Opinion 
 

Opinion

Outsourcing Airports

The move to outsource airport services in Pakistan is aimed at helping loss-making international airports to be on a par with the rapidly-evolving and highly competitive aviation sector.

By Syed Khalid Hassan | September 2023


To attract more Foreign Direct Investment (FDI) in Pakistan, the Economic Coordination Committee, with the advisory support of the International Finance Corporation (IFC) - a member of the World Bank, has initiated a process to outsource the services of three major airports through the Private-Public Partnership Act 2017. The airports are namely Jinnah International Airport in Karachi, Allama Iqbal International Airport in Lahore, and Benazir Bhutto International Airport in Islamabad.

Qatar has expressed interest in investing in the improvement of airport services and utilizing airport lands for commercial activities in Pakistan. Prime Minister Shehbaz Sharif has stated that this is a normal practice to seek profits and has guaranteed complete transparency in dealing with such significant government assets. This trend of outsourcing airport services is increasing globally, and about 44 countries including the UK, the USA, and India have already adopted this approach. This trend has led to modernization of airports and significant improvement in passenger comfort.

The move to outsource airport services in Pakistan is aimed at helping loss-making international airports to be on a par with the rapidly evolving and highly competitive aviation sector. The current airport infrastructure in Pakistan is in dire need of increased capital investments, as well as improved productivity to keep up with the pace of global development. With the Pakistani economy already suffering from low foreign and central bank reserves, the government needs to take measures to rise to the occasion by flooding in FDI and boosting investor confidence. The Pakistan Civil Aviation Authority is currently the operator of the airports, and to ease the government’s budget strain, a profit-driven entity must be implemented. Since Pakistan does not have the capacity to keep up with the globally evolving aviation sector, this move is crucial for the country’s economic growth.

There has been an increase in activity in the aviation sector in Pakistan recently, with Skardu Airport receiving international status, the forthcoming inauguration of Gawadar Airport, and the addition of AirSial and FlyJinnah as new domestic airlines. Talks are also underway to add more airlines to compete with the Pakistan International Airlines (PIA). With more airlines projected to enter the market, there is potential for an increase in demand for airfares, which makes it imperative to improve the quality of airports in the country.

However, Pakistan International Airlines is currently suffering losses of about USD 1.41 billion due to having more staff than aircraft, as well as being banned from flying to Europe, as well as making other strategic and political mishaps in a high-risk industry. The current state of aviation policymaking in the country is terrible and requires significant improvement. For the government, one possible strategy would be to focus on security, policy-making and PIA, while the private sector continues to be productive and competitive.

At present, the only airport capable of hosting the A380 is the new Islamabad airport named Benazir Bhutto International, which reflects the state of the other airports in the country. Once these airports are able to accommodate a vast range of wide-body aircraft, PIA would be encouraged to invest in them, improving their capital and airworthiness, and increasing the number of destinations they can serve worldwide.

In addition to that, PIA can also reduce costs by outsourcing their ground handling services to a third-party company, which would enable them to fully focus on improving their core competencies, such as aircraft maintenance, route expansion, and in-flight services. This would also allow PIA to streamline their operations and potentially increase their profitability, which is critical given their current financial challenges. By leveraging the expertise of specialized ground-handling companies, PIA can improve efficiency, reduce turnaround times, and enhance the overall passenger experience, ultimately helping them to remain competitive in the ever-evolving aviation industry.


The allotment and leasing of airport land to private entities for non-aviation activities is a promising prospect for improving the commercial viability of airports in Pakistan. Private companies that specialize in commercial land use can potentially utilize airport land more efficiently and attract new business opportunities, leading to increased revenue for the airport operator.

One key advantage of privatizing the management of airport land is the potential for increased innovation and improvements in service quality. Private companies are often more profit-driven than government entities, which can create a more competitive environment and encourage innovation. By allowing private companies to lease airport land for such commercial projects as hotels and retail outlets, the airport operator can attract new customers and generate additional revenue. These private companies have the resources and expertise to design, develop, and manage these non-aviation activities in an efficient and profitable manner.

Furthermore, privatization can also create a more efficient and transparent land allocation process, as private companies will be driven by market forces rather than political considerations. This can lead to the efficient use of airport land and maximize its value for both the private sector and the government.

However, it is important to note that the outsourcing of airport land management to private companies is not without its challenges. One of the main challenges is the potential for conflicts between the commercial interests of private companies and the needs of aviation activities. The airport operator needs to carefully balance the needs of commercial tenants with the needs of aviation activities, such as runways, taxiways, and aircraft parking areas.

Another challenge is the need for strong regulation and oversight of private companies operating on airport land. The government needs to ensure that private companies adhere to high standards of safety, security, and environmental protection, and that they comply with all relevant laws and regulations.

In a word, outsourcing the management of airport land to private companies has the potential to generate additional revenue, create new business opportunities, and improve service quality. However, it is important for the government to carefully balance the needs of commercial tenants with the needs of aviation activities and provide strong regulation and oversight to ensure the safety, security, and environmental protection of airport land.

The China-Pakistan Economic Corridor (CPEC) is a massive project that has the potential to transform Pakistan’s economy by addressing the country’s long-standing supply chain issues. However, political turmoil and inconsistent policies have hampered the project’s progress. In this context, airports could play a pivotal role in supply chain management by offering much-needed solutions for handling cargo.
Currently, Pakistan is facing significant difficulties in handling cargo due to inadequate infrastructure and facilities. These issues have led to supply chain disruptions and hindered the country’s overall economic development. Therefore, investment in airport infrastructure is crucial to improve the linkages and constructions of cargo parks and storage facilities. This would fast-track any problems faced in development and enhance Pakistan’s economic competitiveness.

In light of this, airports can serve as an essential asset in developing the country’s supply chain capabilities. The availability of well-equipped cargo handling facilities, coupled with modern storage and warehousing solutions, can ensure that goods are transported efficiently and effectively across the country. Furthermore, airports can be a critical component in the integration of Pakistan into global supply chains, opening up new business opportunities and enhancing the country’s international trade.

It is essential to understand that the significance of airports goes beyond just their role in air transportation. They also play a critical role in facilitating other modes of transportation, including road and rail. By investing in airport infrastructure, Pakistan can develop an integrated transportation network that connects the country’s major cities and facilitates the movement of goods across the country.

However, the development of airport infrastructure requires substantial capital investment, and the government needs to focus on attracting both domestic and foreign investment to fund these projects. Additionally, the government needs to provide an environment for private investors by creating a stable policy framework and implementing transparent regulations.

The Private-Public Partnership Act aims to ensure that complete privatization of Pakistan’s airports is out of the question, as they are vital assets for the country, and the protection of its sovereignty is of utmost priority. However, this act also allows for significant development in the near future, which will lead to increased revenue and improvements around the airport vicinity. These developments will have a snowball effect, increasing economic productivity in each city and ensuring that CPEC operations run smoothly.

Despite the significant potential benefits, the government needs to ensure that the interests of all current stakeholders, such as the Airplane Owners and Operators Association and other Pakistani investors, are safeguarded before attracting new foreign investors. The government should prioritize creating a transparent and fair process for private investment in airport infrastructure, which includes the engagement of all stakeholders.

The Pakistan Civil Aviation Authority (PCAA) also has a crucial role to play in this process. It is essential to have a collaborative effort between the PCAA and private investors, as opposed to a dictatorial approach. This approach will lead to better results, and the PCAA can ensure that national security is protected while avoiding a monopoly.

Furthermore, the government needs to take steps to attract both domestic and foreign investment in airport infrastructure. The private sector has the financial capacity and technical expertise to improve airport infrastructure, and the government should create an enabling environment for them to invest in the country’s airports.

In conclusion, the Private-Public Partnership Act is a significant step towards developing Pakistan’s airports and improving the country’s economic productivity. However, the government needs to prioritize safeguarding the interests of all stakeholders, creating a transparent and fair process for private investment, and collaborating with the private sector. By doing so, Pakistan can unlock the potential benefits of private investment and develop world-class airport infrastructure that is able to meet the highest standards of safety, security, and efficiency.

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