Thursday, December 15, 2011

Pakistan International Airlines sole vendor denied parts’ supply

KARACHI: The sole spare parts vendor of Pakistan International Airlines (PIA), TWA Aviation FZE, has been denied supply of parts by the original equipment manufacturers (OEMs) leaving the national flag carrier in a fix resulting in increased technical problems of the airline’s fleet.

According to a correspondence by TWA to PIA, which is seen by The News, the vendor has informed PIA that it has been denied supply of parts and asked PIA to arrange parts from some other source.

The correspondence relates to parts for new ATR aircrafts on aircraft-on-ground (AOG) basis. It was learnt that the hesitation by OEMs is because that TWA FZE has no credibility or any history of such dealings with manufacturers who alone can supply parts to airline operators or to their recommended vendors.

According to aviation experts, airlines can only use original parts otherwise their insurance cover faces a risk in case of any incident or accident or to qualify for any guarantees offered by manufacturers at the time of delivery.

This is also a requirement for leased aircrafts or aircrafts purchased from the manufacturer or from any other party in case of used aircrafts.

It was learnt that contrary to the claims of PIA that TWA FZE had offered a $700 million credit line, PIA opened an LC (letter of credit) amounting $2.5 million through Summit Bank for supply of parts. Another correspondence between PIA and TWA FZE reveals inexperience of TWA FZE in dealing with such issues.

A source said that the parts were shipped in the name of Summit Bank instead of PIA, which led to delay of two to three days in getting them cleared from the customs.

Airlines all over the world maintain their own inventory of spares to carry out rectification and maintenance at their main hubs. In addition to this they appoint vendors located in proximity to their various international destinations.

PIA made a decision by handing over their inventory to TWA FZE, rather than having a choice of multiple vendors.

Sources said that this was done in 2005- 2006 when the former chairman, Chaudhry Ahmed Saeed was heading the airline. The then DMD AVM handed over the PIA inventory to a company located in UK and appointed it as its sole supplier with right of first refusal.

It may be mentioned here that when an aircraft is on ground and a part is not readily available it is classified as AOG and an airline would rather buy a part at twice or even thrice its normal price tag in order to avoid expenses such as provision of hotels for long delays to passengers, parking charges and consequential ramifications on its schedules.

PIA ended up buying all spares on AOG basis, which led to depletion of allocated maintenance budgets.

In 2007, PIA’s total fleet excluding the Boeing 777 was banned from operating into the European Union following inspections by SAFA (Safety Assessment of Foreign Aircrafts) inspectors.

“PIA has now made the same mistake in 2011. This time it is current DMD, who is an employee of GE, presently working on contract with PIA,” a source said.

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