PIA Faces Shutdown Risk Due to 150% Jet Fuel Price Hike | Pakistan Airlines Crisis

Pakistan International Airlines (PIA) is facing a potential shutdown as jet fuel prices have surged by 150 percent, according to Arif Habib, the airline’s new majority owner. Habib warned that continued operation under the current fuel costs may be financially unsustainable, urging the government to reverse the price increases. Habib stated that PIA “could be forced to shut down” if jet fuel prices remain elevated. The increase in fuel costs comes amid tensions in the Middle East, specifically attacks by the United States and Israel on Iran. Official rates indicate that jet fuel prices have increased from Rs190 per litre to Rs472 per litre since March 1st, and were Rs472 per litre as of March 21st. Habib explained that the government’s decision to increase jet fuel prices is linked to its efforts to subsidize the financial burden of rising oil prices on the general public. He stated that the government opted to raise the price of aviation fuel to generate revenue for a cross-subsidy program. According to Habib, PIA has managed to operate through March, but the continued high fuel costs will “make it difficult for PIA to operate” moving forward. He fears that without government intervention, PIA will be unable to continue its operations and “will be forced to close.” Aviation experts estimate that fuel accounts for 30-40 percent of an airline’s operating expenses. The recent surge in fuel prices has already prompted airlines to increase fares by 20-30 percent. Domestic ticket prices have risen by Rs10,000-15,000, while international fares have increased by Rs30,000-40,000. The consortium led by Arif Habib acquired PIA last year for Rs135 billion, with Fauji Fertilizer Company subsequently joining the group. The consortium, operating as PIA Equity Limited, is scheduled to complete the purchase of an additional 25 percent share from the government by the end of April, which would generate approximately Rs40 billion in revenue for the government. However, the current political tensions, disruptions in air travel, and escalating fuel costs are creating significant challenges for operating PIA. The situation represents a major test for the airline’s privatization plan and its future in both domestic and international markets.