KARACHI: Top officials at Shaheen International Airlines (SIA) rejected reports that its owners had fled the country to avoid paying dues owed to its employees, service providers and government agencies, saying the owners were travelling abroad to raise finances.
The airlines owes around Rs.18 billion in liabilities to the Civil Aviation Authority (CAA), Federal Board of Revenue (FBR) and other creditors and service providers. The airline's offices have been sealed by authorities for almost six months.
“When the owners of the airline [chairman Kashif Mehmud Sehbai and CEO Ehsan Khalid Sehbai] left the country to negotiate an investment deal with Saudi investors, the authorities put their names on the exit control list," acting CEO of the airline Javed Sehbai told Arab News. "We have time until January 2 to deal with the prince."
Pakistani media had reported earlier this week that the Saudi prince had pulled out of the deal but Sehbai denied this.
“The airline owes Rs1.3 billion to CAA and Rs.1.6 billion to FBR on account of services and taxes," he said. "I will arrange finances within two days if allowed to operate...because people and banks will be willing to lend money then. But due to the present condition imposed on us, who will invest?"
The airline had never defaulted in its 13 years long history, he said, adding that Shaheen's 5,000 employees would be rendered jobless if the airline was not allowed to resume operations.
Mirza Mujtaba Baig, a spokesman for CAA, said the airline's offices were sealed after the fulfilment of all legal formalities and since the company had repeatedly failed to pay dues.
“The condition of Shaheen's aircrafts is not such that we could fetch the dues by auctioning them, which is why the authority has gone to the courts for their recovery," Baig said. "On the directives of the court extreme steps can be taken."
He said around 3,000 employees of the airline had been waiting for their salaries for the last five months, which had accumulated to around Rs.1 billion.
"Due to non-payment of salaries, lower and middle class employees are facing severe financial and medical crises,”, a pilot associated with Shaheen since 2012 told Arab News on the condition of anonymity because he was not authorised to speak to the media about the issue. "How can an airline which was profitable from 2004 to 2017 suddenly run into losses? All the planes I flew had 75 percent seat capacity filled."
The pilot said the company also owed dues to hotels, travel agents, fuel companies, catering service providers and ground services.
Shaheen had 18 planes in its fleet until June 2018 when the management started to return planes taken from leasers.
Experts believe that the airline will never takeoff again with such a huge financial burden.
“To start a new airline, a minimum of 3-4 billion rupees is required so who will bear a liability of 18 billion?” aviation expert Afsar Malik told Arab News. "The profit margin in the airline business is very thin, which is why a majority of airlines are running in losses."
Three airlines, including national flag carrier Pakistan International Airline, are currently operating in the country on local and international routes. With the suspension of Shaheen, business has been diverted toward them.
“If a flight is cancelled or suspended, other airlines instantly jack up fares and when we question them, they hold the system responsible for the fare hike,” said Hassan Masud Mirza, Senior Vice Chairman of the Travel Agents’ Association of Pakistan. “We are constantly calling for intervention by the Competition Commission to probe this practice but to no avail."
