In 1964, Pakistan, Iran, and Turkey formed the Regional Cooperation for Development (RCD). Its purpose was to foster closer economic and social ties between the members. In one of its first meetings, it also decided to jointly launch an airline – TUPAIR.
TUPAIR was supposed to be a joint venture between national airlines of the three countries. It was planned such that this new independent airline would order bigger aircraft and would be used to compete on international routes where the three airlines couldn’t compete on their own.
Discussions went on for five years but nothing came out of TUPAIR and it was ultimately abandoned.
Airlines often come together to form an alliance. But TUPAIR was an extreme idea. In most cases, cooperation comes by way of selling seats on a common flight by two or more carriers to cut costs. Known as code-sharing, the approach became popular when airlines started losing money and market share.
By 2010, PIA's losses were snowballing and it was becoming difficult to compete with encroaching Gulf carriers. At the time, PIA already had a code-share arrangement with Turkish Airlines (TK), but it remained dormant.
TUPAIR was supposed to be a joint venture between national airlines of the three countries. Discussions went on for five years but nothing came out of TUPAIR and it was ultimately abandoned.
Around the same time, TK was also pushing the Pakistan government to grant it more flights. Then prime minister Yousaf Raza Gilani was travelling to Turkey on an official trip and granting of additional flights was on the agenda.
"Government officials wanted to give them those flights," says Aijaz Haroon, who was PIA’s managing director at the time. "But we didn't agree. In turn we suggested that Turkish Airlines' CEO should come and sit with us."
The discussions led to the so-called TK-PK Code-Share Agreement. It basically said PIA would fly Pakistani passengers up to Istanbul from where the passengers would have access to 130 destinations, including those in Europe and North America via Turkish Airlines' network.
PIA, however, would keep operating direct flights to the UK and Saudi Arabia–two of its profitable sectors. "Naturally it appealed to Turkish Airlines immediately. Athens, Milan and other European cities where PIA was losing money would be operated by TK," says Haroon, who was also a senior pilot.
The revenues were supposed to be shared on pro-rata basis. It was a winning proposition for PIA since flight time from Karachi to Istanbul was six hours and from Istanbul to the farthest European destination was 4 hours. "I estimated 60% of the revenue would be ours and we were getting such a big market," shares Haroon.
But the point in the agreement that became contentious was PIA's decision to forgo direct flights to the US and instead let TK take its passengers.
"PIA was losing money on the New York route. It still loses money because it has a very poor yield. Fare for the last 20 years has remained between $800 and $1,200," says Haroon.
Passengers, he maintains, are spread across the US – not everyone wants to travel to New York or Chicago, the two cities where PIA was flying to. "We were operating three flights to New York and two to Chicago every week. TK had daily flights to Chicago, Washington and New York," he says.
So, it was agreed that PIA would stop operating on these routes and instead fly its passengers to Istanbul. In turn, TK would feed passengers into PIA flights to Houston, Texas. TK would also discontinue direct flights to Dhaka, Kathmandu, and some Indian cities in favor of PIA.
But the PK-TK plan never went through. Unions, which feared PIA was cutting back its operation in the deal, mounted furious protests. The confrontation that started with harsh statements spilled over out on the streets.
Leading the workers was Sohail Baluch, the President of Pakistan Airlines' Pilots Association (Palpa). "PIA had spent a lot of resources to acquire Boeing 777 aircraft, which were meant to be operated on long-haul routes. The PK-TK deal didn't make any sense," says Baluch.
Contrary to what Haroon and his team say, Baluch insists the unions were not taken into confidence either. "Their intention was not good."
The unions, which saw the agreement as a move to curtail PIA's operation, succeeded in bringing the entire airline operation to a halt for many days. Eventually, the government removed Aijaz Haroon as well.
By 2015, PIA would be code-sharing passengers and routes with Etihad, which will fly many of the Pakistani passengers to cities in the US.
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