PIA operations at risk from jet fuel price surge, Arif Habib says

ISLAMABAD: The new majority owner of Pakistan International Airlines (PIA) warned on Saturday that flight operations may no longer be viable after a sharp rise in jet fuel prices, raising concerns over the country’s high-profile airline privatisation.

Arif Habib, chairman of the Arif Habib Group, which led a consortium that acquired a 75 per cent stake in the national carrier, told Arab News that the surge in fuel costs has placed PIA at a significant disadvantage compared with international competitors.

“It won’t be viable to run the airline with current jet fuel prices,” Habib said, noting that domestic fuel prices have risen disproportionately compared with global trends.

The warning comes as the consortium prepares to assume full operational control of the airline next month.

Pakistan’s aviation sector has been hit by a broader surge in energy costs, following global market disruptions linked to recent geopolitical tensions in the Middle East.

In Pakistan, jet fuel prices have increased from around Rs180 ($0.65) per litre to over Rs400 ($1.43) within a month, according to Habib.

The sharp increase has prompted concern within the government.

A recent Cabinet Committee meeting chaired by Finance Minister Muhammad Aurangzeb warned that rising fuel costs were undermining the competitiveness of domestic airlines and shifting market share toward foreign carriers.

Habib called on the government to intervene by rationalising refining margins to bring fuel prices in line with regional benchmarks, saying the current pricing structure poses an existential challenge to the airline’s turnaround.

“No business can remain healthy while operating at a consistent loss,” he said, adding that he plans to raise the issue with Prime Minister Shehbaz Sharif.

The privatisation of PIA has been a key component of Pakistan’s economic reform programme under a $7 billion International Monetary Fund (IMF) support package.

Founded in 1955, PIA was once considered a leading carrier in Asia, but its performance declined over the years due to political interference, financial mismanagement and staffing inefficiencies.

The airline was also banned from European and British airspace for four years following a 2020 pilot licensing scandal involving what authorities described as “dubious” credentials.

The Arif Habib-led consortium acquired the majority stake in the airline for 135 billion rupees ($485 million) in December, in a deal aimed at modernising its fleet and restoring international routes to destinations such as London and Paris.

Despite the fuel cost pressures, Habib said the airline has not grounded any aircraft and remains committed to its contractual obligations and international operations.

However, he stressed that long-term viability would depend on a “rationalised” domestic fuel pricing mechanism.