Wednesday, January 4, 2012

Grounded for life: One year after crash, JS Air finally closes its doors. (Pakistan)

A fatal accident and declining oil exploration activity mark the demise of the charter air service.

KARACHI:  A year after a deadly accident killed 21 people, JS Air – reputed to be have been one of the leading chartered air service providers in the country – has decided to shut down its operations after several of its customers were scared away towards its competitors, senior company officials told The Express Tribune.

“We were not making any money so there was no option but to cease the operations a couple of weeks back,” said Munawar Alam Siddiqui, chairman of JS Air. “All our clients switched to other service providers.”

JS Air’s downfall started when one of its Beechcraft 1900C-1 crashed minutes after take-off from Karachi airport on November 5, 2010, killing all 21 people on board. The victims included 15 engineers from the Italian energy firm ENI who were going to Bhit gas field in Dadu.

Siddiqui said that the company kept paying all of its employees, including its pilots, for a year but finally decided to pull the plug when it became clear that demand for JS Air’s services would not revive. “We invested $7 million to start JS Air and could not even recover that capital investment.”

The airline was started in 2005 with three leased aircraft and quickly built up its market share.

Another reason for the airline’s demise was the declining number of petroleum geologists travelling to remote oil and gas fields. Energy sector companies formed the bulk of JS Air’s clientele, which included such names as Pakistan Petroleum (the second largest company in the country), Australian mining giant BHP Billiton, Dutch petroleum services giant Schlumberger, and European oil firms ENI and OMV.

Industry experts say that all charter services are dependent on the oil and gas companies, which have now rolled back their exploration and drilling operations in recent years due to security concerns.

The Civil Aviation Authority has at least 20 charter companies registered, with a total of 85 aircraft. Yet most industry experts say that most of these companies exist only on paper. Apart from JS Air, the two other major companies in Pakistan are Schon Air and Aircraft Sales and Services.

Bad luck seems to have played its part in JS Air’s demise as well, said Siddiqui, a licensed pilot who has pictures of vintage aircraft and their models all over in his office.

In 2007, it successfully earned rights to start a domestic air service in Sri Lanka. “That was a very good deal for us. We were ferrying passengers and cargo. But then the war against the Tamil Tigers ended, the roads opened up and there was no need for our aircraft.”

JS Air is owned by Jahangir Siddiqui and Company, the holding company of the JS Group, which is also a shareholder in the passenger airline Airblue. “So there was no incentive for us to go into regular air transport business,” said Siddiqui.

The CAA’s attempts to introduce a liberal aviation policy for promoting charter air services have so far met with failure. A few years ago, former CAA Director General Farooq Rehmatullah envisaged letting investors build private airstrips in small cities and towns.

Aviation industry officials insist that appetite for air travel has to be created as rural income has improved on the back of higher wheat, rice and sugar prices. “But still, these wealthy landlords travel by road in Pajeros and Land Cruisers from their villages to cities,” said a senior CAA official.

Published in The Express Tribune, January 5th, 2012.

http://tribune.com.pk

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