Planning Commission's proposal: privatise railways, airports

[Lahore_Real_Estate]

ISLAMABAD (January 29, 2011) : The Planning Commission (PC) has proposed privatisation of airports, and an initial partial privatisation of Pakistan Railways (PR), in a bid to create level playing field for all market players, in a paper titled 'Pakistan: New Growth Framework 2011'.

It has further proposed that Civil Aviation Authority (CAA), by the very nature of its mandate, should not have control over any assets which make it a player in the aviation industry. The PR and PIA are currently facing severe financial challenges. The Planning Commission has proposed establishment of an independent body, empowered to charge market clearing price for PR.

The paper notes that "in the aviation sector, (CAA) should continue pursuing 'open skies' policy in both passenger and cargo traffic". All airlines should be free to operate on routes of their choice. "Routes which are congested should be auctioned instead of giving a preferential treatment to the PIA. Similarly, on international routes where open skies or multiple designation of airlines is not available, such routes should also be auctioned to all airlines including the national carrier in a transparent manner", the Planning Commission stated.

At present, landing rights fee and timing slots, allocated to private airlines by the CAA, also support PIA. CAA, by the very nature of its mandate, should not have control over any assets, which makes it a player in the aviation industry. The Planning Commission noted that all national airports are under PIA's control, and recommended level playing field for all market players which would necessitate privatisation of all airports. This will reduce charges between airports but will also improve overall efficiency by improving check-in procedures, flight management and provision of modern facilities, the paper argued.

"The right to carry passengers or cargo from a second country to a third country by stopping in one's own country (6th freedom rights) should be introduced to make Pakistan more attractive for potential investors and facilitate current players," the paper stated. Singapore and several other airlines use this right extensively to fly between Europe and Australia. "Given Pakistan's strategic location, this can significantly improve connectivity on Central Asia to Africa Route and Europe to Australia Route," the paper adds.

In respect of Pakistan Railways, the Planning Commission paper has stated: "Pakistan Railways can adopt partial privatisation measures, eg outsourcing stations' management, rail hospitals and allowing companies to run their container trains, letting suburban trains run as separate companies." Pakistan Railways should gradually be unbundled and privatised completely. "Unbundling may include privatisation of rail track, stations management and services (passenger and freight) separately," the paper says.