration Department consists of seven Divisions and units. Each
department is headed by a Director, each division is headed by GM, each section by
manager and subsections and units are controlled by assistant managers.

As I have mentioned earlier in the preface that after having a thorough look on the
organization and its finance department, I have the functioning, objectives of the
finance department (Punjab) Lahore which consists of a Finance Manager (Punjab),
assistant manager finance and 12 Sr. Accounts Officers and 53 junior officers and
staff working as a team in this department at Lahore.
Organizational chart

CHAIRMAN

Corporate Secretary Security Services

Flight Safety Public Affairs

Managing Director

Sp. Asstt. General Sp. Asstt. Technical

Deputy Managing Director Deputy Managing Director

Director Engineering And Maintenance Director Quality Assurance Director Flight

Operations Director Flight Services

Director Finance Director Administration Director Airport Services Director Precision

Engineering

Director DP Services Director Marketing Director Corporate Planning Director General

Services

Director Material Support

CORPORATE PROFILE

Of PIAC
BOARD OF DIRECTORS EXECUTIVE MANAGEMENT
Lt. Gen. (Retd) Hamid Nawaz Khan Secretary Defence & Chairman-PIAC Lt. Gen.
(Retd) Hamid Nawaz Khan Secretary Defence & Chairman-PIAC
Mueen Afzal (Secretary General Finance & Economic Affairs ) Ahmad Saeed
(Managing Director-PIAC )
Air Marshal Salim Arshad
Vice Chief of Air Staff Khursheed Anwar
Chief operating Officer
Air Marshal (Retd) Aliuddin
Director General-CAA Kaleem Malik
Director Finance
Asad Ali Khan
M. Rashid Hasan
Director Flight Services
M.H.K. Khaishgi AVM Syed Javed Raza
Director Precision Engineering
Dr. Salman Shah Wasim Bari
Director Cargo Sales & Services
Omar Khan Afridi Syed Farooq H. Shah
Director Marketing
S.Ali Raza AVM (Retd) Niaz Husain
Director Engineering
Zakir Mahmood Capt. Bakhtiar Ahmad Chaudhry
Director Flight Operations
Ahmad Saeed
Managing Director-PIAC Umar Ghafoor
Director Coordination
Ghazanfar Mashkoor
Secretary-PIAC
Registered Office
PIA Building
Quaid-e-Azam International Airport
Karachi-Pakistan External Auditors
M.Yousuf Adil Saleem & Co. Taseer Hadi Khalid & Co.
GRAPHICAL REPRESENTATION OF THE FACTS AND FIGURES

INTERNATIONAL SALES OF THE IATA AGENTS 2001

GSA/ DSA NET INTERNATIONAL SALES LAHORE 2001
COUNTER SALES INTERNATIONAL LAHORE 2001

SALES
10
12
11
9
13
14
13
7
6
12
7
6
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
MONTH WISE NET INTERNATIONAL SALE LAHORE 2001

NET INTERNATIONAL SALES MIX OF LAHORE 2001

REGION WISE TRAFFIC MIX LAHORE 2001

MANAGERIAL POLICIES
1. To assist G. M. in day to day operations.
2. To look after their down area and to solve day to day problems.
3. To coordinate with other sectional heads so that smooth functioning of Corporation
can be achieved.
4. To safe guard their subordinates.
5. To contact with relevant out side organizations and agencies in order to enhance
the performance of PIAC.
6. To perform any other duty assigned by the C.E.O.
7. To form & regulate relations with the unions and staff association.

CORPORATE SECRETARIAT

Corporate secretariat section is also called share section. This section is headed by
the Manager Javed Mansha Sahib. The main responsibility of the manager is to
maintain the profiles of board members. To arrange the board meetings. To receive
agenda paper. This section is also dealt with ministry of defence. And this section also
calls the annual general meetings and calls extra ordinary meetings.

Following are the main functions of corporate secretariat.

i) Transfer of shares
ii) Diary dispatch
iii) Transmission of shares

i) Transfer of shares:
The main function of this section is to transfer of shares. The instruments of transfer
of any share in the corporation shall be in written and shall be executed both by the
transferor and transferee and shall contain the name, address, and occupation both
of the transferor and transferee and the transferor shall be deemed to remain the
holder of such share until the name of the transferee is entered in the register. Each
signature to such transfer shall be duly attested by the signature of one creditable
witness who shall add his address and occupation.

The board may without assigning any reason refuse to register any transfer of share
to a person of whom it does not approve.

No transfer shall be made to minor or person of unsound mind of to a person not

qualified.

ii) Diary Dispatch:

PIA has the 48,000 shares holders each and every share holder need some
information about their shares like as signature verification, different bank
information changes of ACE number and about dividend up to date information. This
sections responsibility is to first clarify the diary number of each letter which is sent
to the share holder and than dispatch it and keep record in her personal computer.

iii) Transmission of share:

Transfer of the shares to another after the death of previous is handed by this section.

Any person becoming entitled to a share in consequence of the death of any share
holder. (here in referred to as (a person entitled by transmission) shall within three
months of becoming so entitled produce to the Board such evidence as may be
reasonably required by it to prove his title including in the case of death a grant of
probate or letter of administration or succession certificate as the case may be, from
some competent court having jurisdiction in Pakistan and dealer in writing his election
either to be himself registered as a shareholder in respect of the share or to make
such transfer as the deceased, bankrupt.

Provided that in any case where the board in its discretion thinks fit, it may dispense
with the production of a succession certificate letters of administration, or such other
legal representation upon such terms as to indemnify or otherwise it may require.
CORPORATE PLANNING

The basic function of corporate planning is to make strategic plans on daily, weekly,
monthly and yearly basis for every sector of the Pakistan international air line.

1. MARKETING INTELLIGENCE

Function:
This division provides daily monthly half yearly appraisal report of each and every
sector and aspect of flights for the formulation of future plans. This department
generates daily performance report and capacity utilization report on daily basis on
the basis of this report monthly reports are published named as TT bulletin (traffic
trend bulletin ). Many other report are also published like market share comparison
which help in making yearly reports. The basic sources for the data available is FIA,
CA concerned air line etc.

2. ECONOMIC AND FORECASTING

Function
The basic function of this division is to make annual financial estimates of different
functions of PIA for the preparation of annual strategies as well as long term
forecasting for minimum 5years in maximum 10 years for both passenger in cargo
area. Infact this division kept eye on overall economy of the both internal and
external related environment to take future decision.

3. INTERNATIONAL AFFAIRS

Functions
Core function of this division is to obtain traffic right for PIA all over the world through
assisting in government negotiation in through inter-air line agreements the type of
agreements they done are;

a) Operating agreement.
b) Reciprocally agreement
c) Unilateral agreement
d) Nonoperative agreement
ORGANIZATIONAL CHART OF

ADMN. DEPARTMENT

DIRECTOR ADMINISTRATION

GENERAL MANAGER
PERSONAL

GENERAL MANAGER
POLICIES &
REMUNERATION

GENERAL MANAGER
MANPOWER
PLANNING

GENERAL MANAGER
INDUSTRIAL
RELATIONS

GENERAL MANAGER
LEGAL

GENERAL MANAGER
SPORTS

GENERAL MANAGER
SECURITY
MANAGEMENT PRACTICES AND STYLE

To perform managerial functions uniformly by mangers PIA has published three

manuals, named as;
1. Personal process manual (2 volumes).
(Which is commonly known as Green Book)
2. Schedule of power.
3. Service and discipline regulations.
These three manuals are provided to each and every manager so that he can perform
his job according to the rules & regulations. For example if their is a job to be done all
managers practice following procedures.

Policy

Policy
Manual
Policy
Manual

Job

Procedures

Schedule
Authority of
Power

From above diagram it obvious that management practice in PIA is highly regulated
and managers have to follow strictly these above mentioned three books to perform
day to day operations.
Management style in PIA is not bureaucratic rather PIAC has open door policy.
FUNCTIONS OF PERSONAL DEPARTMENT
The personnel department of PIAC perform following functions;
* To maintain personnel record of permanent & temporary employees.
* To monitor and maintain leave and passage record of permanent employees.
* To handle employee grievances in respect of service matters.
* Timely communication of personnel information of employees with regard to
promotion and transfer.

* To ensure uniform implementation of personnel policies and procedures in all

departments of PIAC
* To feed higher management of PIAC policies and procedures, sections for required
amendment in personnel policies.
* To place employees at a right place, right time and in a right manner.
* To fulfill the training needs of PIAC

RECRUITMENT
Recruitment policies of PIA are as follows;
* All positions will be filled by above average intelligence, appropriate qualification,
integrity & good character candidates.
* All recruitment shall be made on merit.
* The standard of suitability and merit shall be determined by the management of
PIAC.
* Person who is dismissed or convicted of an offence shall not eligible for any post.
* Competent authority may relax the maximum age limit up to 10 year.
* All appointments shall be made on clearance certificate from police.
* Vacancies in permanent posts shall be advertised in press, unless otherwise decided
by top management.
* Matriculation certificate is only acceptable document as a birth certificate.

STRUCTURE OF ORGANIZATION IN TERMS OF PAY GROUPS

Pay Group
I-IV Staff and Labour force (here the labour laws are applicable).
V Junior Officer
VI Officers involved in important works actual working hands.
VII Assistant Managers (also includes some senior officers).
VIII Managers
IX Corporate Managers
X managing Directors

Pay Scales
Pay Group Pay Scales
V 3290 - 180 - 4370
V-I 4600 - 210 - 5860
V-II 6090 - 210 - 7350
VI 3780 - 210 - 5460
VI-I 5745 - 250 - 6990
VI-II 7270 - 250 - 8520
VII 5115 - 310 - 6350
VII-I 6730 - 350 - 8480
VII-II 7955 - 310 - 8885
VIII 5115 - 310 - 6355
VIII-I 6730 - 350 - 8480
VIII-II 8865 - 350 - 10615
IX 6800 - 410 - 8440
IX-I 8905 - 450 - 10255
IX-II 10725 - 450 - 11625
X 8060 - 495 - 10040
X-I 10590 - 530 - 12180
X-II 12730 - 530 - 14300

Personal Pay
New element of personal pay has been introduced.
Personal pay for various pay groups will be as under:
Pay Group Personal Pay (Rs. P.M.)
V 703
V-I 768
V-II 788
VI 709
VI-I 779
VI-II 804
VII 729
VII-I 779
VII-II 804
VIII 729
VIII-I 914
VIII-II 944
IX 729
IX-I 914
IX-II 1004
X 739
X-I 914
X-II 1004
BENEFITS, FACILITIES, ADVANTAGES, CONCESSIONS
The personnel officer has a complete record of every employee's entitlement and
utilization of facilities and benefits:
Following are the major benefits and facilities to employees:
Reimbursement
Following reimbursement heads of expenses for officers in pay group V to X (i) at the
prescribed rate:

ENTERTAINMENT
BOOKS AND EXPENSES
PAY GROUP MAGAZINES (Accountable) FUEL
V/V(i,ii) 660 700 167
VI/VI(i,ii) 820 980 181
VII/VII(i,ii) 820 1170 215
VIII/VIII(i,ii) 965 1310 250
IX/IX (i,ii) 730 1700 173
X/X (i,ii) 760 1700 150

House Rent
House rent will be payable @ 60% of the personal pay, Dearness Allowance and
including Pay Group VIII (i).

Shift Allowance
Shift allowance admissible to officers has now been revised as follows:

Pay Group Revised (Rs. P.M.)

V/V (i) 230
VI/VI (i) 275
VII & above 320

Night Shift Allowance

Night Shift allowance is introduced for officers working in rotating shifts.
Pay Group Rate (Rs. Per Night)
V/V (i) 80
VI/VI (i) 95
VII & above 105

Meal Allowances
Meal allowance is given to officers who work at a stretch.
Hours Rupees
10.00 to 10.59 2
11.00 to 15.59 4
16.00 to 20.59 6
21.00 to 24.00 8

Washing Allowances

Washing allowances is given @ Rs.105/month to officers from group (V) to (VIIII).

Utility Allowance
This allowance is given @ 10% of basic pay to officers from group (V) to (VIIII).

Conveyance Allowance
This allowance is also given to the officers from group (V) to (VIIII) @ Rs.950/month.
Beneficiary of this allowance is not eligible for car allowance and reimbursement of
fuel charges.

Car Maintenance Allowance

This allowance is for those offices who do not using conveyance allowance and owned
car.
This allowance is given @ Rs.675 for officers from group V to group VIII (II) and @
Rs.645 for officers from group IX to group XIII.

Grooming Allowance
This allowance is given to female officers @ Rs.275 working in group V & above.

Non Practicing Allowance

This allowance is for permanent medical officers and doctors who are full time
employee, for not practicing private @ 50% of basic pay but not more than
Rs.3320/month.

Qualification Pay
C.As and ACMAs working in finance department sh all be paid @ Rs.3220/month.

This allowance is also given to the officers of information system department except
communication division @ Rs.1170 per month.
MANAGEMENT INFORMATION SYSTEM

1. DEFINITION
MIS is an organization setup process that provides information to all levels of
management to support the operation and decision making in the organization.

2. PURPOSE
The purpose is to provide management system that reports overall performance of air
line for the chief executive information. They usually highlight and pinpoint the
weakness of different departments.

3. FUNCTION:
Through inspection they make sure that none of the department is compromising on
quality. They conduct surveys and customers interview to know the actual
performance. MIS department prepare different reports. Like monthly reports, special
reports, specific reports, observation reports, corporate progress meeting report and
implementation weightage report. They also prepare airline services standard report,
which shows trend either they are going up or falling down.
COMMUNICATION DEPARTMENT

Communication department is headed by a General Manager. This department plays

a very vital role in any organization because we know that without effective
communication system any organization cannot perform its operations properly.

Communication system in P.I.A is like oxygen. Minor mistake can cause huge loss.
There are two types of communication in P.I.A.

i) Incoming traffic
ii) Outgoing traffic

i) INCOMING TRAFFIC:
Incoming traffic means the calls which come in P.I.A., these calls may come from
inside the organization or outside the organization this type of communication is
called incoming traffic.

ii) OUT GOING TRAFFIC:

Outgoing traffic means the calls which are done by the employees of the P.I.A. These
calls may be local, domestic, or international. Only General Managers has direct
excess to national and international calls. If the other employees want to do calls
outside the city they have to request to the operator.

COMPUTER SECTION:
A communication department contains a computer section which maintains the
record of all calls whether local, domestic, or international with (calls) time duration,
phone number. The calls which are indirectly done also recorded in computers.

LEAST LINE:
Least line means to hire a telephone line at a fixed charging. P.I.A has to pay fix
amount to Pakistan Telecommunication Company (PTCL) every month. These type of
lines are very cheaper and beneficial for P.I.A.

ACD:
CRC section contains 15 agents who receive the calls of customers for reservation. If
a telephone line is busy (Agent is busy) the call is automatically transferred to other
agent. CRC section is also under the direct control of communication department.

EXTENSIONS:
For inter communication between different departments P.I.A have a telephone
network. This network can also be used for local communication (with in the city). For
local call the employees first dial 0 (zero) and then required number. These
extensions are operating through the cable system.
Telephone system contains two big switches 1 and 2.

Switch 1:
Covers the head office, PIA training center, Engg: department and M.T on the other
hand
Switch 2:
Covers the Jinnah Terminal.

RESERVATION DEPARTMENT

There are two types of counters working for Reservation

International Counter
Domestic Counter
In international counter there are two sections.

Section 1
In section-1 reservation are taken only for Europe, USA and Canada.
So in this particular section all passengers are related to the reservation for Europe,
USA and Canada. Passenger come and discusses their problems relating to
confirmation, reconfirmation or holding confirm. If a passenger wants to have late his
flight or early flight, he tell the computer operator and the computer operator solve
the problem of that person if possible. There is a complete hold of computer operator
on all functions i.e. what is the date of confirmation, what is the seat number, which is
the side.

If the passenger wants to have some help in the airport, then the operator send this
message through computer and the passenger feel easy at the airport. Because the
personnel of airport takes corrective action and satisfy the passenger.

So in this way the passengers feel also very easy because there is no huge crowd
there and each person has opportunity to reserve his seat very easily.

Section-2
The reservation is taken there only for Gulf, East Asia and Arab Countries. So all the
passengers relating to these particular countries come in his section and reserve their
seats. The section is also computerized and reservation is done through computers.
So because of this the passengers have no problem in case of date of departure,
arrival or reconfirmation. So all facilities are also available have for passengers as
discuss in section-1 i.e. if any problem is faced by the passenger regarding date of
departure, about seat number of about luggage it is solved there in reservation
department.

Domestic Counter
This counter is only works for reservation of domestic tickets. So all the passengers
who travel inside the country have to make reservation from this counter.

Advance Boarding Section

Advance boarding cards are issued in this section. So if the passenger wants to get
boarding card from the head office, there is the facility to get this boarding card, so
the passengers have no difficulty at the airport in case of boarding card.

PTA (Prepaid Ticket Advoice) Section

There is a facility of passengers who do not have money in a particular city to get the
ticket for a particular city.

If a passenger is in Lahore and he wants to go Karachi but he does not have money.
So he has to inform his relatives to pay rupees in Karachi head office. The Karachi
head office inform Lahore head office for the issuance of ticket to that particular
person. This whole records are maintained by PTA section.

So there are four coupons issued by that person. One coupon is received by the
counter who receives the money. One coupon is given to that person who gets the
facility of PTA and two coupons are received by PTA section to take as a record.

DIRECT SELLING SECTION

In this section the facilities is provided to the people who want to get the ticket from
the head office. So the people who do not get the ticket from the travel agents they
also get the ticket from the head office. The selling price of the ticket is same as the
travel agents give them a ticket. It is so because this section also sell the ticket on
the face value of the ticket.

RESERVATION ON TELEPHONE
There is also the facility provided by PIA to passengers or sales agent to confirm the
seats on telephone call. The telephones operator are there and receive the calls and
takes booking on computers. So in this way the sales agent feel very easy to holding
confirm and then reconfirm the seats. There are taking booking for some rules and
regulations.

If the sales agent makes the booking internationally he has to take it at least 2 weeks
before departure.

Similarly for Lahore to Karachi he has to take booking at least three days before and
for other cities at least two days before the departure.

So all travel agents have direct link with the operator and gets information according
to their recruitment. The travel agents make all booking through telephones either it
is holding confirm, waiting confirm or reconfirm.

If there is some problem incurred i.e. if the passenger does not travel according to the
confirmation by the travel agent then the operator is not responsible, the agent is
responsible about this particular seat. PIA also fines the travel agents if some problem
is incurred according to the confirmation of seats.

FLIGHT CHECK
Flight check is a sensitive area in PIA where the booking is originated. Either it is from
the travel agent or it is through the head office.

In this particular section the complete bio data of the passengers who will be travel
on a particular flight is feeded in the computer and confirm the requirements of
passengers as well as the requirement of personnel.

A flight is checked three time before the departure. Firstly the flight is checked before
72 hours before the departure, then 48 hours of departure and then 24 hours before
departure.

No show ratio means the passengers who books their seats and do not travel in time.
This ratio is very high in Pakistan.

To decrease this ratio the facility is provided to the persons who are in waiting list.
This is very fruitful for the organization.

Only senior member check the flight list and only one member is responsible to check
the list relating to any hours i.e. other 72 hours, or 48 hours or 24 hours. So every list
like relating to 24 hours before departure is checked only by one person. If some
problem is there for any seat then the second member has to linked with the operator
or travel agent to reconfirm the particular seats.

PFA (Past Flight Analysis)

When the flight is departure this particular section check all bio date of flight. So it is
a counter check of flight check.

Central Reservation Control (CRC), Reservation planning, Haj & Charter Planning are
three sections of division under consideration. Discussion will concentrate on CRC.
CRC is further divided into four cells:
- Complaints cell,
- Post flight cell,
- Telephone sales, and
- Procedures Bureau.

Central Reservation Control (CRC), Reservation planning, Haj & Charter Planning are
three sections of division under consideration. Discussion will concentrated on CRC.
CRC is further divided into four cells:
- Complaints cell,
- Post flight cell,
- Telephone sales, and
- Procedures Bureau.

AIRPORT SERVICES

TRAFFIC DEPARTMENT
The traffic people are in direct contact with the passengers and they handle different
stages occurred during a passenger's way from checkin lounge to the aircraft. As the
passenger enters the checkin lounge the duties of traffic people starts till the
passenger boards to the aircraft.

As the traffic department relates to passenger services, the passenger services

comprises of the following units:
- Passenger Handling:
- Traffic Controller
- Officer Incharge Counters
- Weight Balance Unit
- Departure Control Unit
- Special Handling Unit
- Protocol Handling Unit
- Flight Inquiries
- Post Flight Unit
- Lost and Found Unit
- Lounges
MANAGEMENT
Every station has a Station Manager, who is infact the representative of Director
Airport Services, since all units of the division comprising Airport and Flight Services
Departments report to the Station Manager.

There is 24 hours working in traffic department and 4 shifts are engaged in their
duties in this very section.

Organization chart of Traffic Section is as given on next page.

STATION MANAGER

Traffic Manager OIR OIC

Assistant
Traffic Manager

Traffic
Supervisors
PASSENGER HANDLING

Traffic Controller
Traffic Controller controls entire activities of passenger flow.

Officer Incharge Counters (OIC)

OIC is the incharge of checkin counters which are 11 in number at Lahore Airport
including one counter for Sohni/Executive/First Class. Each counter is facilitated with
weighing machines and a conveyer belt behind the counters for baggages.

Coupon is collected from the passengers on the spot and Boarding cards are issued
having different colors specified to different flights and classes.
Baggage are weighed on weighing machines and charged if over weight and then
baggage tags of different colors are used according to the flights.
Weight and Balance Unit
After collecting the coupon from passengers at checkin counters a weight and
balance sheet known as "Trim Sheet" is prepared. Trim sheet is detail of total load on
aircraft including load in holds and cabin, passengers weight, actual take off weight
comprising zero fuel weight, which is the summation of total traffic load (PLU) and dry
operating weight, and weights of take off fuel and water methanol. Actual lending
weight is calculated by subtracting trip fuel and water methanol from actual take off
weight.

The purpose of preparation of this loadsheet is to get balance and centre of gravity
conditions of the aircraft.

Departure Control Unit

a) Passengers Manifest
In this unit, all activities regarding departure are controlled by using computers. Here
the passengers manifest is prepared which includes each passenger's name, his type
(revenue/nonrevenue), group (audit, child, infant), seat number, time of checkin,
pieces and weight of baggage, etc.
b) Passengers Loand Summary
After this a Passengers Load Summary is prepared. These documents are used in
preparation of Trim Sheet.
c) Post Flight Report
After the departure of flight a Post Flight Report is prepared with the help of Post
Flight Unit. This report consists of airport addition passengers list, no record
passengers list, and noshow passengers list.

Special Handling Unit

This unit deals with the passengers who are required special handling. Telexes
regarding special handling cases are flashed in advanced from the Departure Station
of the flight to the arrival station. The services provided in special cases are free of
cost and on courtesy basis.
Special Handling Unit deals with the following types of cases:
- UM - Unaccompanied Miners (children less than 12 years old)
- Ladies Alone
- Pregnant Ladies
- Blind Passengers
- Wheel Chair Cases
- Abnormal Passengers (must be nonviolent)
- Stretcher Cases
PROTOCOL HANDLING UNIT
This unit is also called V.I.P Handling Unit. The functions included are handled by the
Protocol Officer.

The VIP simply hands over the ticket and inform about the luggage to Protocol Officer.
A VIP coach takes him/her to the aircraft, while VVIP travels to the aircraft in their own
flag cars.

FLIGHT ENQUIRIES
The enquiries about the flights are provided to passengers by this unit. This
information includes the following:
- Flight expected time of arrival (ETA).
- Flight expected time of Departure (ETD).
- List of passengers in particular flight, etc.
POST FLIGHT UNIT
This section deals with all the activities after the departure of each flight. It is
supervised by Assistant Section Manager.

Function
First of all the coupons are checked in term of sector, validity, fare and place of
issuance of ticket.
a) Traffic Load Summary
After the checking of coupon a Traffic Load Summary (TLS) is prepared for each flight.
The basic purpose of TLS is to calculate the total revenue earned.
b) Arrival & Departure Registers
Two separate registers of arrival and departure flights are maintained in which TLS's
are recorded.

c) Flight Files
Flight files of each and every incoming and out going flights are maintained on daily
basis for the station requirements.
d) Other Airlines
In case of tickets used by passengers are of other airlines, the coupons of these
tickets are used as cheques. Expenses and bills of services provided to other airlines,
in case of interline agreements are also recorded in this unit.
e) Other Functions
In case of extended or overnight delay of flight accommodation and meals are
provided in hotel on the expenses of PIA. Hotel authorization slip and bills are also
verified through this departments.

LOST AND FOUND UNIT

This unit is also known as the Baggage Service Unit.
Functions
Normally, two types of the situations are dealt by this unit, which are:
i. Lost baggage complaint.
ii. Unclaimed baggage.
a) Property Irregularity Report (PR)
In case of a lost baggage complaint a Property Irregularity Report (PIR) is prepared
just like as a FIR in a Police Station. In case of loss, of excess baggage (more than 20
kg. in domestic travel and more than 30 kg. in international travel), for which EBT -
Excess Baggage Ticket has not get the PIR is prepared on courtesy bases.
PIR issued by PIA can be used in any PIA office in the world, for compensation.
LOUNGES
The entire airport premises is the property of Civil Aviation Authority(CCA) and they
have rent it out to PIAC. Similarly, the lounges on airport are also owned and
facilitated by C.A.A.

Civil Aviation Authority CAA is semiautonomous body who is responsible for providing
facilities on airport, to the passenger and the airlines as well
There are mainly three types of lounges on Lahore Airport:
- Domestic Lounge (Departure and Arrival).
- International Lounges (Departure and Arrival).
- VIP Lounge.
PUBLIC RELATIONS

Public Relation Department:

We worked only 1 day in this department and really enjoyed here. The main functions
of this department are:
v To monitor the seminars and functions in PIA.
v To giving any news of PIA through electronic media or press media.
v To give advertisement of PIA.
v Monitor any type of news regarding PIA whether it is in favour of the organization or
not.
v Maintain all the news published through print media in form of records.
v Facilitate the various personalities of the press, show biz and other govt. officials.
v This department also issues various types of magazines, booklets and pamphlets of
PIA.

Never the less this department has a very vital role to play in the development of the
goodwill and social standing of PIA. It enables the PIA to cope with all types of
contingent events happening in the outer world relating not only to its competitors
but also with other related parties such as media, govt. bodies, shareholders and
most important its worthy customers.
MANAGEMENT TRAINING
In-house management training was started at PIA Training Centre (PTC), in Karachi in
1986. For the purpose of airline, top management of PIAC conceived this scheme.
Training programs were arranged for people working in group IV to X, Virtually, group
X (G.Ms) is ignored, but for reaching to group X, one is required to complete
management training courses of group IX. We can say that in order to get promotion
to next group, one is required to complete management training courses of his
present group. At PTC separate unit was established in 1987.
Initially following were the policies for management.
1. Supervisory management Course (Period 1 week)
2. Intermediate Management course
a) Management Course I (Period 2 weeks)
b) management Course II (Period 2 weeks)
3. Senior Management Courses (Period 2 weeks)

Eligibility for these courses were determined by the management on priority basis
and nature of the job performed by the person concerned. Over 4 years period of
time, meetings of top, management were held, some suggestion came from Director
IBA Karachi, foreign experts, and public Administration Institutes. Priorities were
changed, objectives were modified and new training strategy was developed.
Objectives were defined as follows:

Objectives of Management Training

1. To sharpen the skills of PIA managers and officers and make them effective and
efficient.
2. To inculcate awareness of team spirit for achievement of corporate objectives.
3. To help the managers/officers in developing analytical tools for planning,
motivating, communicating, controlling, problem solving and decision making.
According to new strategy courses were organized as:
Initial Management Courses 2 weeks
Middle Management Courses 3 weeks
Senior Management Courses 3 weeks
But management was not satisfied with the periods of time for training, so they
extended initial management, Middle management, and Senior management courses'
time to 3, 3 and 4 weeks respectively. Presently PIA Training Centre is according to
modified schedule. An other development course is offered by PIA to its engineers
and planners. This Technical Management and Development Course is of 3 weeks.
This course includes two course of management and one for technicalities.
There is a standing proposal from PIA management to GM training that program must
be modified in following way:
1. Initial Management course
(For pay Group IV & V) 3 weeks
2. Middle Management Training Course
(For pay group VI & VIII) 4 weeks
3. Senior Management Course
(For Pay Group VIII & IX) 4 weeks
4. Technical Management & Development
Course
(For engineering & planning staff) 3 weeks
During training, emphasis is on following courses:
a) Management core subject
b) Case studies, exercises, problem solving models.
c) PIA Management (as a separate subject).

MARKETING DEPARTMENT

Marketing is the most important department of any organization because it is to sell

the product made by the organization. Since PIA is commercial organization, therefore
it is more market-oriented.

The marketing of Air Transportation service is in some way unique. The difference is
firstly because of personalized service; secondly, it is difficult to examine the quality
of the product (i.e. service) prior to the time of final sale. The marketing department
is headed by Director and under him are the General Managers. Different divisions of
this department are;

1. Pax market planning

2. Tours promotion
3. Cargo division
4. Sales development
5. Tariff
6. Pax sales planning
1. Pax market planning
PIA has its own budget and they have their revenue targets each year. They split this
target to other stations as they have the historic date of the stations for assigning the
targets.

The targets are assigned to generate revenue in the beginning of the fiscal year and
then in May and June meetings are held and the performance of the station is
checked whole the year. Number of passengers and revenues are correlated. The
stations have to meet the target of revenue and the number of passengers

simultaneously. They are strict to the targets but due to certain environmental
changes, they review and revise the targets.

There is some flexibility in these cases. In addition to it, the duty of this department is
that when Director or Managing Director go to any foreign station, this department
provides them with the brief relevant informations are compiled and handed over to
them.

So the basic objective or basic duty of this department is planning of targets. After
analysing the performance of the previous year and the forecasted position of the
coming year, the passenger marketing plans are compiled.

2. TOURS PROMOTION
Tourism commercial advantages apart by bringing different, people regions and
country closures through frequent contact it bridges the gap between them. This is
perhaps tourism most positive and constructive role which for reading social and
political precautions. Travels helps create a climate of understanding tolerance and
goodwill and those who are engage in promoting tourism as a profession or in need
working for a worthwhile cause.

Taking up its economic benefits, the word tourism market potential is limitless and its
turnover mind boggling. Pakistan tourism industry potential is immense and it
attraction as tourist destination, as recorded during the past few years, is fast
growing. PIA corporate tourism marketing objective is based on these hard facts. PIA
tourism objective is to exploit Pakistan name tourist attractions and gain maximum
market share by tapping the tourist traffic of the worlds tourist generating areas of
the Pakistan and other destinations over PIA's network operations is most realistic.
The slackened development pace in PIA's traditional target markets leaves it no
choice but to diversify PIA's revenue earning resource channels. In the present market
conditions what PIA need most is to explore new
avenues for alternate target market segments. The tourism market will no doubt
prove to be PIA's best choice because it is the world's fastest growing market.

Tourism holds a key position in the international travel trade today. Compared to an
ordinary traveller who travels out of necessity, a tourist does so out of choice. It is

undesirably a profitable business if done properly. The market potential is immense

and evergrowing. From US$52 million in 1959, the annual world turnover of tourism
industry has surpassed dollars 105 billion today. Tourism is the second largest
industry after oil and can play an important role in a countries economy. In fact in
many countries tourism is the main source of income and is therefore organized on a
large scale under direct government care and involvement.

A third world country can generate vitally needed resources for its development
programs through tourism. Pakistanis rich and varies resources, with right promotion
are likely to attract a steady stream of tourism industry's prevailing trends Pakistanis
geographic location is ideal.

In PIA need for promoting inclusive tours is more intensively felt today than ever
before. After having passed its peak in the seventies and early eighties, ethnic traffic
is now declining.

A near exclusive and intensive promotion of inclusive tour packages by the field
offices is likely to open up bright new horizons for PIA in the coming years. Promoting
tours on the domestic routes in the local market may prove to equally rewarding in
view of the growing awareness about the advantages of tourism among our
countrymen. Time had come for PIA to know that we can bring people of different
regions closer by promoting goodwill through travel and

tourism. Development of domestic tourism will go a long way to help raise the quality
and quality of necessary tourist infrastructure as well as the inflow of foreign tourists
to the country.

i) PIA tours promotion's role in country tourism

Pakistan International Airlines, being the flag carrier of the nation, has been forefront
in promoting tourism to and within Pakistan. The airline reflects Pakistanis hospitality
culture and progressiveness in the multifaceted activities. Its offices all over the world
are the first resort for a foreign nation or a tour operator to get to know more about
Pakistan

and how to travel there. The present management of PIA has placed major emphasis
on developing tourist traffic in PIA's total marketing strategy. This is an additional
source of traffic which holds great future potential.

PIA is aware that many Asian countries have given tourism top priority in their
development plans. The trends of world tourism also indicate PIA's decision about
gearing itself specially for tourist traffic.

ii) PIA tours section's set up & function.

In keeping with the importance of tourism, PIA management has assigned a corporate
manager to head the Airline's tours promotion section. Field offices of the section are
also being opened at various stations as a part of the overall marketing activity to
lookafter the tours promotion business Managers, to head the tours promotion section
have been appointed at
Lahore
Rawalpindi
Frankfurt

The sections main functions and activities can be categorized as;

1. Development of tourist traffic to abroad and within Pakistan
2. Development tourist traffic on PIA routes.
3. Assisting tourist groups in transit.
4. Development of tour packages alongwith applicable costs at a given time besides
production and supply of publicity material.
5. Organizing familiarization/educational trips to Pakistan for foreign tour
operators/travel writers etc.
6. Organizing festivals in prospective tourist generating countries.
7. Coordinating between tour operations, government agencies/PTDC/hotels and PIA
network of sales/handing units.
8. Training and briefing the field force on producing and marketing tour packages.

One of the foremost tasks undertaken by the section is the projection of Pakistan as
tourist destination. A careful survey revealed that the principle deterrent to the
growth of tourism in Pakistan was the high ground cost. However, the section has
succeeded inrationalization.

The ground package cost which is now a little lower than that in the neighbouring
countries.
3. CARGO DIVISION

Air cargo business is developing at a speed which is threatening to all other modes of
cargo movement e.g rail, road and sea. This is not to suggest that in near or even in
the distance future any of these cargo modes would be totally eliminated but the air
mode is definitely destined to unimagineable heights of growth in future. The primary
reason being speed a vital element of business

environment today and surely to be progressively a more important factor in the

international trade tomorrow.

Where as air cargo has now been an old time business in developing countries any
significant development in Pakistan was not felt until the late 50s a limited scale
commodity movement between the two wings of Pakistan east and west Pakistan,
was perhaps only cargo business activity. There was only one cargo agent until late
60s. a total of 5000 tons of cargo was booked at all airports in Pakistan in 1962 50%
of this volume of this cargo was carried on domestic routes. How ever as far as PIA is
concerned, major portion of cargo activity was still confined to domestic movement

The marketing in this section is done in a similar way as it is done in marketing of a

products or selling of tickets. In this case the product is (space). so we can say that
this division sells the space in the aircraft. The reservation of space is done in the
same way

as done in the case of booking of passenger accommodation on a particular flight

.those items are not booked which are declare as banned items by IATA.

The products are packed in pallets the capacity of one pallet is 2.5 tons and the
capacity of that container in which they are packed is 800 kg to 1 ton. These
containers are shifted to available cargo space on the air craft with the help of most
modern equipments. These are fixed by IATA and these rates vary from commodity to
commodity and product to product there are few exception for charging of freight
which are valuable like gold, diamonds and other precious items are charge 150%
above the normal rates plus some other charges dead bodies are charge on normal
charges.

PIA has an automatic system of shifting the pallets from one aircrafts to another one
and also from ground to aircraft. It has also truck services from air craft to the
destination.

By cargo PIA is earning 12 to 15% of revenue. It is also course of increasing exports

PIA has even been arranging meeting with foreign importers and Pakistani importers
in an attempt to promote export from the country.
The carriers can except strongly smelling goods like (hides, perfumes) provided there
packaging prevents the escape of annoying smells. The out side of each piece of
cargo must be free from any spoilage of the constants. The carrier can accept wet
cargo including cool goods wet fresh flowers and vegetable, soft fruits and other
goods which may leak or give of moisture provided the packing is leak prove.

The PIA management at its heights level sets a certain targets for cargo revenue. The
targets are fully discussed with cargo division's team and other professionals then the
target is accepted and practical steps are taken for their accomplishment. PIA has
achieve, maximum benefits from cargo division. Infect, if viewed in the international
and historical perspective the growth in air-cargo has outpaced passenger growth by
almost

double embassies. For instance, passenger growth in last few years has been
recorded between 2-3 percent whereas the growth in cargo department has been I
double figures.

The major items airlifted by PIA are carpets, handicrafts, surgical instruments, sports
goods, sheep-casing / skin, leather goods and textiles, particularly readymade
garments. During 1983 first time PIA freighters uplifted the frozen

caresses of 25000 sheep and goats, sacrificed at Minaa during Hajj and donated to
the Afghan refugees in Peshawar and Quetta by Saudi Arabia.

The airline has been carrying out market survey for Pakistani product abroad and
reporting its findings to Pakistan exporters. The exports are mainly to Europe, the Far
East, Gulf, Saudi Arabia and Africa.

Now PIA cargo division has computerized system and that modern equipment will tell
the cargo space situation on a certain flight or B747 every hour and at every
individual flight. This system will tell at which particular station PIA can pick up cargo
and at which place will bring PIA more revenue.

In PIA's early days, cargo was very much a sort of passenger appendage or an earned
bonus. It has since grown in sixtures and made its present felt. In the mid 80s. it is an
integral part of the air line operation and a major contribution to its revenue. Up until
the 1960`s there was only one cargo agent in the whole country and he mainly
handle the domestic cargo. But now there are large number of cargo agents in the
whole country and these agents handle the domestic cargo.
5. Sales development
Sale promotion is the main sub section of the sales section. One of the primary
function is to promote the sales and generate the revenue. The targets are assigned
to the spo's for this purpose and they are motivated to achieve those targets. Spo's
go to the fields, before

leaving they fill a form about their program and when they come back they fill the
called report. Every manager has his own way of working.

This section is headed by passenger sales manager and there are four sales assistant
managers all the SPO's have defined their agency and their report about the agency
to agency assistant sales managers. They cover all the 72 IATA and 30 non IATA
agencies under IATA group 9% official incentives or concession is approved for the
agency on international routes and 3% on domestic routes. Basically the incentive is
directed toward the wholesales. They give the incentives to the agency according to
their efficiency. It is only done at that time when agents give bulk business.
Management tries to give incentives on the bulk quantity because 83% of revenue is
generated by the traveling agencies.

It has a genuine reason i.e. PIA offices are in the particular area and agents are very
familiar with the environment and their offices are spread over the city and it helps
the passenger to go indirectly to the traveling agencies.

Assistant sales manager recruiting deals with the recruiting agencies. There is a very
close coordination between agencies and recruiting agencies. Both the cells have to
be alert. Assistant manager marketing deals with the proper feed back of the
passengers. The sales strategy is not possible with out proper feed back. Their job is
to maintain productivity, agencies record and also to maintain the statistical record.

Assistant manager for special projects deals with the irregular works or which are not
according to the rules.

6. TARIFF
Under this program different type of fares such as domestic international, one way
round trip, normal, special, seasonal, family fare students rebated fair, defense
personnel rebated fair etc., are made readily available and can be displayed by
putting a simple code

in to the system which display the desire and required air fare on the terminal this
fare used by PIA.

7. PAX SALES PLANNING

Pax sales and reservation comprise of two sections
1. Market planning
2. Sales planning

PIA has the network of the agents. All terms and conditions and policies regarding agents are
followed which are made by the IATA under all the rules and r

lations.

Passenger sales planning coordinates with the various division of the marketing. It is
the nerve center of the marketing department. In the air line view point the world is
the market. Then it is divided in to several sub division. This sales planning section is
very fundamental. The main purpose of this section is to increase the sales r ather then
to decrease. The joint effort are to turn the business in a good position. The aim is to patronize the
system in such a way that the sales should increase.

The main function of this department are as follow

1. Monitoring the station activity and maintaining a proper record in order to keep an
upto date profit.
2. Informing the station of various sales lead
3. Coordinating with various departments in related work of station and solving them
on day to day basis
4. Finding competitors activities in order to improve leads of they stations if and when
required.

In order to sort out monitoring this section have divided its department in to four
section and four assistant managers are responsible for different four areas. Two
officers work on load monitoring on daily basis.

MARKETING MIX OF PIAC

Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market. There are literally dozens of marketing mix tools.
McCarthy popularized fourfactor classification of these tools called the four P's:
product, price, place (i.e. distribution), and promotion.

In the following lines the 4 P's of PIAC are discussed:

PRODUCT
A product is anything that be offered to a market for alteration, acquisition, use, or
consumption that might satisfy a want or need. Most products we think of are
physical products, but it also includes services. PIAC is also providing services to the
nation, which can be categorized as follows:
- Seat Service (for passengers); and
- Space service (for Cargo).

A service is any act or performance that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. Services are
activities, benefits, or satisfactions that are offered for sale. Services are intangible,
inseparable, variable, and perishable. As a result, they normally require more quality
control, supplier credibility and adaptability.

The characteristics of the services provided by PIAC are depicted in following lines.

Intangibility
Services provided by PIA are intangible. Unlike physical product, they cannot be seen,
tested, felt, heard or smelled before they are bought. Therefore, the buyer cannot see
the result before the purchase. To reduce uncertainly, the buyers will look for signs
and

evidence of the service quality. They will draw interface about the quality of the
service from the place, people, equipment, communication material, symbols and
price that they will see.

Therefore, the PIA's task is to manage the evidence, to tangibles the intangible.

Inseparability
Services are typically produced and consumed at the same time. If the service is
rendered by a person, then the person is part of the service. Since the client is also
present as the service is being produced. Provided client interaction is a special
feature of services marketing. Both the provider and the client affect the service
outcome.

Variability
Services are highly variable, as they depend on who provides them and when and
where they are provided. Service buyers are aware of this high variability and
frequently talk to others before selecting a service provider.

Service firm can take two steps towards quality control. The first is investing in good
personnel selection and training. PIA spends substantial sums to train their
employees in providing good service.
The second step is monitoring customer satisfaction system, customer surveys, and
can be detected and corrected. Like any other government owned corporation, PIAC
also do not properly monitor customer satisfaction.

Perish ability
Services cannot be stored and they have no shself life. The perishability of services is
not a problem when demand is steady, because it is easy to staff the services in
advance. When demand fluctuates, service firms have difficult problems. For
example, PIA has to

apply much more equipment because of peakperiod demand on a specific route than
it would, if demand, was even throughout the year.

PIA use the following strategies for producing a better match between demand and
supply.

On the Demand Side

- Differential Pricing to shift some demand from peak to offpeak periods.
- Nonpeak demand can be cultivated.
- Reservation system is one way to manage the demand level, and PIA employ it
extensively.

On the Supply Side

- Peaktime efficiency routines are introduced. Employees perform only/essential tasks
during peak periods.
- Shared services are developed by interline agreements.

PRICE
A profit organization face the task of setting a price on their product/service. Price is
the amount of money that customers have to pay for product/service. It is one of the
most important elements determining organization's market share and profitability.
Price is the only element in marketing mix that produces revenue; the other elements
produce costs.

How are prices set? PIAC has to deal with pricing aspect in two types of situation.
1. Pricing of passenger tickets.
2. Pricing of Cargo Airway Bill.
For the two types of routes, domestic routes and international routes, different pricing
policies are used by PIA.

Domestic Routes
Prices for domestic routes are fixed by government of Pakistan for PIAC. The cost plus
method is used to set price at domestic level. The PIA's management estimates the
price by using following sixsteps procedure and sent to the government for final
approval:
1. Selecting the Pricing Objective.
2. Determining Demand
3. Estimating Costs
4. Analyzing competitor's prices & offer
5. Selecting a pricing method
6. Selecting the final price.

However, the fares of flight to the northern areas, like the Gilgit, Sakardu, Swat, etc.
are subsidized in order to encourage traffic.

International Routes
The prices for international routes are set by International Air Travel Association
(IATA). The IATA dose not allow any discount on any international route, however,
airlines provide discounts through their agent on some routes. Ticket shows the full
price for the route while airlines charge discounted fare by cutting their prescribed
share of profit.

However, PIA establishes the pricing strategies on different international routes

keeping in view the following points;
1. Demand for seat, greater demand tends to no discount.
2. Competitor's price.
3. Cost of operation.
4. Type of Aircraft used.

PROMOTION OF PIA
Overall Advertising Objectives of PIA
1. To reinforce PIA's image as a national airlines and as Pakistanis "travelling
ambassador".
2. To make the airline better known and appreciated.
3. To obtained public awareness that the company recognizes its economic and social
responsibility.
4. To receive recognition for the company's achievements and services.
5. To build goodwill.
6. To receive public recognition for the devotion to duty of its employees.

All corporate and institutional advertising is based on these objectives.

Domestic Promotion

International Advertising Limited, a 100% subsidiary of PIA established in 1966,

handles its total advertising requirements in Pakistan and caters to stations where
PIA's associate agencies cannot provide services.

The nature of mass media in Pakistan shows striking peculiarities which determines
media selection for PIA's advertising:
1. The number of publications exceed 900, whereas the literacy rate is barely 15%.
2. Selection of media is not based on the maximum advertising advantages above. It
is largely dictated by government controls and preferences.
3. Media research is about non existent. Therefore, assessment of leadership viewers
etc. is impossible.
4. The primary medium for PIA's advertising is Press.

5. Electronic media cannot be effectively used until the airlines service facilities
improve at par with other airlines.
PIA passengers travelling out of Pakistan's airport experience frustration and
annoyance at the lack of ground facilities. The objective of advertising by IAL for PIA
is to inform passengers about the extent of PIA's operations and the efforts to
modernize the facilities, some of which are not the responsibility of PIA.

While advertising for PIA in the domestic press, the International Advertising Limited
tries to bring certain facts into public notice, such as:

1. PIA is the biggest corporation in the country.

2. PIA operates 1540 flights a week throughout its network.
3. PIA has 60% of the air travel market in and out of Pakistan 22% more than the
international norm for national carrier.
4. PIA is the one public sector organization that not only meets all its foreign
exchange requirements but further contributes to national balance of payments.
5. PIA's domestic regularity compares favourably with the best American domestic
operators.
Passenger Oriented Campaign
Recently a passenger oriented

motivational

campaign for employee's attention towards the passenger's problem and advice them to adopt a more
sympathetic attitude. The campaign was based on the management s new line of thinking which is
THE PASSENGER IS THE MAN WHO PAYS OUR SALARIES; IF HE WAS NOT HERE WE WOULD
NOT BE HERE EITHER.

The campaign commenced in the letters from the Chairman, PIAC directed to individual employees'
summing up the airlines current position and emphasizing the need for further improvement in customer
services. This was followed up by a series of posters, monthly
calendars, scribing pads, ticklers in the form of postcards and folders. PIA monthly letter from the Director,
Customer Services mailed to each employee supported the campaign.

International Promotion
The international promotional work for PIA is entrusted in the hands of Ogilvy and Methase, an American
advertising company based in Singapore. The choice for this agency was made strictly on merit keeping into
consideration the fact that this agency has offices in all those regions where PIA operates their flights. The
two main strategies adopted by Ogilvy and Methase in consultation with PIA regarding advertising
campaign are:
1. Corporate advertising
2. Regional advertising
Corporate advertising talks of PIA as an experienced airline and this strategy is purely institutional in
nature. It lines to give certain facts about PIA and compares the corporation with other airlines and tries to
prove its comparative advantage. The regional advertising, however, caters to the needs and requirements of
particular areas and regions and would differ from region to region. Ogilvy and Methase advertise for PIA
in many well known magazines, newspapers and other publication, some important of which are:
1. Newsweek (Pacific & Atlantic Issue)
2. Times
3. Lions Express, Paris
4. Far Eastern Economic Review
5. Die, Spiegel, Frankfurt
6. New Yorker, America
7. Reader's Digest
8. Aisan Wall Street Journal

9. Air Trade
10. Travel Review, Bangkok
11. Trade News, Bangkok
12. Living, Bangkok

PLACEMENT/DISTRIBUTION
Marketing channels can be viewed as sets of independent organizations involved in the process of making a
product or service available for use or consumption.

A distribution system is a key resource. Normally it takes years to build, and it is not easily changed. It
represents a significant corporate commitment to large numbers of independent companies whose business
is distribution and to the particular markets they serve.
The PIAC has partially owned distribution system.

Levels of Channel
PIA uses the two levels of channels, which are described in the following paragraphs.

ZeroLevel Channel
(Also called a directmarketing channel). Here PIA sells the tickets directly to final users, through its ticket
counters.
In Lahore, PIA has ticket and booking office to sell tickets directly to the customers all such offices of PIA
are computerized and directly linked with the head office at Karachi.

OneLevel Channel
Here travel agents, as intermediaries, are involved in selling of tickets to the customers. Many travel agents
are provided with the auto ticketing and

reservation system. There are two types of travel agents, which are depicted below:

IATA Agencies
There are 30 IATA approved travel agencies which deals with PIA. These agencies can also be stocked and
sell the tickets of other airlines. Commission of these agents is as follows:
- International Sector = 9%
- Domestic Sector = 5%

District Sales Agents

These are the agents who exclusively deal with PIA's ticket and cannot deal in other airline's ticket.
Normally, these are located, where PIA does not have sales point.

However, there is one in Lahore. The commission provided to General Sales Agents is as follows:
- International Sector = 12%
- Domestic Sector = 5%

Functions of Finance Department

The duties of a typical finance department can be classified into two generic categories. The first category is
planning and the second function is controlling.
These activities are inter-related and inseparable because if there is no planning there will not be any
control. Therefore planning and control move together.

Planning refers to the activities which bridge the gape from the starting point to the terminal point. Planning
in the finance department under review refers to the activities of Cash Flow and Budget preparation.

PLANNING

Planning is fundamental to the management process, a process of sensitizing an organization to external

opportunities and threats, of determining the desirable and possible objectives, and of deploying the
resources to match the objectives. Without planning there is no basis for controlling as planning provides
the foundation upon which the control function operates. The planner should be able to visualize the
proposed pattern of activities individually and collectively, internally and externally.

Budgets

The budget is not only the most important plan of an enterprise, but also the basic link of accounting with
management. The use of budgets, particularly in connection with the control phase of management, has
been termed as "budgetary control". A company's organizational chart and its chart of accounts form the
basic framework on which to build a coordinated and efficient system of managerial planning and budgetary
control. The organization chart defines the functional responsibilities of executives and thereby justifies
their budgets. Although final responsibility for the budgets rests with executive management, all managers
are responsible for the preparation and execution of their departmental budgets. If a budgetary control
system is to be successful, these managers must fully cooperate and must understand their role in making
the budget system successful.

Budget precedes the cash flow or cash budget. Budgeting process is usually directed by a budget committee.
The budget committee review, decides, suggest and approve various policy matters and then all the work is
submitted to the Managing Director/ Chairman for the final consideration and approval. In performing these
functions, the budget committee becomes a management committee. It is a powerful forces in coordination
the various activities of the business and in controlling the operations.

Budget-Development and Implementation

The procedure used in developing a budget may be as important as its content and should include these
fundamental principles;

v Provides adequate guidance so that all management levels are working on the same assumptions, targeted
objectives, and agenda. All managers should understand the limitations and constraints of their participation
and the bounds of their decision making. Participants should be told, prior to the time.

v Encourage participation in the budgeting process at each level within the organization. Structure the
activity of developing the budget by involving the people who will be responsible for the implementation of
the budget and who will be rewarded accordingly to its accomplishments.

v Structure the climate of budget preparation to eliminate the anxiety and defensiveness. Individuals should
have the freedom and authority to influence and accept their own performance levels, and should assume
the responsibility for the accomplishment. Budget preparation should be oriented to the problems and
opportunities of the participants.

v Structure the preparation of the budget so that there is a reasonably high probability of successful
attainment of the objectives. When challenging the attainable objectives achievement, feeling of success,
confidence, and satisfaction are produced and aspiration levels are raised. A careful distinction should be
made between controllable factor for which individuals should be responsible and for uncontrollable factor
for which they are not.
Proper budget implementation requires adherence to the following principles:

Establish reward and reward contingencies that will lead to achieving the organizational objectives. Too
often, the budgeting process does not provide the sufficient rewards to induce employees to accomplish
organizational objectives.

The organization should focus on rewarding the achievement rather than punishing the failure. Feelings of
success and failure largely determine attitudes towards the budget and the level of performance to which
employees will aspire.

Provide rapid feedback on the performance of each work team or individual. This principle necessitates the
use of reports and reporting procedures that are understandable to workers and supervisors at the
department level, so that they can analyze their results and initiate corrective action.

Cash Flow or Cash Budget

Cash flow statement the actual inflow/ outflow of cash during a period generally of one year. I accounting
practice there are some transactions which do not involve cash like depreciation, are not taken into
consideration while preparing cash flow.

A cash budget or cash flow involves detailed estimates of anticipated cash receipts and disbursements for
the budget period or some other specific period. It has generally been recognized as an extremely useful
essential management tool. Planning and controlling cash is basic to good management. Even if a company
does not prepare extensive budgets for the sales and production. It should setup a budget or estimate of cash
receipts and disbursements as an aid to cash management.

Nature and purpose of cash budget

A cash budget of cash flow:

v Indicate the effect on the cash position of seasonal requirements large inventories, unusual receipts and
slowness in collecting account receivable.

v Indicate the cash requirements needed for a plant or equipment expansion program.

v Show the need for additional funds from sources such as bank loans/overdraft or sale of securities and the
time factors involved. In this connection, it might exert a cautionary influence on plans for plan expansion,
leading to a modification of capital expenditure decisions.

v Indicates the availability of cash for taking advantages of discounts.

v Assists in planning the financial requirements of bond retirements, income tax and payments to pension
and retirement.

v Shows the availability of excess funds for short-term or long term investments.
v Serves as a basic for evaluating the actual cash management performance of responsible individuals, using
measurement criteria such as the target average daily balance as compared with the actual average daily
balance in each cash account.

v Cash flow is followed by the Projected Profit and Loss Account which is also a part of the Profit planning
and estimated or projected profit/ loss can be examined. It summaries of sales, manufacturing and operating
expenses. It projects net income, the goal towards which all efforts are directed, and it offers management
the opportunity to judge the accuracy of the budget work and investigate causes for variances. No new
estimates are actually made; figures taken from various budgets are merely arranged in the form of an
income statement.

v The sales budget gives the expected sales revenue; the manufacturing budget furnishes manufacturing
costs and cost of goods sold which, when deducted from sales give the estimated gross profit. Estimates
from the marketing and administrative budgets are subtracted from the estimated gross profit to arrive at
income from operations. Finally provision for income tax is deducted to determine net income.
Purpose of cash flow

Total cash availability - inflow

Total cash availability - outflow

Cash required for FMR

Cash required for capital investment

Cash required for repairs

Cash required for short/ long term investment

Source for cash - short term and long term

CONTROLLING

This function of the finance department is carried out in the light of standards set in the planning stage. The
actual performance is compared with the preplanned objectives and standards, which lead to rectification of
any deviation and improvement suggestions which will assist in future planning.

Management control is the systematic effort by the business management to compare performance with
plans. The control function is of prime importance in the accomplishment of objectives. The need for
control increases with the size and complexity of the organization. Continuous supervision of an activity,
task or job is required to keep it within previously defined boundaries. These boundaries are termed as
budgets in the planning phase, are set up for manufacturing, marketing, finance and all other activities.
Actual results are measured against plans; and if significant differences are noted, remedial actions are
taken.

Generally in this phase the actual performance is derived from the preparation of the monthly Profit and
Loss Account and is compared with the projected profit and loss account in order to observe the actual
variance. When the variance is detected then it is analyzed to know the reasons/ causes resulted in the
variance. If these causes or reasons are controllable then corrective measures are taken to rectify it. The
difference is projected and actual performance (surplus or deficit) is taken to the next period and adjusted
accordingly.

Monthly Profit and Loss Account tool of control

Comparison of actual Vs projected or judicial figures which leads to variance.

Department of finance

Out of the nine divisions in the department Revenue Division is the most important division. Some of the
important divisions are described below in detail.

REVENUE DIVISION:

Airline sells space and services and these are measured in terms of money. The revenue In terms of money
is controlled by the revenue division. It is further subdivided into three sections:

a) Passenger (PAX) Revenue

b) Cargo Revenue
c) Interline Revenue
d) Pricing

For each type of revenue stream there is an independent unit. So Revenue Division is discussed in units:

a) PASSENGER (PAX) REVENUE:

1) Sales: revenue function starts from printing of tickets. Tickets of airline contain few coupons with a
jacket (bearing instruction on it). Tickets are sold at station and at agents' offices. Sales of tickets may be:

i. Direct sale or
ii. Indirect sale
Direct sales mean sales at stations of PIAC, whereas indirect Sales are by agents.

i. Direct sales

There are 46 locations for direct sales all over the network of PIA. Two types of ticketing are practiced i.e.
manual ticketing and auto ticketing. Manual ticketing involves procedures of pencil paper work on printed
tickets. Whereas auto ticketing involves advance system of computerized ticketing and on the spot
computerized ticket printing. Regarding direct sales following four documents are important:

a) Passenger Revenue/ Extra Baggage Carrier Ticket:

The ticket has four/ three coupons. First is audit coupon, second is issue coupon, third is the flight/ lift
coupon and fourth the revenue coupon. Flight coupons are arranged for one/ two or four sectors. Audit
coupon and flight are the most important coupons. Because flight coupon is the only coupon to be used
either for the lift or for refund / reissue / travel on non- PK carrier, etc. whereas audit coupons is meant for
PIA's revenue record. Audit coupons are sent to head office with sales statements from each station.
Accounting to entry is based on audit coupon.

b) Miscellaneous charges order (MCO):

These documents contain, audit issue office and exchange coupons. These are meant for exchange if for the
time being you don't want to block a seat.

c) Prepaid ticket advice (PTA):

This is for sponsoring the tickets of the relatives, friends, etc. from any other country/ destination. The
money paid by the person sponsoring the ticket in advance and after the checking of the documents of the
nominee of the sponsorer sponsoree is issued this ticket. The responsible stations communicate through
telexes.

TAX

In the fare charged from passenger following taxes are included:

a) Domestic:

1) Rs. 40 % sector to CAA (Airport Tax).

2) 10% of the central Exercise Duty to central government of Pakistan.
b) International

1) Economy class Rs. 200 Airport Tax

2) Club/ executive class Rs.300 Aviation Authority
3) 1st class Rs.300 (CAA)

c) Foreign Tax

Rs. 280 per ticket as foreign travel if ticket is issued in Pakistan.

AGENCY SALES

There are three types of agents selling tickets of PIA. IATA approved agents, general sales agents (GSAs)
and non-IATA agents. Agents are paid commission on domestic 5% and on international 9% and sometimes
paid 3% above the normal rates. Agents as well as stations are required to submit the sales statements.
These may be daily/ weekly/ monthly as the case may be.

Life unit:

This unit is further subdivided into lift control and life automation sub units. Domestic ticket is directly
treated as revenue but international tickets are treated as unearned revenue which is liability. Unearned
revenue is treated as earned when the passengers are actually lifted. Lift unit is concerned with checking of
flight tickets according to schedules of flights for the passengers actually lifted. Domestic tickets are treated
as revenue directly because experience tells that people on domestic routes rarely miss travel. But to
international due to non-completion of document people miss the flights and refunds occur unusually.
International flights are 20% to 30% over booked for covering the seats of passengers not traveling.

Domestic coupons are directly recorded in accounts by sales unit. But international tickets coupons are fed
in computer for matching of list with lifted passenger's record. No matter when the ticket was sold and
where it was sold. This unit gets all required documents from sales unit and that gets these from stations
concerned.

Refund unit:
Persons who do not report 72 hours before the flight the seat is automatically canceled. In case of
international tickets the unused tickets are fully refunded. Jacket covering the coupons of the ticket bears
instructions and procedure of cancellation charges with specified rates.

Accounting units:
Disks/ information received from all stations, sometimes enables this unit to monitor accounting and
prepare floppies and transmit them to main frame. In PIAC accounting is fully automated and
computerized. Few stations have on line systems too however manual work is not totally eliminated due to
non- availability of the on line systems at some stations.

b) CARGO REVENUE SECTION

Before going into details it will be helpful to look at the organization set up of this section.

Manager Cargo Revenue

Assistant Manager Sales Unit Assistant Manager Lift Unit

Accounts Officer
R-2 Accounts Officer
R-3 Accounts Officer
R-11 Accounts Officer
Mail Revenue Accounts Officer
Miscellaneous

In the hierarchy above R-2 stands for revenue generated by PIA's own counters where there is no
commission on sales, R-3 is concerned with FOB payments by consignee, in which commission factor is
involved. R-11 stands for a document regarding the agent's sales revenue and remittance report. Whereas
miscellaneous includes refunds, handling charges, etc.

Sales Unit
Sales may be of two types, sales on PIA's own counters and sales by agents. When cargo sales are made
airway bills are prepared by stations/ agents. Stations are responsible for reports to head office about airway
bills, both of agents and stations. Agent reports to stations and stations to H.O. cargo sales may be domestic
or international R-2 is statement regarding domestic cargo sales and international cargo sales for PIA
counters whereas R-11 is a statement for agent's cargo sales. R-3 is collection report. R's are returns are a
statement for agent's cargo sales. R-3 is collection report. R's are returns prepared by the stations and sent to
lift unit. Lift unit keeps the tracks of the cargo sales revenue and monitors the preparation and collection
made by the stations.

Lift units:

When cargo sales are made a liability is created until the cargo is actually lifted. From the statements and
airway bills from stations lift unit prepares original accounting entry. When sales are made entry passed is
books of accounts looks like:

Cash Rs. ______

Unearned cargo revenue Rs. ______
And when the cargo is actually lifted unearned revenue is converted from liability account to earned
revenue account a revenue account and entry like

Unearned cargo revenue Rs. _______

Revenue earned Rs. _______

This accounting is function of the unit under discussion. Different sources are also prepared by this unit to
feed the accounting data in main ledgers in main frame computer system.

Source 20 prepaid (PIA) airway bills

Source 21 PIA and other airlines airways bills
Source 23 other airlines payments and receipts of airway bills
Source 24 prepaid other airway bills

These sources are prepaid by the lift section and sent to DPC. This unit has been divided into two more cells
one is mail ad other miscellaneous.

Mail cell is concerned with revenues and accounting of the revenues from mail carried by PIA carriers.
Every year there was dealing and carrying of mail at national and international levels through with agencies.
Mail may be of following types:

Domestic mail
International mail

PIA is earning about Rs. 12 crore revenue yearly from all types of mails carried at national and international
levels. Instead of cargo airway bills this cell is concerned with mail way bills on the basis of which
accounting are done.

Miscellaneous revenue cell deals with return R-4 which consists of handling charges (credit and cash)
transactions and refunds etc. through cash clearance account and total advances account. Cash receipts and
invoices and disks along with lists are attached R-4. Data is arranged, checked and sent to DPC in a form to
be fed in computer system. Stations send return's summary on monthly basis to Head Office.

c) INTERNATIONAL REVENUE SECTION

All airlines render services and these are measured in terms of money. Revenue decision is responsible to
keep the tracks of all the revenue. Interline revenue has two aspects:

v Receivable when ticket is purchased by passenger from any other airline but lifted by PIA.
v Payable when tickets is purchased by passengers from PIA but are lifted by some other carrier.

These transactions are settled through IATA clearance house. IATA clearance house has its member airlines.
These airlines have their accounts with IATA. But non IATA member airlines are dealt according to the
standing agreements with them. As IATA regulates the airline industry in the world most of the settlements
are through IATA.

Sometimes revenue is divided according to sectors carried. These types of the settlements are on the basis of
mileage. This is called peroration. For settlement there are three currencies in which payments are receipts
are made:

European currency
US Dollar
Pound Sterling

d) PRICING

This section of the revenue division was established in 1975. It acts as regulating authority of the airline.

According to IATA rules approved fare written on the face of the tickets should be charged as that fare is
approved. But the airlines undercut their fare especially in other than the base country. This section
monitors these underground unethical violations of the IATA rules.

When other airlines undercut fares and PIA feels that it must also undercut, the station managers prepares
proposals about fare expected to be charged and sends these proposals to marketing department. Marketing
department analysis the proposals and approve them after comparing with last year's figures. Final approval
is made by the "director sales".

Functions of this section are to:

Monitor the sales and undercutting

Provide funds through secret accounts
Check whether the undercutting is made according to approval or not
Do accounting for this commission item
Make reconciliation of secret accounts, with undercutting and special incentive commission
Account with statements received from stations and GSAs.
IATA keeps regular check on undercut, collect evidences from people passengers, explore the records of
suspected stations and agents but still undercut is rapidly growing.

Financial Services Division

Payroll section:

Financial services division consists of three sections:

Payroll/ taxes section

Disbursement section: and
Other departmental finance sections

Here, we are concerned with payroll/ taxes section which is headed by manager. Payroll/ taxes section has
further been divided into two units:

Salary and taxes unit

Reimbursements and foreign salaries unit

a) Salary and taxes unit

Domestic salary and taxes to be deducted at source are the responsibility of this unit. Disbursements of the
salaries are made through banks this function is watched by unit under discussion. Attendance account of
each employee is dept by the computer system. Casual leaves, sick leaves, medical leaves, accident leaves,
and others are recorded in this account and if employee exceeds the extended limits of leave, the deductions
are made from the salary.

Allowances/ funds including house rent allowance, provident fund, medical allowance, qualification
allowance and others are calculated and deducted/ added. Payroll of each employee is calculated on the
basis of the previous months recorded. Salary preparation system is computerized and payments are made
by cheques through employee's bank accounts.

b) Reimbursement unit:

All expenses and payments made by the employees on behalf of the corporation are reimbursed and paid
back to them. Besides this travel,

entertainment
, taxi fare, car allowance, etc. are also paid to employees. Following are the sources for the recording all
information regarding on employees salary.
Source 50: sent by the manager employment contains basic information about employees.

Source 51: prepared by this section to make deduction from the salary.

Source 52: any single change in the salary. It is called salary structure change adjustment advice.

Source 53: for miscellaneous recoveries of loans and advances this source is not concerned with salary but
with loans and advances.

Source 54: master taps statistical data change advice.

Source 55: master tape amount adjustments/ change. Regarding salary/ loans refund.

Source 56: salary structure change adjustment advice for multiple changes on multiple dates in the salary
and its structure.

Source 57: attendance form.

Source 58: no more in use.

Source 59: termination advice.

Taxes:

Taxes are under control of the assistant manager salary and taxes, who is responsible to deduct tax at source
form taxable salaries of the employees according to current tax rates by the federal government.

Insurance and terminal benefits

The division is headed by a qualified GM. The division consists of:

I. Insurance
II. Terminal benefits

I. Insurance section

PIAC enters into contract with some insurance companies to insure its aircraft, passengers and baggage etc.
Insurance section purchases policies on behalf of the PIAC and claims compensations on behalf of PIAC
whenever loss occurs. Group insurance scheme is major scheme of the PIAC.

Premium of insurance is certain percentage of sum assured, paid by this section. Nowadays PIAC has about
20 policies. Cases come from different departments and sections and are sent by this section to insurance
companies. Negotiations are made for determination of amount of loss by this section. In case of heavy
insurance policies corporations insuring the sum get reinsurance from international market of insurance in
the world.

II. Terminal benefits section:

Employees of PIAC have some rights on PIAC after retirement/ termination/ resignation as the case may be.
This section is responsible to discharge those responsibilities of PIAC. Under the control of GM and
manager insurance and terminal benefits, an assistant manager is responsible for these benefits. Provident
fund is the major amount to be kept and paid data the time of termination to employees. An employee can
be separated by following ways from his/ her normal functions.

If he reaches his age of retirement

If he resigns, or
If he is terminated by PIAC administration on disciplinary grounds

Rules of gratuity and pension in all three cases are different. In case of pension, he will be paid pension
according to the salary section declaration and order. Provident fund both employees and employer's
contribution is paid to him along with gratuity.

In case of resignation, resignee gets only own contribution of provident fund and same is applicable to the
person who has been terminated on disciplinary grounds.

Organizational Chart
PIA Finance Department Lahore

Finance Manager Punjab

Assistant manager payments Assistant manager receipts

A. O. Disbursement A. O. Revenue

A. O. refund
A. O. Agency Sales

A. O. Payroll A. O. Document Control

A. O. Bank Reconciliation

A. O. Automation

A. O. = Accounts Officer
All PIA sales counters cash at Lahore is controlled by Accounts Officer Revenue.

Function of PIA Finance Department Lahore

Following are the main functions of finance department.

Arrange funds when required

As PIA is a commercial organization. It is very important to control the different types of sales and
purchase.

Different accounting reports help management in decision making.

Periodical accounting reports are helpful indicating the profitable routes.

As PIA is a commercial organization. Its main function is to carry passenger from one place to other place.
One country to another country. One continent to another continent. Cargo taking is second function of
PIAC. As the PIA business is a different type of business from a routine business. That is why its accounting
system is some what different and accounting reports are different from the routine reports.

As PIA is a very large organization and its business operates all over the world and its offices as well as
finance office are located all over the world that is why it difficult to cover or to elaborate whole of the
PIA's financial structure within the limit of my internship report that is why I am going to give the
accounting get up and account system in Lahore.
Graphical representation of facts and figures

Financial Analysis

THE COMPANY'S PERFORMANCE

TOOLS OF ANALYSIS

Ratio Analysis

Trend Analysis

Common Size Analysis

BALANCE SHEET AS AT DECEMBER 31, 2001

Note 2001 2000 2001 1999

Rupees in thousand (US$ in thousand)
Shareholders' Equity (Restated)
Share capital 3 3,884,618 3,884,618 64,744 3,884,618
Reserves 4 4,130,712 4,130,712 68,845 4,130,712
Accumulated loss (12,859,266) (11,078,273) (214,321) (5,779,450)
(4,843,936) (3,062,943) (80,732) 2,235,880

SURPLUS ON REVALUATION OF FIXED ASSETS 5 2,300,308 4,841,306 38,338 4,858,652

REDEEMABLE CAPITAL 6 4,863,330 2,371,575 81,056 3,461,242
LONG TERMS LOANS 7 268,739 391,353 4,479 504,270
OBLIGATION UNDER FINANCE LEASES 8 3,125,133 5,922 52,085 7,717
OBLIGATION UNDER HIRE PURCHASE 9 2,503,792 3,986,944 41,730 5,889,343
DEFERRED DEPOSITS & OTHER LIABILITY 10 2,557,211 2,621,706 42,620 2,161,511
LONG-TERM DEPOSITS AND OTHER LIABILITY 11 328,308 403,348 5,472 817,395

CURRENT LIABILITIES
Current maturities 12 2,604,337 4,827,785 43,406 4,262,621
Short-term loans 13 7,654,147 5,452,591 127,569 5,934,849
Creditors, accrued expenses and other liabilities 14 18,148,502 16,324,065 302,475 11,323,319
Provision for taxation-net advance tax 76,784 18,622 1,280 21,520,789
28,483,770 26,641,063 474,730
CONTINGENCIES & COMMITMENTS 15
39,586,655 38,200,274 659,778 41,456,799

FIXED ASSETS
Operating fixed assets 16 23,591,762 23,337,393 393,196 24,142,667
Capital work-in-progress 17 45,185 94,987 753 48,644
23,636,947 23,432,380 393,949 24.191,311

LONG-TERM INVESTMENTS 18 215,862 215,862 3,598 215,862

LONG-TERM ADVANCES 19 3,483,007 3,230,392 58,050 2,725,196
LONG TERM DEPOSITS AND OTHER RECEIVABLES 20 413,680 452,092 6,895 427,844
DEFERRED COSTS 21 494,077 972,516 8,235 1,447,386

CURRENT ASSETS
Stores and spares 22 3,669,636 3,575,666 61,161 3,807,939
Aircraft held for disposal 23 11,613 236,637 194 236,637
Short-term investments 24 27,023 27,023 450 3,198,436
Trade debts 25 3,053,980 3,285,609 50,900 3,681,749
Advances, deposits & prepayments 26 533,163 451,530 8,886 386,549
Other receivables 27 1,881,214 573,641 31,353 4,246
Cash and bank balances 28 2,166,453 1,746,926 36,107 1,133,644
11,343,082 9,897,032 189,051 12,449,200
39,586,655 38,200,274 659778 41,456,799

The annexed notes 1 to 39 form an integral part of these financial statements.

These financial statements were authorized for issue in the Board of Directors Meeting held on May 24,
2002.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2001

Note 2001 2000 2001 1999

Rupees in thousand (US$ in thousand)
(Restated)
REVENUE 29 43,608,371 39,227,700 726,806 35,491,988
COSTS AND EXPENDITURE 30 43,242,160 42,188,837 720,702 35,869,818
366,211 (2,961,137) 6,104 (377,830)
FINANCIAL CHARGES 31 (2,600,574) (2,437,162) (43,343) 2,332,357
OTHER PROVISIONS & ADJUSTMENTS 32 (206, 153) (616,550) (3,436) 847,195
OTHER INCOME 33 558,672 713,224 9,311 (2,104,448)
LOSS BEFORE TAXATION (1,881,844) (5,301,625) (31,364) 1,075,104)
TAXATION 34
Current (234,992) (232,416) (3,917) (305,930)
Prior (88,698) (56,907) (1,478) (13,250)
Deferred -- 280,000 -- (280,000)
(323,690) (9,323) (5,395) (599,180)

LOSS AFTER TAXATION (2,205534) (5,310,948) (36,759) (2,052,114)

ACCUMULATED LOSS BROUGHT FORWARD AS PREVIOUSLY REPORTED (10,922,604)
(5,779,450) (182,043)
Depreciation relating to prior period on reinstatement of grounded aircraft (155,669) -- (2,595) --
Accumulated loss brought forward as restated (11,078,273) (5,779,450) (184,683) (3,727,336)
Surplus on revaluation of fixed assets realized 35 424,541 12,125 7,076 --
Loss carried forward (12,859,266) (11,078,273) (214,321) (5,779,450)
Loss per share (Rs/ US$) 36 (5.91) (14.22) (0.10) (5.49)
RATIO ANALYSIS
BALANCE SHEET RATIOS
LIQUIDITY RATIOS
Liquidity ratios are used to measure a firm's ability to meet short term obligations. They compare short-term
obligations to short term current) resources available to meet these obligations from these ratios, much
insight can be obtained into the present cash solvency of the firm and the firm's ability to remain solvent in
the event of adversity.
CURRENT RATIO
Current assets divided by current liabilities. It shows a firm's ability to cover its current liabilities with its
current assets.
Standard For C.R 2:1
Assets liabilities

YEAR CALCULATION CURRENT RATIO

1999 12,449,200
21,520,789 0.58
2000 9,897,032
26,649,062 0.37
2001 11,343,082
28,483,770 0.40
INTERPRETATION
Comparing internally for three year PIA current ratio has gradually decreased from 1999 then there is
slightly increase in 2001. this improvement is considered nominal. So we can say that PIA is maintained its
bad liquidity position. This gradual decrease is due to gradual incurrent maturities, creditors accused
expenses and other liabilities. On the assets since there was a decrease in stores and spases from 1999 to
2000. then there is improvement in current assets. Overall, it present management deficiency and co'd less
ability to pay its current liabilities.
ACID-TEST (QUICK) RATIO
Current assets less inventories divided by current liabilities. It shows a firm's ability to meet current
liabilities with its most liquid (quick) assets.
Acid-test ratio = Current Assets inventories
Current Liabilities
Standard for Quick Ratio 1:1
Assets Liabilities

YEAR CALCULATION CURRENT RATIO

1999 12,315, 040
21,520,789 0.57
2000 9,821,872
26,641,062 0.37
2001 11,224,042
28,483,770 0.39

INTERPRETATION
This ratio serves as a supplement, to the current ratio is analyzing liquidity. This ratio concentrates primarily
on more liquid current assets cash, marketable securities and receivables in relation to current obligations.
PIA's acid test is gradually decreasing since 1999. and then there is little bit improvement in 2001. the
whole situation was a result of change in sale policy and RTD.

FINANCIAL LEVERAGE (DEBT) RATIOS

These ratios answered the question.
v How the firm has financed its assets (sources of finance in % age)?
v First question is answered by balance sheet leverage ratio.

DEBT-TO-EQUITY RATIO
Ratio that show the extent to which the firm is financed by debt
Debt-to-equity ratio = Total Debt
Shareholder's Equity

YEAR CALCULATION CURRENT RATIO

1999 39,220,919
2,235,880 17.54: (1)
2000 41,263,217
(3,062,943) 13.47: (1)
2001 44,430,591
4,843,936 9.17: (1)

INTERPRETATION
To assess the extent to which the firms is using borrowed money this ratio is used of capital (owner's
equity). It means that creditors are not providing more loans to the PIA because of losses and loss in
shareholder's equity. The ratio of external finance is consistently declining from 1999 to 2001.
DEBT-TO-TOTAL ASSETS RATIO
The debt-to-total assets ratio is derived by dividing a firm's total debt by its total assets.
Total debt
Total assets

YEAR CALCULATION CURRENT RATIO

1999 39,220,919
41,456,799 0.95
2000 41,263,217
38,200,274 1.08
2001 44,430,591
39,586,655 1.12
INTERPRETATION
This ratio highlights the relative importance of debt financing to the firm by showing the %age of the firm's
assets that are supported by debt finagling. Thus in 1999, 95% of the firms assets are financed with debt (of
various types). While the remaining 5% of the financing comes from shareholder's equity. And 2000 108%
from financed with debt and now 2001 112% financed with debt. It is due to continuous losses suffered by
the company and it is covering the loss through creditor's fund. Here the financial risk is very high and the
cushion of protection afforded the firms creditors are very large. It was not in the favor of the co.
LONG TERM CAPITALIZATION
Long term capitalization is derived by dividing a firm's total long term debt by its total capitalization.
Long Terms Debt
Total capitalization
Total capitalization

= Long term Debt and shareholder's Equity

YEAR CALCULATION CURRENT RATIO
1999 1,770,0136
19,936,010 0.89
2000 14,622,154
11,559,211 1.26
2001 15,946,821
11,102,885 1.44

INTERPRETATION
This ratio tells us the relative importance of long-term debt to the capital structure (long term financing of
the firm). Where total capitalization represents all long-term and shareholder's equity. The share of creditors
in long term financing is consistently increasing. The mimesis ligure of ratio is greater than one (1) because
the company is in the situation of coniferous losses.

INCOME STATEMENT AND INCOME STATEMENT / BALANCE SHEET RATIOS COVERAGE

RATIOS
Ratios that relate the financial charges of a firm to its ability to service, or cover tham.
One of the most traditional of the coverage ratios is the interest coverage ratio, or times interest earned.

INTEREST CHARGES RATIO

Earning before interest and taxes divided by interest charges. It indicates a firms ability to cover interest
charges.
Earning before interest and taxes (EBIT)
Interest expense

YEAR CALCULATION CURRENT RATIO

1999 (377,830)
2,332,357 (0.16)
2000 (2,961,137)
2,437,162 (1.21)
2001 366,211
2,600,574 0.14

INTERPRETATION
This ratio is designed to relate the financial charges of a firm to its ability to serve or cover them. This ratio
serves as one measure of the firm ability to meet its interest payment and thus avoid barlosupty. In general,
higher the ratio, greater the livelihood that the company could cover its interest payments without difficulty.
In 1999 the ratio is (0.16). it means that company has no sufficient income to meet its financial charges. It
has very alarming situation in 2000 with ratio (1.21). in 2001, there is little bit improvement to meet the
charges.
ACTIVITY (PERFORMANCE) RATIOS
These ratios, also known as efficiency or turnover ratios. How effectively the firm is using its assets. Some
aspects of activity analysis are closely related to liquidity analysis. Activity ratios primarily focus on how
effectively the firm is managing two specific assets groups. Receivables and inventories and its total assets,
in general. It includes three ratio giving below.
RECEIVABLES ACTIVITY
The receivable turnover (RT) ratio provides insight into the quality of the firm's receivables and how
successful the firm is in its corrections. This ratio is calculated by dividing receivable into annual credit
sales.
Receivables Turnover Ratio
= Annual not credit
Receivables
Receivable Turnover Days (RTD)
= Days in the year
Receivable Turnover

YEAR RTR RTD

1999 11.10 33 Days
2000 11.94 31 Days
2001 14.28 16 Days

INTERPRETATION
Receivable turnover ratio tells us the number of times accounts receivable have been turned over (turned
into cash) during the year. The higher the turnover, the shorter the time between the typical sale and cash
collection. Since 1999, there is greater fluctuation in this ratio. Upto 2001, it increased too much. This
change was due to reduction in receivables.

PAYABLE ACTIVITY
This ratio tells when firm wants to study its own prompted of payment to suppliers or that of potential credit
customer.
Payable Turnover Day (PTD)

= Days in the year

Payable turnover ratio

YEAR RTR P.T.D

1999 4.02 90 Days
2000 3.18 114 Days
2001 0.79 39 462 Days

INTERPRETATION
In 1999 the co payable ratio is very low. But it increased in 2000 & 2001. and its payable days are also
decreased.

INVENTORY ACTIVITY
Inventory turnover Ratio (I.T.O.R)

= Cost of Goods sold

Inventory

= Inventory Turnover days (ITD)

Days in the year

Inventory turnover ratio

YEAR I.T.O.R I.T.D

1999 8.87 41
2000 11.80 30
2001 11.75 31

INTERPRETATION
To determine how effectively the firm is managing inventory and an indication of the liquidity of inventory,
this ratio is computed PIA should a some fluctuation in inventory turnover from 1999 to 2000 it increased to
11.80 time but in 2001, it decreased this change was, basically, due to change in inventory turnover is
decreasing, which is a good sign for company.

Operating Cycle:
The length of time from the commitment of cash for purchases until the collection of receivables resulting
from the sale of goods or services.

Operating Cycle = Inventory Turnover Days

+ Receivable Turnover Days

Year 1999 2000 2001

Operating Cycle 74 61 57
Interpretation:
A direct result of both liquidity and efficiency ratios is the concept of firm's operating cycle. A firm's
operating cycle is the length of time from the commitment of cash for purchases until the collection of
receivables resulting from the sale of goods or services. As the length of operating cycle is an important
factor in determining a firm's current assets needs. PIA's operating cycle shows a fluctuation in 1999, it was
high but in 2000, it decreased. This change was due to decrease in receivables as well as in inventory level,
which resulted in low RTD and ITD. Although a short operating cycle is considered better for a firm but it
does not prove so in case of PIA.

PROFITABILITY RATIOS
Profitability ratios are of the types. These showing profitability in ratio to sales and those showing
profitability in sedation to investment. Together, these ratios indicate the firms overall effectiveness of
operation.

PROFITABILITY IN RELATION TO SALES

Gross profit (loss) margin
= Gross Profit (Loss) x 100
Net Sales

Net profit (Loss) Margin

= Net Profit (Loss) after taxes x 100

Net Sales

YEAR I.T.O.R I.T.D

1999 (1.06 %) (5.78%)
2000 (7.54%) (13.54%)
2001 (0.84%) (5.06%)

INTERPRETATION

Gross profit (Loss) margin ratio tells us the profit of the firms relative to sale, after defecting, the cost of
producing the goods. It is a measure of the efficiency of the firms operation, as well as indication of how
products are preced PIAs gross profit (loss) margin shows a fluxion but still it is in loss.
On 2001 the G.P is positive which shows the little bit improvement. The net profit (loss) margin is a
measure of the firm's profitability of sales after taking account of all expenses and income taxes. This ratio
shows the same fluctuation as in case of gross profit margin.
Here PIA is bear very high level of loss.
PROFITABILITY IN RELATION TO INVESTMENT
Return on investment (ROI)
= Net profit (Loss) after taxes x 100
Total Assets

Return on equity (ROE)

= Net profit (Loss) after taxes x 100

Shareholder's equity

YEAR I.T.O.R I.T.D

1999 (4.95 %) (91.78%)
2000 (13.9%) (13.39%)
2001 (5.57%) (45.53%)

INTERPRETATION

ROI reflects profitability on these assets. PIA is maintaining loss on assets. It does not go in its favor.
It presents a bad situation ROE us the earning shows very drastic and alarming situation about continuous
losses.

DU PONT ANALYSIS
ROI and the Du Pont approach
Earning power
= Sales profitability
x Assets Efficiency
ROI = Net Profit (loss) Margin
x total assets turnover

N.I after taxes

Net sales
x Net sales
Total assets
In 1999
ROI = (5.78) x 0.86 = (4.97)
In 2000
ROI = (13.54) x 1.30 = (13.94)
In 2001
Not = (5.06) x (1.10) = (5.56)

ROE and Du pont analysis

ROE = Net Total Equity
Profit x assists x multiplier
Margin turnover
Net Profit

= After taxes x Net sales x Total assets

Net sales Total Assets Shareholder's Equity

On 1999
ROE = (5.78) x 85.61. 18.54

In 2000

ROE = (14.96) x 102.69 x (12.47)

In 2001
ROE = (5.08) x (110.16) x (8.17)
Common size Analysis (Vertical Analysis)
INTERPRETATION:
Common size analysis express the various component of a balance sheet as % age's of the total assets of the
company. In addition, this can be done for the for the income statement, but here items are related to net
sales. The expression of individual financial statement items as %age of totals helps to spot trend with
respect to the relative importance of these items over time.
To illustrate, common size balance sheet income statement are shown alongside regular statement in table
above for PIA. The %age of owner's equity decreased from 1999 to 2001 that is due to heavy losses. In
2001, there is improvement in redeemable capital. Long term loans have declining trend. The huge amount
is financed by lease in 2001. current liabilities have increasing trend and decrease in long-term financing.
On the assets side, fixed assets and investments have almost same percentages. There is % age decrease in
differed cost which is an improvement.
BALANCE SHEET

1999 2000 2001

Shareholder's Equity
Share capital 9.37% 10.17% 9.81%
Reserves 9.96% 10.81% 10.43%
Accumulated losses (13.94%) (29.00%) (32.49%)
5.39% (8.02%) (12.24%)
Surplus on revaluation of fixed assets 11.72% 12.67% 5.81%
Redeemable capital 8.35% 6.21% 12.29%
Long term loans 1.22% 1.02% 0.68%
Obligation under Finance lease 0.02% 0.02% 7.89%
Obligation under higher purchase 14.21% 10.44% 6.32%
Deffered liabilities 5.21% 6.86% 6.46%
Long term deposits and other liabilities 1.97% 1.06% 0.83%
Current liabilities
Current maturities 10.28% 1.28% 6.58%
Short term loans 14.32% 2.64% 19.34%
Creditors accrued esp.& other liab. 27.31% 42.78% 45.85%
Provision for taxation net of adv. Tax 0.05% 0.19%
51.91% 69.74% 71.95%
Contingencies comments 100% 100% 100%
zFixed Assets
Operating Fixed Assets 58.24% 61.09% 59.60%
Capital W.I.P. 0.12% 0/25% 0.11%
58.35% 61.34% 59.71%
Long term 0.52% 0.57% 0.55%
Long term advances 6.57% 8.46% 8.80%
Long terms deposit and other receivable 1.03% 1.18% 1.04%
Deffered cost 3.49% 2.55% 1.25%
Current assets
Stores and spares 9.19% 9.36% 9.27%
Aircraft held for disposal 0.57% 0.62% 0.03%
Short term 7.72% 8.3% 7.71%
Trade debts 8.38% 8.60% 7.79%
Advances deposits and prepayments 0.93% 1.18% 1.35%
Other receivable 0.01% 1.50% 4.75%
Cash and balance 0.03% 4.57% 5.47%
30.03% 25.91% 28.65%
100% 100%` 100%

INCOME STATEMENT:

1999 2000 2001

Revenue 100% 100% 100%
Cost and expenditure (43.81%) 144.34% 99.16%
(9.6%) 10.13% 0.34%
Financial charges 8.34% 8.34% 5.96%
Other provision 2.11% 2.11% 0.47%
Other income (2.44%) (2.44%) 1.28%
Loss before taxation (17.61)% 18.14% 4.32%
Taxation
Current (0.80%) 0.80% 0.54%
Prior (0.19%) (0.19%) 0.20%
Deffered 0.96% 0.96% --
(0.03%) (0.03%) (0.74%)
Loss after taxation (17.64%) (18.17%) (5.06%)

In current assets the air craft for disposal has decreased in 2001. there is improvement in advances, deposits,
prepayments, cash balance and other receivables.
In income statement there is significant decrease in expenditure from 2000 to 2001. there is also decline in
financial charges and other provisions from 2000 to 2001. the amount of loss carried forward in reduced
from 2000 to 2001.
INDEX ANALYSIS (HORIZONTAL ANALYSIS)
INTERPRETATION:
In index analysis in balance sheet at the side of owner's equity the share capital and reserves are some in 3
years loss are increased in huge amount in 2000 and some loss decline in 2001 surplus. On revaluation of
fixed assets suddenly decreased in 2001. in 2000 redeemable capital decreased and highly increased in
2001. in 2000 long terms loans decreased in 2001= it increased. The cause of the losses in 2000 long term
deposits other liabilities decreased after all in 2001 it improved. In current liabilities side in 2000= current
maturities increase and in 2001 it decreased.
In asset side in 2000 capital work in progress is highly increased and in 2001 suddenly highly decreased.
Long term investment is the same in three years long term advances, long term deposits and other
receivables increased in 2000 and decrease in 2001. deffred cost is also decreased. At
BALANCE SHEET

1999 2000 2001

Shareholder's Equity
Share capital 100% 100% 100%
Reserves 100% 100% 100%
Accumulated losses (100%) (191.68%) (116.08%)
(100%) 136.99% 158.15%
Surplus on revaluation of fixed assets 100% 99.64% 47.51%
Redeemable capital 100% 68.52% 205.07%
Long term loans 100% 72.94% 52.58%
Obligation under Finance lease 100% 67.70% 62.80%
Obligation under higher purchase 100% 121.29% 97.54%
Deffered liabilities 100%
Long term deposits and other liabilities 100% 49.35% 81.40%
Current liabilities
Current maturities 100% 113.21% 53.94%
Short term loans 100% 91.87% 140.38%
Creditors 100% 144.82% 111.05%
Provision for taxation net of advance tax 100% -- 24.25%
100% 123.79% 106.92%
Contingencies comments 100% 92.14% 103.63%
Fixed Assets
Operating Fixed Assets 100% 96.66% 109.66%
Capital W.I.P. 100% 195.27% 47.57%
100% 96.86% 100.87%
Long term 100% 100% 100%
Long term advances 100% 118.54% 107.82%
Long terms 100% 10567% 91.50%
Deffered cost 100% 67.19% 50.80%
Current assets
Stores and spares 100% 93.90% 102.63%
Aircraft held for disposal 100% 100% 4.91%
Short term 100% 636.43% 100%
Trade debts 100% 102.72% 92.95%
Advances 100% 12.20% 118.08%
Other receivable 100% 148.40% 327.94%
Cash and balance 100% 154.10% 124.02%
100% 79.50% 114.61%
100% 92.14% 103.63%

INCOME STATEMENT
1999 2000 2001
Revenue 100% 110% 111.17%
Cost and expenditure 100% 117.18% 102.50%
100% 742.52% 12.37%
Financial cheeses 100% 104.49% 106.71%
Other provision 100% (72.78%) (33.44%)
Other income 100% (33.89%) (78.33%)
Loss before taxation 100% (354.18%) 35.50%
Taxation
Current 100% 75.97% 101.11%
Prior 100% (429.49%) 155.86%
Deffered 100% 100% --
100% (1.56%) (347.95%)
Loss after taxation 100% (251.22%) (41.53%)

The side of current assets short term investment is suddenly increased. Other receivable, cash to bank
balance is also increased.
Income statement side revenue, cost to expenditure increased in 2000 and 2001. In 2000 G.P suddenly
increased but in 2001 decreased other provisions, adjustments to other income are also decreased. Taxation
is also increased. At last net loss in increased.
TREND ANALYSIS

1999 2000 2001

Liquidity
Current ratio 0.58 0.37 0.40
Acid test ratio 057 0.37 0.39
Leverage
Debt-to-equity ratio 17.54:1 13.47:(1) 9.17: (1)
Total debt to assets ratio 0.95 1.08 1.12
Long term capitalization 0.89 1.26 1.44
Overage
Interest coverage ratio (0.16) (1.21) (0.14)
Activity
Average collection period 33 Days 31 Days 26 days
Inventory turnover in dap 41 30 31
Total assets turnover 0.86 1.03 1.10
Profitability
Gross profit margin (1.06%) (7.54%) (0.84%)
Net profit margin (5.78%) (13.54%) (5.06%)
Return on investment (4.95%) (13.9%) (5.57%)
Return on equity (91.78%) (173.39%) (45.53%)
OVERALL ANALYSIS
Comparing internally for the three year we can say that PIA is maintained its bad liquid position. PIA's acid-
test ratio is gradually decreasing. In the financial side creditors are not providing more loans to the PIA
because of losses and loss in shareholder's equity. And the financial ratio is very high and the cushion of
protection afforded the firm's creditors are very large. In long term capitalization the numeric figure of ratio
is greater than one. Because the company is in the situation of continuous losses. In the case of losses
company has no sufficient charges. The company's activity position is little bit good. In the profit side PIA
is bear very high level of loss. PIA is intimating loss on assets. It does not go in as favor. It present a bad
situation.
SIX YEAR SUMMARY

2001 2000 1999 *1998 1997 1996

OPERATION
Route kilometers 265,643 317,213 332,417 359,608 336,230 310,205
Revenue kilometers flown (000) 70,958 76,212 75,483 109,403 78,796 74,288
Revenue Hours Flow 121,860 134,066 135,136 199,699 143,686 138,014
Available Tonne Kilometers (000) 2,540,547 2,631,392 2,559,740 3,694655 2,648,842 2,525,900
Available Seat Kilometers (000) 17,755,558 18,691,763 17,839,306 24,682,856 17,528,336 16,572,919
TRAFFIC
Revenue passengers Carried (000) 4,877 5,297 4,914 8,102 5,883 5,399
Revenue pasenagers KM (000) 11,652,295 12,055,619 10,653,462 16,470,037 11,660,447 10,592,399
Passenger Load Factor 65.6% 64.5% 59.7% 66.7% 66.5% 63.9%
Revenue Freight Tonne Kilometers (000) 371,304 340,384 327,330 574,318 425,758 430,027
Kgs. Of Excess Baggage & Cargo (000) 111,526 107,798 101,017 171,878 121,209 121,151
Kgs. Of Mail (000) 1,914 1,930 1,460 2,212 1,602 1,709
Revenue Tonne KM (000) 1,438,303 1,452,094 1,306,518 2,084,938 1,494,808 1,402,311
Revenue Load Factor 56.6% 55.2% 51,0% 56.4% 56.4% 55.6%
Avg. Pax Stage Distance (Statute KM) 2,389 2,276 2,168 2,033 1,982 1,962
FINANCIAL
Operating revenue (Rs. in million). 43,608,37 39,227.70 35,491.99 52,308.14 32,732.16 27,504.68
Operating Expenses(Rs. in million). 43,242,16 42,033.17 36,394.65 48,453.69 32,809.05 27,150.39
Operating Profit (loss) (Rs. in million). 366,21 (2,805.47) (902.67) 3,854.45 76.89 354.29
Profit (loss) after Tax (Rs. in million). (2,205.53) (5,155.28) (2,052.11) 2,159.19 4,794.96 65.17
Fixed assets (Rs. in million). 23,205.53) (23,155.28) 24,191.31 25,158.80 26,710.28 20,0,35.07
Current assets (Rs. in million). 11,343,08 9,969.13 12,469.91 11,590.70 7,002.58 7629.41
Current liabilities (Rs. in million). 28,483.77 26,724.43 20,614.48 18,353.96 12,165.40 9286.71
Long term debts (Rs. in million). 10,760,99 6,755.79 9,854.86 9,478.42 13,223.29 1,1077.12
Net Worth (Rs. in million). (4,843.94) (2,907.27) 2,235.88 6,047.30 3,888.10 8683.07
Jet Fuel Prices (Rs. per US Gallon ). 51.88 50.94 29.06 26.69 30.93 24.35
Cost Per A.T.K. (Rs). 17.02 15.97 14.22 13.11 12.38 10.75
RATIOS .
Earnings per Share (5.91) (13.80) (5.49) 5.78 (12.84) 0.17
Net Assets per share 29.73 31.14 55.80 61.35 65.53 54.12
Debt Equity Ratio (5.00) 6.00 2.00 1.33 3.10 1.45
Current Ratio 0.40 0.40 0.60 0.60 0.57 0.82
Share prices (Rs. 10 shares).
High 7.50 13.15 18.25 8.35 15.50 11.25
Low 2.45 5.00 3.50 3.00 6.45 7.75
Closing 2.85 5.00 8.60 3.85 9.00 7.75
PERSONNEL
Average No. of Employees 17.170 17,663 17,854 18,946 21,671 21,181
Revenue per Employee (Rs). 2,539,800 2,220.897 1,987,901 2,760,907 1,510,413 12,985,54
A.T.K. per Employee 147,964 148,978 143,371 195,010 122,230 119,253

*1998 figures are for July 97-Dec 98 period (18 months).

RATIO ANALYSIS
As a comparison of half years ending June 2001 and June 2002

BALANCE SHEET RATIOS

LIQUIDITY RATIOS
Liquidity ratios are used to measure a firm's ability to meet short term obligations. They compare short-term
obligations to short term (current) resources available to meet these obligations from these ratios; much
insight can be obtained into the present cash solvency of the firm and the firm's ability to remain solvent in
the event of adversity.
CURRENT RATIO
Current assets divided by current liabilities. It shows a firm's ability to cover its current liabilities with its
current assets.
Standard For C.R 2:1

YEAR CALCULATION CURRENT RATIO

December 2001 11,343,082
28,483,770 0.40
June 2002 11,176,434
27,036,987 0.41

INTERPRETATION
Comparing internally for half year PIA current ratio has gradually increased slightly in 2002, this
improvement is considered nominal. So we can say that PIA has maintained its bad liquidity position. This
bad position is due to current maturities, creditors, accrued expenses and other liabilities however current
liabilities have decreased now. On the assets side since there was a decrease in cash in 2002 then there is
slight improvement in stores and spares and in investment. Overall, it presents management deficiency and
less ability to pay its current liabilities.
ACID-TEST (QUICK) RATIO
Current assets less inventories divided by current liabilities. It shows a firm's ability to meet current
liabilities with its most liquid (quick) assets.
Acid-test ratio = Current Assets inventories
Current Liabilities
Standard for Quick Ratio 1:1
Assets Liabilities

YEAR CALCULATION CURRENT RATIO

June 2002 7,325,095
27,036,987 0.27
December 2001 7,673,446
28,483,770 0.27

INTERPRETATION
This ratio serves as a supplement, to the current ratio in analyzing liquidity. This ratio concentrates
primarily on more liquid current assets cash, marketable securities and receivables in relation to current
obligations. PIA's acid test was gradually decreasing since 1999, now it is same on June 2002 as it was on
December 2001 the whole situation was a result of change in sale policy and RTD.

FINANCIAL LEVERAGE (DEBT) RATIOS

These ratios answered the question.
v How the firm has financed its assets (sources of finance in % age)?
v First question is answered by balance sheet leverage ratio.

DEBT-TO-EQUITY RATIO
Ratio that show the extent to which the firm is financed by debt

Debt-to-equity ratio = Total Debt

Shareholder's Equity

YEAR CALCULATION CURRENT RATIO

June 2002 42,314,945
(4,190,606) 10.10: (1)
December 2001 44,430,591
(4,843,936) 9.17: (1)
INTERPRETATION
To assess the extent to which the firms is using borrowed money this ratio is used of capital (owner's
equity). It means that creditors are not providing more loans to the PIA because of losses and loss in
shareholder's equity. The ratio is still bad but because of the profit in this half year negative equity is
reducing and liabilities have also reduced because of the reduction in obligation under finance lease and hire
purchase.

DEBT-TO-TOTAL ASSETS RATIO

Total debt
Total assets

YEAR CALCULATION CURRENT RATIO

June 2002 42,314,945
38,124,339 111%
December 2001 44,430,591
39,586,655 112%

INTERPRETATION
This ratio highlights the relative importance of debt financing to the firm by showing the %age of the firm's
assets that are supported by debt financing. Thus in 2001 debt is 112% of the assets this position is
improving in 2002 and now percentage is 111% , but still it is very bad. It is due to continuous losses
suffered by the company and it is covering the loss through creditor's fund. Here the financial risk is very
high and the cushion of protection afforded by the creditors is very large. It is not in the favor of the
company.

LONG TERM CAPITALIZATION

Long-term capitalization is derived by dividing a firm's total long term debt by its total capitalization.
Long Terms Debt
Total capitalization
Total capitalization = Long term Debt and shareholder's Equity

YEAR CALCULATION CURRENT RATIO

2002 15,277,958
11,087,352 1.38
2001 15,946,821
11,102,885 1.44

INTERPRETATION
This ratio tells us the relative importance of long-term debt to the capital structure (long term financing of
the firm). Where total capitalization represents all long-term and shareholder's equity. The share of creditors
in long term financing was consistently increasing but in this half year it is increasing but still now it is not
so good. The figure of ratio is greater than one (1) because the company is in the situation of excessive
accumulated losses and heavy burden of debt.

INCOME STATEMENT AND INCOME STATEMENT / BALANCE SHEET RATIOS COVERAGE

RATIOS
Ratios that relate the financial charges of a firm to its ability to service or cover them.
One of the most traditional of the coverage ratios is the interest coverage ratio, or times interest earned ratio.

INTEREST CHARGES COVERAGE RATIO

Earning before interest and taxes divided by interest charges. It indicates a firms ability to cover interest
charges.

Earning before interest and taxes (EBIT)

Interest expense

YEAR CALCULATION CURRENT RATIO

June 2002 1,671,329
1,118,360 1.49
June 2001 (1,064,668)
1,220,004 (0.87)

INTERPRETATION
This ratio is designed to relate the financial charges of a firm to its ability to serve or cover them. This ratio
serves as one measure of the firm ability to meet its interest payment. In general, higher the ratio the greater
the likelihood that the company could cover its interest payments without difficulty. In 2001 the ratio (0.87).
it means that company had no sufficient income to meet its financial charges. It had very alarming situation
in 2001 but there is good improvement in 2002 that now the company can meet the financial charges.

ACTIVITY (PERFORMANCE) RATIOS

These ratios are also known as efficiency or turnover ratios. How effectively the firm is using its assets.
Some aspects of activity analysis are closely related to liquidity analysis. Activity ratios primarily focus on
how effectively the firm is managing two specific assets groups that are receivables, inventories and its total
assets, in general. It includes three ratios giving below.

RECEIVABLES ACTIVITY
The receivable turnover (RT) ratio provides insight into the quality of the firm's receivables and how
successful the firm is in its corrections. This ratio is calculated by dividing receivable into annual credit
sales.
Receivables Turnover Ratio = Credit sales
receivables
Receivable Turnover Days (RTD)
= Days in the year
Receivable Turnover ratio
YEAR RTR RTD
June 2002 21,202,454 =6.79
3,123,011 27 Days
June 2001 21,966,254 =7.19
3,053,980 25 Days

INTERPRETATION
Receivable turnover ratio tells us the number of times accounts receivable have been turned over (turned
into cash) during the year. Higher the turnover the shorter the time between typical sale and cash collection.
In 2002 it decreased 0.4 point. This change was due to increase in receivables.

PAYABLE ACTIVITY
This ratio tells when firm wants to study its own promptness of payment to suppliers or that of potential
credit customer.

Payable Turnover Ratio = Credit purchases

Creditors
Payable Turnover Day (PTD)

= Days in the year

Payable turnover ratio

YEAR RTR P.T.D

June 2002 19,431,925 =1.04
18,723,098 173 Days
June 2001 23,296,710 =1.28
18,148,502 140 Days

INTERPRETATION
In 2002 payable ratio improved and its payable days have decreased.
INVENTORY ACTIVITY
Inventory turnover Ratio (I.T.O.R)
= Cost of Goods sold
Inventory

Inventory Turnover days (ITD)

= Days in the year

Inventory turnover ratio
YEAR I.T.O.R I.T.D
June 2002 19,431,925 =5.05
3,851,339 36 days
June 2001 23,296,710 =6.35
3,669,636 28 days

INTERPRETATION
To determine how effectively the firm is managing inventory and an indication is the liquidity of inventory,
this ratio is computed for PIA. It showed some fluctuation in inventory turnover from 2001 to 2002 it
decreased by 1.30 point in 2002, which is mainly due to decrease in costs.
Operating Cycle:
The length of time from the commitment of cash for purchases until the collection of receivables, resulting
from the sale of goods or services
Operating Cycle = Inventory Turnover Days
+ Receivable Turnover Days

Year June 2002 June 2001

Operating Cycle 27+36=63 25+28=53

INTERPRETATION:
A direct result of both liquidity and efficiency ratios is the concept of firm's operating cycle. A firm's
operating cycle is the length of time from the commitment of cash for purchases until the collection of
receivables resulting from the sale of goods or services. As the length of operating cycle is an important
factor in determining a firm's current assets needs. PIA's operating cycle shows a fluctuation, it increased by
10 days. Short operating cycle is considered better for a firm.

PROFITABILITY RATIOS
Profitability ratios are of the types, showing profitability in ratio of sales and those showing profitability in
sedation to investment. Together, these ratios indicate the firms overall effectiveness of operation.

PROFITABILITY IN RELATION TO SALES

Gross profit (loss) margin
= Gross Profit (Loss) x 100
Net Sales

Net profit (Loss) Margin

= Net Profit (Loss) after taxes x 100

Net Sales
YEAR G.P.Ratio N.P.Ratio
June 2002 1,770,529 *100 =8.35%
21,202,454 446,957 *100=2.11%
21,202,454
June 2001 (1,330,456) *100=(6.06)%
21,966,254 (2,394,503) *100=(10.9)%
21,966,254

INTERPRETATION
Gross profit (Loss) margin ratio tells us the profit of the firms relative to sale, after defecting, the cost of
producing the goods. It is a measure of the efficiency of the firm's operation. PIA's gross profit (loss)
margin shows a fluxion but now it is in profit.

In 2002 the G.P is positive which shows the very good improvement after many years. The net profit (loss)
margin is a measure of the firm's profitability of sales after taking account of all expenses and income taxes.
This ratio shows the same fluctuation as in case of gross profit margin, though it is not too much but any
how it is very good performance.
PROFITABILITY IN RELATION TO INVESTMENT
Return on investment (ROI)

= Net profit (Loss) after taxes x 100

Total Assets

Return on equity (ROE)

= Net profit (Loss) after taxes x 100

Shareholder's equity

YEAR R.O.I. R.O.E.

June 2002 446,957 *100=1.17%
38,124,339 446,957*100=10.67%
(4,190,606)
June 2001 (2,394,503)*100=(6.05)%
39,586,655 (2,394,503)*100=(49.43)%
(4,843,936)

INTERPRETATION
ROI reflects profitability on these assets. PIA was maintaining loss on assets. It did not go in its favor;
during current year due to positive profit ROI is positive and improving.
PIA was presenting a bad situation in ROE on account of heavy losses which made its equity negative
though equity is still negative but now position is improving on account of profit.

DU PORT ANALYSIS
RETURN ON ASSETS = NET PROFIT MARGIN X ASSETS TURNOVER
Net profit after tax = Net profit after tax X sales
Total assets sales total assets

June 2002 446,957 =0.0117

38,124,339 446,957 X 21,202,454 =.021X.556 =0.0117
21,202,454 38,124,339
June 2001 (2,394,503) =(0.0605)
39,586,655 (2,394,503) X 21,966,254 =.109X.555 =0.0605
21,966,254 39,586,655

Common size Analysis (Vertical Analysis)

Common size analysis express the various component of a balance sheet as % age's of the total assets of the
company. In addition, this can be done for income statement, but here items are related to net sales. The
expression of individual financial statement items as %age of totals helps to spot trend with respect to the
relative importance of these items over time.

BALANCE SHEET

June 2002 December 2001

Shareholder's Equity
Share capital 10.19% 9.81%
Reserves 10.83% 10.43%
Unrealized loss on measurement of investments (0.47)%
Accumulated losses (31.55)% (32.49%)
(10.99)% (12.24%)
Advance against equity 1.31%
Surplus on revaluation of fixed assets 6.03% 5.81%
Redeemable capital 12.76% 12.29%
Long term loans 0.53% 0.68%
Obligation under Finance lease 7.472% 7.89%
Obligation under higher purchase 3.89% 6.32%
Deffered liabilities 7.22% 6.46%
Long term deposits and other liabilities 0.87% 0.83%
Current liabilities
Current maturities 7.16% 6.58%
Short term loans 14 .64% 19.34%
Creditors accrued esp.& other liab. 49.11% 45.85%
Provision for taxation net of adv. Tax 0.01% 0.19%
70.92% 71.95%
TOTAL 100% 100%
zFixed Assets
Operating Fixed Assets 58.79% 59.60%
Capital W.I.P. 0.07% 0.11%
58.86% 59.71%
Investments 0.92% 0.55%
Long term advances 9.38% 8.80%
Long terms deposit and other receivable 0.86% 1.04%
Deffered cost 0.67% 1.25%
Current assets
Stores and spares 10.10% 9.27%
Aircraft held for disposal 0.03% 0.03%
Short term investments 0.46% 0.07%
Trade debts 8.19% 7.79%
Advances deposits and prepayments 2.20% 1.35%
Other receivable 3.92% 4.75%
Cash and balance 4.42 % 5.47%
29.32% 28.65%
TOTAL 100%` 100%

INTERPRETATION:
Common size balance sheet is shown in table above for PIA. The %age of owner's equity increased from
2001 to 2002 it is still negative but has improved by 1.25 %age points that is due to current period profit.
Long term loans have declining trend. The huge amount was financed by lease in 2001 now it is decreasing.
Current liabilities are decreasing that is due to repayment of short term loans .
On the assets side, fixed assets and investments have almost same percentages. There is % age decrease in
differed cost, which is an improvement.There is improvement in advances, deposits, prepayments and other
receivables.
INCOME STATEMENT:

June 2001 June 2002

Revenue 100% 100%
Cost and expenditure 106.06% 91.65%
G.P. (6.06)% 8.35%
Financial charges (5.55)% (5.28)%
Other provision (0.46)% (0.75)%
Other income 1.67% 0.28%
Profit/(loss)before taxation (10.40)% 2.61%
Taxation (0.50)% (0.50)%
Profit/(loss)after taxation (10.90)% 2.11%

INTERPRETATION:
In income statement there is significant decrease in expenditure from 2001 to 2002. There is also decline in
financial charges. There is net profit in current half year of 2.11% as compared to the loss of 10.90% of
respective half of last year.

INDEX ANALYSIS (HORIZONTAL ANALYSIS)

In Horizontal Analysis we measure %age increase or decrease in each item of balance sheet and profit and
loss statement with respect to the base(previous) period.

BALANCE SHEET

December 2001 June 2002

Shareholder's Equity
Share capital 100% 100%
Reserves 100% 100%
Unrealized loss on measurement of
Investment 0% (100)%
Accumulated losses (100%) (93.54%)
(100%) (86.51)%
Advance against equity 0% 100%
Surplus on revaluation of fixed assets 100% 100%
Redeemable capital 100% 100%
Long term loans 100% 75.19%
Obligation under Finance lease 100% 91.14%
Obligation under higher purchase 100% 59.21%
Deffered liabilities 100% 107.59%
Long term deposits and other liabilities 100% 100.59%
Current liabilities
Current maturities 100% 104.81%
Short term loans 100% 72.91%
Creditors 100% 103.17%
Provision for taxation net of advance tax 100% 5.01%
100% 123.79%
TOTAL 100% 96.31%
Fixed Assets
Operating Fixed Assets 100% 95%
Capital W.I.P. 100% 59.55%
100% 94.93%
Long term INVESTMENT 100% 113.64%
Long term advances 100% 102.64%
Long terms DEPOSITES AND other receivables 100% 102.14%
Deffered cost 100% 51.57%
Current assets
Stores and spares 100% 104.95%
Aircraft held for disposal 100% 100%
Short term investment 100% 644.57%
Trade debts 100% 102.26%
Advances 100% 157.39%
Other receivable 100% 79.36%
Cash and balance 100% 77.74%
100% 98.53%
TOTAL 100% 96.31%

INCOME STATEMENT

June 2001 June 2002

Revenue 100% 96.52%
Cost and expenditure 100% 83.41%
G.P. (100)% 133.08%
Financial cheeses (100)% (91.67)%
Other provision (100)% (157.97)%
Other income 100% 16.15%
Profit(Loss) before taxation (100)% 24.20%
Taxation (100)%
Profit(Loss)after taxation (100)% 18.67%

INTERPRETATIONS:
At the side of owner's equity the share capital and reserves are same for both half years. Some loss declined
in 2002 due to current period profit. There is no change in redeemable capital and long terms loans
decreased. Obligation under finance lease and hire purchase has decreased. In current liabilities in 2002
short-term loan decreased.
In asset side in 2002 capital work in progress decreased. Long-term investment increased and deferred cost
decreased. In current assets short term investment is suddenly increased to 645% of last period . Other
receivable and cash & bank balance is decreased.
In Income statement revenue is less as compared to the respective last period but cost and expenditures are
much controlled. In 2002 G.P suddenly increased in positive and financial charges are less so net profit
increased in positive i.e.18% of loss of the respective period of last year.

TRAINING PROGRAMME

I jointed the prestigious organization PAKISTAN INTERNATIONAL AIRLINES CORPORATION for my

internship on July 1, 2002.I was accompanied by 2 other internees. The internship was scheduled for seven
weeks. The schedule was provided to us on our very first day and we are asked to conduct our activities as
per schedule.
No doubt training at PIAC was a great experience for me which not only provide me an opportunity to
observe difference between theory and practice. This experience also broaded my vision and confidence.
PIA do not require from internee to work like staff. For internship trainees briefing and observation method
is used to train them. The detail of my activities during this program is as follows:

Sales promotion department

On very first day of PIA we are briefed about the overall organization of PIA. A question answer session
was held to clarity the various aspects of PIAC. Then for rest of four day we observed the working of
Passenger Sales. We were allowed to ask any type of question regarding sales activities of PIA. Since the
head office of PIA is at Karachi and all organizational planning is done at Karachi, so we could not see how
actually marketing planning is done at PIA. We only learn there how to implement marketing programmes.
This section deals in three types of activities namely tour promotion, sales development and agency affairs.
But the most critical duty of this section in Lahore is to deal with agency affairs.

There is departmental system in the organization. The schedule was given according to the department wise.
We worked here for two weeks in this department. We learned very important information relating to travel
agency and overall promotional programme of this department. The structure of this department consist of
13 members in total including passenger sales manager and assistant manager.

The main function of this department are as follows.

PIA Pakistan International Airlines sells tickets directly to its customers or final users through its counters.
In Lahore, PIA has ticket and booking office to sell tickets directly to the customers all such offices of PIA
are computerized and directly linked with the head office at Karachi. It is called zero level channel.

IATA is known as International Air Transport Association. It is a regulatory body which gives licenses to
airlines and approved agents. The agents approved by IATA is given 9% commission. The commission of
local agents or non approved agents is 5%.the condition for a GSA is that if he want to approve himself with
the IATA, he must have 5 million cash in hand and 5 million bank guarantee. Travel agencies approved by
the IATA have a bank guarantee of 3.5 million.

Here travel agents, as intermediaries, are involved in selling of tickets to the customers. Many travel agents
are provided with the auto ticketing and reservation system. Travel agents are of two types that are:

IATA Agencies
There are many approved IATA travel agencies which deals with PIA. These agencies can also be stocked
and sell the tickets of other airlines. Commission of these agents is as follows:
1. Domestic Sector = 5%
2. International Sector = 9%

GSA (General Sales Agents)

These are the agents who exclusively deals with PIA's ticket and cannot deal in other airline's ticket.
Normally, these are located, where PIA does not have sales point.
The commission provided to General Sales Agents is as follows:

- International Sector = 12%

- Domestic Sector = 9%

DSA (Domestic Sales Agent)

DSA works as local ticketing agent. It exist where the offices of PIA also exist. It sales only the local or
domestic tickets. It can not deal with international tickets. The commission given by PIA is 7% to Domestic
Sales Agents.

Inadmissible cell
We have worked on day inadmissible cell there. It was established in 1992 in PIA. This departments deal
with passports and checks all other document relating to traveling. The personnel of this department keep an
eye on the customers and people who are traveling. It also plays an important role for PIA. Because if a
guilty passenger is traveled in PIA, The organization if fined upto 3000 dollars. We really enjoyed and
learned a lot about this department even in a short time. We have also checked some passports of the
passengers with the help of some specific tools. These tools are used in checking the documents whether it
is original or bogus. We have also seen very important documents and passport of various countries that was
very informative for us.

CARGO SALES AND CARGO TERMINAL

Cargo sales is responsible for cargo booking and cargo terminal is responsible for handling of cargo at
airport. This department is very active because all the exports of Sialkot and Lahore is handled here. Here
we learn how sales people perform their jobs. In the morning all officers of cargo sales attend a meeting in
which performance of last day and schedule of that day is discussed. After the meeting all sales officer went
into market and contact with various exporters to convince then that they sent their shipments by PIA.
During our stay at cargo ales we learn how documentation for cargo is done. The rules and regulations of
IATA and PIA regarding cargo booking. We also spent two days at cargo terminal at Lahore airport. During
these days we learn how cargo is arrived & received by PIA. How sapce planning of cargo is done and how
cargo is boarded at aircraft.

RESERVATION & TICKETING

Our stay at reservation & ticketing was very interesting. The whole reservation system of PIA is
computerized. All computers at Lahore are connected with main frame computer at Karachi. We worked in
this particular department for two weeks.

There are separate department for the reservation of demostic and international. There are basically two
department

Reservation for Europion Countries

Firstly we had worked in these particular department. We had met with the manager and manager had told
us about this department of marketing because all the bookings and reservations are done through this
department. After that he had given us a task to sit with the computer operator and understand the whole
procedure of reservation. We firstly meet Mr. Khalid who was on duty at that time. He was very interesting
man and had a very good personality.
Different numbers are allotted to different passengers who were waiting for their number. Different
passengers we are coning after one another. We sat with Mr. Khalid Shahib who told us about the whole
procedure of reservation. One passenger came and asked him to reconfirm his seat on a particular date and
also asked to book a particular seat number.

Mr. Khalid Shahib had booked and also reconfirm the seat. After that another lady came and asked him to
reconfirm her seats. She told that she had also an old lady, so please arrange her in such a way that she had
no problem on the airport. Mr. Khalid had also click some keys and told that all the procedure had been
completed.

After going book this lady I asked a question to him that what type of arrangement had been taken by PIA
to the old passengers. He told us that all arrangement were taken by PIA for the passenger, so the passenger
feel very easy and he had no problem for traveling. It is so that all the informations relating to the seats date
and about the passenger had been given to the airport personnel and when the airport personnel received the
information it take all necessary actions to satisfy the passenger.

We asked about some keys used by him during the confirmation of seats. He told us about some keys eg.
SS means for only sale

It means that the ticket is only sold and do not have any confirmation.
HK means holding confirms
It means that the ticket is only holding confirm.

RR means reconform
It means that the ticket has become reconform.

Passenger were coming after another asset told the operator about any change which they went to do. The
computer operator gave fall attention and also had a very good behavior with the passenger. We saw that it
was a very tough job and must have required more skilled people. It is so because some difficult keys were
used in operating and it was only learned through training. So we had two days there and really enjoyed the
whole procedure.

We were in section-2 i.e. in the section where the reservation about East Asia and for Arab counter were
doing. There were also computer operators who were along the reservation for theses particular counters.
The same procedure who there so in the section-1 i.e. international counter.

After that we saw the whole procedure of booking on the domestic counter.

We have really enjoy in this particular department. So because of this distribution of departments the
passengers were feeling very easy and there were no problem to incurred there in the whole procedure of
reservation. We were very busy in this department for a week. It is so because many people visited the
department for different cases and the computer operator had the duty to solve the problem of each
passengers. So the computer operator was a very busy man. We were also busy to understand the whole
procedure of the reservation.

PIA also provide reservation facility on telephone. We learn how staff of PIA deal with customer and how
reservation procedure is performed.
We saw the whole procedure of booking on telephone and advance booking.

We observed the system of telephone booking and worked with them. It was really an interesting task. Qazi
Farhan Sahib, Reservation Ticket Assistant was very cooperative and interesting man. He help me to
understand the whole procedure of booking on telephone. I received some calls of customers on telephone
and made booking.

The rules on telephone booking are that if a man wants to book his seat internationally he should make sure
his seat at least 2 weeks before. Domestically from Lahore to Karachi the customers should ensure their
seats at least 3 days before traveling and from other areas there are at least 2 days to confirm their seats.

If a person has two way ticket and in that case he will be given a time limit by the operator and on the
expiry of that period , operator will not be responsible for that. In case of return ticket there is a time limit of
72 hours to confirm his seat. RTA is only responsible for booking the seats.

The seats can be booked by the travel agents and travel agents directly linked with the operators. He gets
informations according to the requirements.so all the process of reservation goes through the operator
personally. If there is some problem or the passenger does not go according to the confirmation by the
agents then the operator is not responsible. The agent is responsible for that particular seat which was empty
by PIA. PIA also finds the agents if there is some problem according to the confirmation.

FLIGHT CHECK DEPARTMENT

Flights check is very important and sensitive area in the PIA. Where the booking is originated either it is
from the travel agent or from the organization booking department. After understanding the boidata is
feeded in the computer and all information relevant to the passenger and their requirements and staffs is
kept. Flights is checked three times before departure respectively 72 hours, 48 hours, 24 hours before the
departure of the flight. Senior members are checked different flights lists before 72 hours and if some
problems is incurred then they contact with the operator and also the agents to confirm the seat. . Before 48
hours or 24 hours the list is checked and if there is some problem found then they contact to those agents in
case of seats lying vacant

NO SHOW RATIO

It means the person who books their seats and do not travel in time. This ratio is very high in Pakistan. So to
decreassse these ratios the facility is provided to the passengers who are in waiting list. Because this is very
fruitful for the organization.
FINANCE
I am going to give detail of finance department and how it works. How it is linked with other PIA office as
well as with the head office.

Receipt Side

A. REVENUE DEPARTMENT:

As PIA main business is selling of by air tickets. PIA has a very modern and fast working system of
ticketing. All the reservation and ticket system is computerized.

All the sales at PIA counter are controlled by the revenue section. The entire cash sale is deposited in the
bank on daily basis. There are different types of sale:

Cash sale
Credit card sale
Sales to defense personal against voucher
Incentive tickets to different client and agents
Staff rebated tickets

1) Cash sales

Cash sales are banked on daily basis and bank slips along with sale reports of the same day sent to the
revenue section where the staff made a initial audit of the report and the deposited into the bank. That
amount is accounted for in a source named R-1. This accounting circle revolves till the monthly closing
course.

2) Credit card sale

All the credit card sales are sent to revenue section on daily basis and their they are sorted and listing are
made for billing to the concerned bank. When cheques of credit sale are received it is deposited into the
bank and bank credit it to the PIA account.

3) Sale to defense personals

As per government of Pakistan rules army men has to pay 50% fare. Remaining 50% will be recovered
from the army through a lengthy billing procedure. All the daily sales to army personal are received in
revenue section ad the handed over to another section dealing all the credit sales named credit control
section.

Army men traveling on official duty travel against an A. P. W. issued by their authority. A. P. W. mean air
passage warrants. These APW are also deal by credit control section.
4) Incentive tickets to different clients
When an agent makes a satisfactory sales. He also claims it for a rebated air ticket. Some passenger are
VIPs are regular traveler or from commercial points of view PIA managements feels they are valuable such
as persons are awarded with incentive tickets. Such tickets are accounted for by the H. O.

5) Staff rebated tickets

Like all other organizations PIA employees are awarded with free/ rebated air tickets.

All the above sales are received in the revenue section along with their support there they are sorted out and
accounted for at their merit after all job is completed al the supporting paper are pound correct and properly
attached. These reports are sent to H. O. for an other audit by the staff working in H. O. All the sales A/C
are re-controlled on daily basis.

B. DOCUMENTS CONTROL SECTION

As PIA function is to sell air ticket and carry cargo from one place to another. So it main documents or
important paper is ticket and airway bills. As there are so many tickets are used on daily basis by PIA itself
and by the agent. So it is very important to control all the ticket. So a separate section named document
control section is working for this purpose. All PIA tickets are printed in U. S. A. and Singapore from there
they are received by the H. O. Then H. O. sends these tickets to station according to their requirement.
Where they are kept in strong room and issued to after proper recording and inventory is maintained.

C. SERIAL CONTROL SECTION

The duty of this section is control the serial of all revenue documents tickets. All tickets are used in
sequence. The main function of this section is to check and control and to avoid any misuse or any break in
sequence.

D. AGENCY SALES UNIT

Most of the PIA are sold by agents. The function of the section to check the agents and coordinates with the
solving different type of problem. Ticket sold by the agents are reported in a sales report and submitted to
this section fortnightly along with a cheques of same amount reported in sales report after deducting 9%
commission allowed to the agents.

The object of the sections is to check the sales report of each agent. Whether all tickets are reported which
are sold whether correct amount is reported in the sales report? Fair calculation is a very technical job.
Checking of fair calculation main objective of their section. After checking all the sales reports received
from the agents are feeded in computer and whole the data is transferred to head office. Whole the sale
amount against the passenger sales are reported in R-10 and whole the sales amount received against cargo
sales are reported in R-11. Sales proceeds are received from agents on fortnightly basis.

Payment Side

1. Disbursement section

PIA has the honour to introduce computerized payment system in the country. Cheques are automatically
printed with the payments voucher. All outside party payment are made by this section. When any spare part
is purchased a bill is raised by the seller. After proper approval by the authority, bills are received by the
section. In this section bills are thoroughly checked. If bills are found correct in all respect. Then a pay
voucher is prepared on computer cheques are also printed on computer along with pay voucher. After
printing these pay voucher. All pay vouchers are approved by the authorized officer. After approval of pay
voucher cheques are also signed by authorized officer.

2. Refund section
As PIA business is sales of ticket. All unutilized tickets are returned to PIA and refund is claimed. To deal
with such ticket a refund section is working in PIA finance. The unused ticket is presented in refund section.
After proper scrutiny of the ticket a pay voucher is prepared along with cheques. This pay voucher and
cheques duly approved and signed by the authorized officer. All the payments process is computerized and
whole accounting is automatically done by computer user has to only enter the specified A/C code allocated
by PIA for each type of payment. Because payments are of different type and nature. So many accounting
code used to proper accounting as per PIA set rules.

3. Payroll section
we discussing about the PIA set up at Lahore there are about 2000 employees worth in PIA at Lahore base.
To make the different type of payment to there employees for example salary payment transfer expenses
setting allow. There are dozens of other payments involved regarding PIA employee. All such payment is
made through this section. All payments are duly approved by the regional manager. For each payment a
separate pay voucher is prepared. Due to totally computerized accounting payment system, a cheque is
automatically printed with the pay voucher.
This pay voucher is duly approved by the c

erned officer. All payments are made through cheques. All payments are made Habib bank limited.
WAPDA house branch Lahore. PIA salary system is also computerized. Salary of all employees is
prepared at Karachi head office. All sources for the payment and adjustment of allowances are
prepared at Lahore office and dispatched to Karachi for final settlement in payroll. Computerized
salary slips are printed at Karachi where our main IBM computer is installed. After printing the pay
slips these slips are dispatched to Lahore station. All employees' salaries are paid through banks.
There are about 20 branches of different banks giving facility to PIA employees for payment of salary.

4. Cash section
To make the small payments regarding refund of amounting less Rs. 3000/- a cash officer is deputed
for such payments and to payment for petty expenses and all employees payment less than Rs.
3000/-. All payment cheques are delivered through this cash officer. The duty of this cash officer to
balance the impress A/C on daily basis and make arrangements of necessary funds to meet out the
daily petty expenses and operational payments.

5. Credit control section

The function of this section is to deal with all credit sales made by PIA and recovery of such amounts. All
MNA/MPAs are issued traveler voucher by the govt. All tickets issued to MNA/MPAs are against these
travel vouchers. These vouchers are of different value. When a ticket is issued to MNA/MPAs or senator
they give travel voucher instead of cash. There are always so many problems in encashment of such
voucher. These entire vouchers are cleared by state bank of Pakistan.

All military travel is issued against travel voucher. If it is a official travel ticket are issued against A. P. W.
air passage warrant. Such A. P. W. are billed to controller of military. As per govt. rules all the army men are
allowed 50% rebate on air travel. 50% will be paid by the concerned traveler and remaining 50% will be
recovered by PIA through billing. Invoices are raised to controller of military accounts. All these recoveries
is make by this section. There are so many other parties which dealing with PIA on credit basis. All sales
and services performed by PIA on credit basis. Credit control deals with all credit sales ad recovery of such
amount is responsibility of credit section.

Bank Reconciliation Section

PIA accounting system is based on monthly closing basis. 7th of every month is the closing date for the
previous month closing when all the previously discussed section complete their monthly closing and
balance all their accounts.

Now the duty of bank reconciliation starts when the bank statement is received and bank balance is
reconciled with cash book. As already discussed whole the PIA accounting system is computerized and
whole the accounting is matched by the computer automatically bank reconciliation is also computerized.
PIA banker in Lahore is Habib Bank WAPDA house branch. Bank statement is received on daily basis. PIA
is monitoring two accounts A/C No. 28140/513. all receipt or deposit are received and credit in this A/C
other is payment A/C 27140/514. all payment are made from this A/C. after the job of bank reconciliation is
completed. Now the data of Lahore station for one month is ready to transfer to H. O. Karachi.

Finance automation cell

As already discussed PIA system is computerized. So to monitor the all accounting transaction and provide
the management any information or report as and when required by local management or by the H.O. All
such information or report are provided b this section. Now when all the report is all section are completed
and their respective accounting is completed and all balance are complied and bank reconciliation is OK.
All the data for the whole month is transferred to head office Karachi through mail. Where finance
automation cell head office receive this data. Finance automation cell head office receives such data from
all station and then compiles it. By this way each month all data of Lahore base is transferred to head office
on 17th of each month.

PIA has its own coding system there are different types of sales earning revenue receipt and payment. So
PIA has defined in such way.

R-1: All cash sales at PIA counters are reported in R-1.

R-2: All cargo sales is reported in R-2.

R-3: All receipt against cargo which means booked by another station on credit basis or to pay basis means
collection made at destination all such collection are reported in R-3.

R-4: All miscellaneous collection or recoveries from staff are reported in R-4 example all airport taxes. All
rent received. Payment by PIA staff.

R-5: All receipt/ collection recovered against credit sale are reported in R-5. Recovery of MNA/ MPAs
ticket issued against travel voucher. Recovery from army persons.

R-6: All the payments made against unutilized PIA tickets presented for refund are reported in R-6.
R-7: All collection made on behalf of other stations are reported in R-7.

R-8: This is maintained by the credit control section. This shows the party- wise balances of all the credit
parties, and shows recoverable balances.

R-9: R-9 is consolidated statement of all receipt. While studying R-9 we can judge at glance the source-wise
collection detail for a month. It shows the consolidated amounts collected and reported against each source
for the clearer picture of finance system. I am providing a copy of R-9 for the monthly closing of
November.

R-10: R-10 is a report in which all the sale of agents are reported. There are three types of agents which
deals in passenger ticket these are known as Pax agents.

DSA's: Domestic Sales Agents

Such agents sell only domestic tickets. They are allowed 5% commission.

IATA Agents:

Such agents are registered agents. They sell tickets of each airline. They deal both in domestic and
international tickets. They are allowed 9% commission on international sale and 5% commission on
domestic sale.

G. S. A. General Sale Agents:

Such agents can sell only PIA tickets. They are allowed to sell domestic as well as international tickets.
They are allowed 10 and half % commission on international sales.

DSAs and GSAs submit their cheques for the sale on weekly basis and IATA agents are allowed to submit
cheques on fortnightly basis. All these cheques are reported on R-10.

R-11: All cargo sales by agents are reported in R-11. cargo sales are submitted by agents on fortnightly
basis. Agents are allowed 9% commission on all INTL. cargo sales. All these sales are reported in R-11.

ADMIN AND PERSONNEL

Admin and Personnel department is the life blood of any organization. During our stay in department we are
told about following things.
- Functions of this department.
- How record of permanent & nonpermanent employees is maintained.
- How leave & passage record is maintained.
- About recruiting, selection and training policies of PIA.
Now I define each division one by one.

Functions
A General Manager handles personnel division. The main functions of personnel division are:
i) Prepare employees personnel record.
ii) Attendance of the employees
iii) Issuance of warning, show cause notices, charge sheets, and termination letters.
iv) Recording the efficiency and adjustments of employees.
v) Preparing the promotion cases of the employees.
vi) Leave records of the employees.
vii) Increment records of the employees.
viii) The wages system is also controlled via this division.
ix) The cases like, death cases and record of Annual progress and attendance are also kept by this division.
Another functions of personnel division are:
a) To implement policies
b) Leave
c) Discipline
d) Promotion

a) To Implement Personnel Policies:

Top management of PIA makes the policies, and then sends to the personnel division. It is the responsibility
of this division to implement these policies effectively and also check the performance of the policies.

b) Leave:
All types of leaves are also dealt by this division but long period leaves are dealt by the top management.
Personnel division maintains the records of employees leaves.

c) Discipline:
It is also the responsibility of personnel division to maintain the discipline and punctuality in the
organization. This division also uses the "(Carrot and Stick)". Policy for maintaining the regularity and
punctuality. Give rewards to those employees who are regular and punctual and use punishment for those
who are not regular or not punctual.
d) Promotion:
This division also handles promotion cases. Promotion cases group 5 and above are dealt by the personnel
division and below then group 5 (five) are dealt by the relevant department.

This division analyses the regularity, punctuality, performance etc and then promotes them according to
their performance and seniority.

2) PERSONNEL RECORD & STATISTIC:

Following are the main units of this division.
i) Automation
ii) Personnel record
iii) Micro films of personnel files.
Now I explain each unit one by one.

i) Automation:
Automation unit was established in 1983. The main objectives of this unit are:
* To create a central data bank.
* To provide personnel information as quickly as possible for higher management decision.

Major Functions of Unit:

Carries out the task of computerization of personnel bio data/services history, to facilitate quick retrieval of
information and to generate various reports.

Services Provided by Automation Unit:

Automation unit of personnel record and statistic section is well equipped to extend the following
information services to the management and other users.
* Monthly establishment statistic
* Vacancy status.
* Department/Division/Section and location wise data.
* Pay group / Domicile / qualification wise data information.
* Male/female employees ratios statements.

ii) Personnel Record:

To main function of this unit is to provide information to the ministry, agencies and management and certify
the vacancy statement.
iii) Micro Films of Personnel Files:
This unit was established in 1984. The main function of this unit is to change the files of employees in the
shape of films, because these films save all the data of employees.

The processing of role (film) is also dealt by this unit. This unit makes the duplicate of every film and a
code number must be given to every film and this film is distributed to every department of PIA.

COMMUNICATION DEPARTMENT
Communication department is headed by a General Manager. This department plays a very vital role in any
organization because we know that without effective communication system any organization cannot
perform its operations properly.
Communication system in P.I.A is like oxygen. Minor mistake can cause huge loss. There are two types of
communication in P.I.A.
i) Incoming traffic
ii) Outgoing traffic

i) INCOMING TRAFFIC:
Incoming traffic means the calls which come in P.I.A., these calls may come from inside the organization or
outside the organization this type of communication is called incoming traffic.

ii) OUT GOING TRAFFIC:

Outgoing traffic means the calls which are done by the employees of the P.I.A. These calls may be local,
domestic, or international. Only General Managers has direct excess to national and international calls. If
the other employees want to do calls outside the city they have to request to the operator.

COMPUTER SECTION:
A communication department contains a computer section which maintains the record of all calls whether
local, domestic, or international with (calls) time duration, phone number. The calls which are indirectly
done also recorded in computers.

LEAST LINE:
Least line means to hire a telephone line at a fixed charging. P.I.A has to pay fix amount to Pakistan
Telecommunication Company (PTCL) every month. These type of lines are very cheaper and beneficial for
P.I.A.

ACD:
CRC section contains 15 agents who receive the calls of customers for reservation. If a telephone line is
busy (Agent is busy) the call is automatically transferred to other agent. CRC section is also under the direct
control of communication department.

EXTENSIONS:
For inter communication between different departments P.I.A have a telephone network. This network can
also be used for local communication (with in the city). For local call the employees first dial 0 (zero) and
then required number. These extensions are operating through the cable system.
Telephone system contains two big switches 1 and 2.

Switch 1:
Covers the head office, PIA training center, Engg: department and M.T on the other hand

Switch 2:
Covers the Jinnah Terminal.

Public Relation Department

We worked only 1 day in this department and really enjoyed here. The main functions of this department are
to monitor the seminars and functions in PIA. Its personnel are responsible for giving any news of PIA
through electronic media or press media. It also responsible for advertisement of PIA. If any news is printed
in newspapers then this department handles all situations and link with the people giving news in
newspapers either it is good or bad news. This department also make any type of action if the news is
against PIA. This department is also responsible to keep the record of all types of news either these are good
or bad. So the personnel of this department are responsible to take records of all the news from the
newspapers relating to PIA.
SWOT Analysis

Strengths and weaknesses

Strengths

Only national airline

High quality services
Measurable well defined goals and objectives
Provided services for Hajj and Umrah
People oriented organization
Govt. sponsored organization
Direct access to the destinations
Monopoly in the domestic routes
The symbol of Pakistan in airline

Weakness

Over recruitment
Lack of professionalism
Low level of commitment for the organization
High fares
The upper management not belongs to the airline
Govt intervention
Promotion on seniority basis
Weak rewards and appraisal
Less effort in the field of marketing
"Opportunities and threats"

Opportunities

Fleet expansion
Golden shake hand
Better recruitment policy
Political stability
Lesser govt. intervention
Proper training program
Proper work evaluation techniques

Threats

Open sky policy

Insufficient fleet
Over burden of employees
High amount of loan
Terrorism
Domestic destinations
Busy flight schedule
Leakage of money
Maintenance incapability
PROBLEMES
MAIN PROBLEMS
P.I.A is a large public organization like other organization P.I.A is also facing some serious problems. Some
of them are discussed below.

POLUTUCAL INTERFERENCE
Executives are the people who can improve or fail any business. They should know their basic jobs
authorities and responsibilities. In PIA, major problem is that there in high political interference in the
appointment and selection area. Managing director is appointed from out side the organization. Now a days
chairman of PIA is a PMA political person can't have as much knowledge of a commercial organization as a
prompted, talented persons. These executives then select their favorite person for the new vacancies weather
they have technical knowledge about job or not so, this effects the over all efficiency and business of the
organization.

Union Interference
PIA employee have there unions. They use their power mostly for low level appointments so the upper and
lower appointments affect the rest of proportion.

Bureaucratic Structure
Character of the organizations is more like on elite govt. set up and less like an efficient forward looking
organization.

Govt. Hurdles
1) Operation on non economic rates.

2) Purchaser of insurance policies from Insurance Corporation.

1. PIA functioning under ministry of defense instead of ministry of communications or aviation.

Most of govt. department delay payments.
Govt. dept. working at air port irritates the customers. Employees sometimes misuse the PIA transport.

i. Some times, agency sale agents don't realize airport taxes which make complication in realization of
revenue.
ii. At some areas jobs are not clearly defined which effect efficiency and working relation of employees.
iii. Rate of

motivational

campaigns for employees very low.

iv. For refund, customers have to come to the office which creates problem for the them.
v. Over booking and mishandling also create trouble.
vi. Misappropriation of work in one of the main problems e.g. engineer works as accountant etc. this is also
because of political interference.
vii. Career planning is discovering PIA arranges internal exams given appreciation letter, show cause letters
but promotion is given by same old procedure on seniority basis.
viii. Delay in computer up gradation also effect out put.
Recommendation

1) Managing director and executive should always be appointed from with in the organization so that he
may know basic problem and may able to work for its improvement.

2) Corporation should be treated as commercial organization unnecessary facilities provided to govt. should
not be discouraged but with drawn.

3) Govt. Corporation should be made independent under a new division of aviation in the ministry of
communication.

PIA should be organization on commercial lines as commercial organization.

There should be clear distribution of work and only qualified person should be appointed on jobs.

More

motivational

campaign should be introduced to increase employees' efficiency.

Refund facilities should be provided on airport.

Administration department should give follow proper career planning policies and promotion should be
given on qualification basis not seniority basis.

It is computer would so management should give more attention on computer up gradation and
implementation