Finance Department Is Working In Pia Business Essay

The report is about internship done at Pakistan international airline town office Quetta. The main objective for selection of this organization for the internship was to see how the finance department is working in PIA and how they control all PIA’s finance and I also want to get knowledge about the finance department. In this report the introduction of the PIA as well as all history of that organization how and when they start how they moved and achieved those goals and how can rid from problems which PIA is facing till now and also mentioned some current information of the organization. After that it will describe which types of organization structure implement in PIA. A brief description of product, services and what packages PIA delivers to its customers. SWOT analysis tells about each and every thing of the organization. PEST Analysis of the organization has also been done. Few departments and their functions have also been mentioned in the report. Then after SWOT conclusion drawn and also drawn recommendations to how to improve things. During internship its experience was great. I learned a lot of thing through internship this report accentuates the details of my learning and observation at PIA. It also includes the actual forms that are used in this organization to carry out basic business processes. And, I am sure that this report will provide you a complete and clear image of organization..

INTRODUCTION:

PIA was established in 14th august 1947. In Pakistan there was only one airline working in Pakistan. At that time airline named orient airline. After the passage of time two more airline started operation in Pakistan named of that airline were air limited and crescent airways was doing commercial operation. These companies not fulfill the requirement of the air traffic rules so both companies failed and not continue their operation. In this way orient was the only company operated in Pakistan for domestic routes.

The government and the people of Pakistan both of them sincerely hardworking for the development of their airline and reach those airline which is freely moves all over the world. The main problem was occurred in communication, so PIAC improved communication system. In 1955 Pakistan government take a initiatives and passed the ordinance and launched Pakistan international airline for both domestic routes as well as international and fulfill all requirement which is necessary for international passenger..

So in this way Pakistan international airline reached its goals and expanded its network gradually now PIA serving the 83 destination with full of potential.

Brief history:

PIA started the international aviation operation from Karachi to London via Cairo and Rome. Until1956 PIA had been running in loss due to the addition of Boeing 707 fleet. PIA was the first airline to operate jets in Asia. New York to Karachi routes was started in 1957.Pakistan became the first non-communist airline to fly to the people’s republic of china and also serving operation between Europe and Asia via Moscow in 1963-1964.during 1960-70 PIA made a record of a huge surplus of about 49.22million. In 1966-67 engines overhaul shop was commissioned and completed.

1967-68 first batch of Pakistan pilot training was completed from PIA flying school and received pilot licensed. In 1969-70 PIA also started and extended engineering service with other airline like royal Nepal airline co. engineering services, domestic operation, and international operation made agreements with other airlines like Yugoslavia airline. Terminal facilities were expanded at Islamabad and Karachi and management agreement signed with Malta airline under which PIA seconded a management team to Malta in 1972-73. During this time period wide body Douglas dc was introduced.

Full time chairman board of director was appointed in 1973 to 1974. 720b fleet was given to air Malta on lease and at that time 158.08 million earn profit. At that time also started pension scheme for employees so in this way employees motivated and during work with more of potential. Added four more craft in PIA during 1976-77.technical services at Somali airline, Yemen airline and Malta airline were started in 1977. Two subsidiaries established and registered in UAE to promote hotel and PIA airline. Boeing 747 was introduced in 1977.

In house new technology introduced computerized reservation system (REPAK), new flight control system installed at Karachi In the achievement of 1980-81.PIA introduce first time ” direct inward dialing” telephone facility in Pakistan and also mini micro computer system installed in head office Karachi these technology also installed in other cities like Peshawar , Islamabad and Quetta.

Night coach service was introduced in 1983-84, flight kitchen of PIA, which was commissioned in febuary1977 and fully modernized due to other airline in 1983-84, five737-A300 were introduced into the fleet of PIA in 1984-85 executive class for international flight PIA 747 was introduced first time in 1985. Auto ticketing, flight kitchen at Islamabad routed on civil air transport were getting of PIA in 1986-87. During that time period many new routes were introduced included same other operation to Rawalakot and Muzaffarabad. Automatic reservation and ticketing facility at LARKANA in 19890-90, two women which was awarded for Pakistan international airline achieving first women were introduced and operate passenger flight in 1989-91. Direct hajj flight from Quetta to Saudi Arabia also started at 1990-91.June 1991 PIA received six air bus A310-300 air craft from air bus industries. 1999 PIA purchased Boeing 747 on lease and in 2002 PIA further purchased Boeing 747 -300 aircraft from the industry of Cathay pacific. Five aircraft which were still on lease no payment made. So in this way PIA improving day by day till now for the purchasing of aircraft give maximum benefit to employees in a year every employee give allowance and a ticket of PIA hajj also included in bonuses. So in this way PIA employees fully satisfied for this organization.

Vision:

PIA’S vision is to become a world class profitable airline full fill customer need wants and demand through facilitate with effective and efficient service, punctuality, new ideas, product, technology and safe journey.

Mission:

Employee team work will contribute towards PIA a global airline of choice through

Offering quality customer service and innovative products

Using state of the art technology

Ensuring cost effective measures in procurement and operations

Development safety culture

Corporate values:

Customer expectations

(Convenience, care, affordability)

Service

(Personalized, courteous, passionate)

Innovation

(New ideas, product, value added services)

Cohesiveness

(Respect for individuals, team work and effective communication)

Integrity

(Business ethics, accountability and transparency)

Safety

(Passengers, employee, environment)

Social responsibility

(Welfare, health, education)

Objective of Pakistan International Airline Corporation:

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

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

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.

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

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.

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.

To acquire, hold or dispose of any property, whether movable or immovable, or any air transport undertaking.

CORPORATE INFORMATION:

Pakistan international airline has been segmented into thirteen departments as shown in the organization chart. PIA is one of the biggest organizations in our country having worldwide operations as well. The network of flight around the world and its operations are managed very well. PIAC administration department consist of seven divisions with units. Every department is headed by director and each division is headed by general manager (GM) each section are controlled by manager and subsection headed by assistant manager.

Product and services of PIAC:

A service is doing work like one party can offer to other party that is essentially intangible and does not result in the ownership of anything. Services can be defined as activities benefits and satisfaction after sale. As a result they normally require more quality control supplier credibility and adaptability.

Pakistan international airline serving his services around the globe the following countries which PIAC lead those countries.

Seat Service (for passengers).

Space service (for Cargo).

Seat Service:

The price for international routes is set by (IATA) (international air travel association). IATA does not allow any discount on international routes, however airline provide some discount through agents or some time its fares depend on demand and supply on that routes where greater demand no relaxation on fares and its fares also depend on which type of class and which craft is used.

PIA cargo services:

PIAC also giving services of air cargo from one place to another Speed ex and cargo department are working for providing services to customer. PIA cargo provides higher density cargo at lower prices.

In domestic general cargo its two types of goods they transfer from one place to another which is as follows.

Wet Cargo.

In wet cargo perishable item like fruits, vegetable and those thing which having limited life like newspaper.

Dry Cargo.

In dry cargo nonperishable item included like books, catalogues, textbook, newspaper.

Providing those services against those services they charges different rates in different commodity

Weight rates /kg.

1-4kg 130-270

5-44 41/kg

These fares are applying only Quetta to Lahore. While in dangerous goods like ammunition or other such type of item which is harmful for human life firstly take permission through authorize person than those commodity move from one place to another.

On the other hand PIAC also provide services for the transferring automobile but it apply some conditions

Automobile must be less than 5 feet while transferring the car from one place to another PIA charge 26100 for pluck sheet. Pluck sheet moves cars from one place to another smoothly and fairly.

DEPARTMENTS:

Flight Check Department:

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 saved in the computer and confirm the requirements of passengers as well as the requirement of personnel. A flight is checked three times before the departure. Firstly the flight is checked before 72 hours before the departure, then 48 hours of departure and then 24hours before departure. No show ratio means the passengers who books their seats and do not travel in time.

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, Hajj & Charter Planning are three sections of division under consideration. CRC is further divided into four cells:

Complaints cell

Post flight cell

Telephone sales

Procedures Bureau.

AIRPORT SERVICES TRAFFIC DEPARTMENT:

The traffic personnel are in direct contact with the passengers and they handle different stages occurred during a passenger’s way from check-in lounge to the aircraft. As the passenger enters the check-in 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 In charge Counter

Weight Balance Unit

Departure Control Unit

Special Handling Unit

Protocol Handling Unit

Flight Inquiries

Post Flight Unit

Lost and Found Unit

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

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 unimaginable 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 ways 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.

 

SALES DEVELOPMENT:

Sale promotion is the main sub section of the sales section. One of the primary functions is to promote the sales and generate the revenue. 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 concessions 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

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 gap 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.

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) Interline Revenue)

PASSENGER (PAX) REVENUE:

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:

Direct sale

Indirect sale

Direct sales mean sales at stations of PIAC, whereas indirect Sales are by agents.

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. Where as 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.

TAC (travel authorization certificate):

if passenger travel for personal purpose he or she must collect the TAC (travel authorization certificate) from CMA to avail 50 % off opportunity and submitted to booking office with CNIC

there is 2 copy of TAC original copy is remain with the PIA but duplicate copy are send to CMA as a evidence for claiming the remaining 50 % amount by CMA because CMA paid remaining 50% amount paid to PIA on the behalf of his or her employee

APW (Air passenger warrant):

If passenger travel officially then CMA issue APW to his or her employee and whole amount is paid CMA to PIA same on the above procedure

These forms required

Name and designation of employee’s

Rank

Nature of duty and PA number

And attested from his or her department

Finance department also receive the refund forms and before sending collection bill to army office’s department deduct the refund amount from the sales.

TYPES OF EMPLOYEES:

The workers of PIA can be classified as under:

Permanent Workers

Temporary Workers

Seasonal Workers

Daily Wage Workers

Trainees

Permanent workers:

Those workers who are engaged on performing their services for the whole year are called permanent workers. They are appointed on those jobs, which are of permanent nature.

In PIA these employees get different types of allowances and benefits.

These benefits are

House facility (Which is allotted according to the grades).

Medical Facility

Bonuses and Daily coupon

Temporary workers:

Temporary workers are appointed on those jobs, which are of temporary nature.

They are likely to be Permanent but work under contract period of few years and after work is completed they are dismissed from their jobs.

Seasonal workers:

These workers are hired during the HAJJ operation, when the operation is over they are lay off.

Daily wage workers:

These are the workers who worked and get their remuneration on daily bases. They can be hired in any section where they are needed.

Trainee

These are the learners. This is a work mean, to which allowances are paid during the training and after the completion of the course. Internship is also a kind of training but no remuneration is paid to trainee in this kind of training.

Entertainment & Benefits to Employees

House Rent

House rent will be payable @ 60% of the personal pay,

Dearness Allowance and including Pay Group VIII

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

Utility Allowance:

This allowance is given @ 10% of basic pay to officers from group (V) to (VII-II).

Conveyance Allowance

This allowance is also given to the officers from group (V) to (VII-II) @Rs.950/month. Beneficiary of this allowance is not eligible for car allowance.

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 XI-II.

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 thanRs.3320/month.

Qualification Pay

C.As and ACMAs working in finance department shall be paid @Rs.3220/month. This allowance is also given to the officers of information system department except communication division @ Rs.1170 per month.

SWOT Analysis:

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STRENGTHS

LEADING MARKET POSITION

PIA is one of Pakistan’s leading air carriers, with more than 800 daily flights. Around 150,000 passengers a month fly on PIA, making it one of the major operators in the domestic market in terms of passenger kilometers. PIA’s international market share was 43.5%, In the Domestic market, its market share was 69.4%. Its strong market position is driven by consistently low fares as well as reliable service, frequent and convenient flights, use of new technologies like e-ticketing and self check-in terminals, comfortable cabins and superior customer service.

BRAND RECOGNITION:

PIA has high brand recall. It is recognized by travelers all over the country. PIA is a national airline, operating passenger and cargo services covering eighty-two domestic and foreign. PIA has earned the number one ranking in customer satisfaction

SUPERIOR OPERATING STRUCTURE

PIA has maintained its position as the low cost carrier. It has been first class Pakistani airline to use the latest technology. Factors’ contributing consists of different series of Boeing and Airbus and an efficient, high-utilization and point- to-point route structure. Flying one type of aircraft significantly simplifies scheduling, maintenance, flight operations, and training activities.

NETWORK PRESENCE

PIA enjoys a strong network in key domestic and international destinations. The company’s network includes three the major airports in Pakistan, as well as major international airport such as Dubai International Airport. Having a strong network means that PIA can generate traffic feed for both its domestic and international Flights.

HUB AIRPORT AT KARACHI:

PIA operates from its hub in Jinnah International Airport, Karachi. Jinnah International is one of the world’s busiest airports in terms of number of passengers carried. It is also one of the largest international gateways to Asia. It is also the leading international air passenger (and cargo) gateway to Pakistan.

EFFECTIVE USE OF TECHNOLOGY:

PIA has successfully incorporated latest technology in all its systems, giving it an edge over competitors. PIA takes credit for introducing most new technologies to the Pakistani market. It was the second carrier in Pakistan to incorporate the e-ticketing system and the second in South Asia to introduce self check in systems at the Jinnah International Airport, Karachi.

WEAKNESS

FORMULATION OF GOVT. RULES:

The Basic flaw of this organization is its consolidation that is centralized system. The key policies, strategies and set of laws are designed by the upper management. The centralized system is one of the biggest obstacles of long term success of PIA. PIA centralizes structure lead to barrel between different level of management, decreased motivation, and hard access to information.

HIGH DEPENDENCE ON PASSENGER REVENUES:

Passenger revenues accounted for 87 percent of the PIA’s total revenue in 2007. Cargo services allow airlines to generate additional revenues from existing passenger flights. In addition, cargo revenues are usually counter cyclical to passenger revenues and have lower demand elasticity than passenger business, which allows airlines to pass on fuel price hikes to customers. 

DEBT :

PIA has a significant amount of 42 billion debts. Current and future debts could have important consequences for stakeholders of the company. Debts could also put PIA at a competitive disadvantage to competitors that have lesser debt and could also increase the company’s vulnerability to interest rate increases.

RELIANCE ON OIL PRICES

PIA’s sustainability, growth and revenues directly depend on oil prices. A steep rise in oil prices can seriously damage the long term viability of any airline. Recently many airlines around the world went bankrupt due to rising oil prices. Airlines need to hedge against this risk by taking proper measures.

OPPORTUNITIES

HAVING THE MAXIMUM ROUTE AND FLEET

PIA is having the maximum route and fleet domestic and international destinations network in Pakistan as compared to its Competitors. Route and fleet expansion will positively impact the company’s operations by increasing revenues.

GROWING DEMAND FOR LOW COST AIRLINES

The growing demand for air travel is driven by lower fares and consumer confidence. A survey by International Aviation Authority showed that ticket price is the number one criterion for passengers when selecting a flight, well ahead of the availability of a non-stop service.

CUSTOMER LOYALTY :

PIA’s frequent flyer and loyalty programs can help it retain customers. PIA’s Awards plus (frequent flyer program) was established to develop passenger loyalty by offering awards and services to frequent travelers. Such schemes encourage repeat travel on PIA, as passengers seek to accrue the benefits given to regular travelers.

SHIFTING CUSTOMER NEEDS :

The needs of air passengers are increasingly changing, as they are becoming more and more price sensitive. If PIA succeeds in making its prices more competitive, then the company will be able to gain significant market share.

INDUSTRY RECOVERY

Market analysts believe that the global airline industry will experience an upturn in fortunes over the next few years. This represents an opportunity for PIA, as it could generate increased revenues and command market share if it capitalizes on increases in demand.

THREATS

HIGH INTEREST RATES

The past few years have seen State Bank of Pakistan impose high as well as low interest rates to check inflation and the over heating of Pakistani economy. Inflation in Pakistan may see another raise in the short-term.

ACCIDENTS

There had been 3 accidents with PIA listed as below:

Pakistan International Airlines Flight PK 705 was a Boeing 720 – 040 B that crashed while descending to land on Runway 34 at Cairo International Airport on May 20, 1965 resulting in 119 fatalities.

Pakistan International Airlines Flight PK740 was a Boeing 707-340C that crashed after takeoff from Jeddah International Airport on November 26, 1979. All 156 aboard were killed.

Pakistan International Airlines Flight 268 was an Airbus A300B4-203, registration AP-BCP, which crashed on approach to Kathmandu’s Tribhuvan International Airport on September 28, 1992. All 167 on board were killed.

STRONG COMPETITION BY AIRBLUE

PIA is now competing against carriers such as Air blue and Shaheen Airline. PIA remains Air blue’s strongest competitor because of the huge market it has gained over time, strong brand image and customer loyalty.PIA has started new low-fares subsidiary “PIA Express” to stop the Airblue market share growing to fast.

INTEREST AND FOREIGN CURRENCY EXCHANGE RATES

Fluctuating foreign currency exchange rates can have a significant impact on PIA’s earnings. For example, as PIA is providing its services to the UK. Negative or positive effects arise from exchange rate movements as change in expenses

PEST ANALYSIS

POLITICAL FACTORS

Political factors always have a great influence on the way businesses operate in the airline industry and the spending power of customers. In recent years it has been observed that government played an active role in increasing competition in the airline industry. A number of new airlines such as Air Blue and JS Air have been awarded licenses to enter the domestic market. The over all industry will grow resulting in more luxurious and comfortable flights. 

ECONOMIC FACTORS

Currently, Airlines industry has three major players: Pakistan International Airlines, Air blue, Aero Asia and Shaheen Airlines. Their target market includes domestic travelers as well as Pakistanis living abroad particularly in the UK and USA. These countries have strong economies coupled with high purchasing power. Customers’ purchase behavior depends very much on prices of the competing airlines