The International Monetary Fund (IMF) has agreed to grant sales tax exemptions and eliminate equity losses as part of the privatization process of Pakistan International Airlines (PIA).
According to sources, PIA’s buyer will receive sales tax exemptions for purchasing or leasing aircraft for both domestic and international routes. These exemptions, along with the removal of PIA’s accumulated losses, could increase the airline’s bidding value from Rs250 billion to Rs350 billion.
Currently, PIA holds a debt of around Rs660 billion, which has been transferred to a holding company under government supervision. The proceeds from PIA’s privatization and the sale of the Roosevelt Hotel will be used to settle the airline’s financial liabilities.
Sources further disclosed that the IMF has approved the settlement of PIA’s holding company debt. Regarding the Roosevelt Hotel, a joint venture is planned to be finalized within six months, with an estimated value of $1 billion. The Prime Minister has been briefed on the tax exemptions, loss removal, and the proposed Roosevelt Hotel sale plan.
Initially, the IMF had only approved sales tax exemptions for international routes. After further negotiations, the exemptions were extended to include domestic routes as well. With these concessions, PIA’s leased aircraft could benefit from sales tax relief of up to PKR 8.1 million per month.
Meanwhile, PIA continues to face operational challenges due to a shortage of critical spare parts. Out of its fleet of 34 aircraft, 17 remain grounded:
- Boeing 777 fleet: 7 out of 12 planes are non-operational.
- Airbus A320 fleet: 7 out of 17 planes remain grounded.
- ATR fleet: Only 2 out of 5 planes are currently in service.
PIA Reduces International Airfares
In related developments, PIA has announced fare reductions for international flights following the IMF’s approval of a waiver on Federal Excise Duty (FED), as reported by the state-run APP.
The waiver, granted at the request of the Pakistani government, applies only to international routes and offers significant savings for passengers. For instance:
- Flights to the USA could see fare reductions of up to Rs350,000.
- Passengers traveling to Africa and the Middle East may save up to Rs105,000.
- Travelers heading to Europe, Australia, New Zealand, and the Far East could benefit from savings of up to Rs210,000.
However, the waiver does not extend to domestic travel, which will remain subject to the Federal Excise Duty (FED).
