ISLAMABAD: Arif Habib, chairman of the consortium that acquired majority stake in Pakistan International Airlines, has issued a stark warning that the national flag carrier could face forced closure if the recent sharp increase in jet fuel prices is not reversed.
The alert comes just weeks before the Arif Habib-led group assumes full operational control of PIA next month, casting a shadow over one of Pakistan’s most significant privatisation deals in decades.
Jet fuel JP-1 rates have skyrocketed nearly 150 percent since early March, climbing from Rs190 per litre to Rs472 per litre by March 21. Official data shows a fresh Rs84 per litre hike, equivalent to 21.65 percent, implemented without formal announcement amid global supply disruptions.
This surge stems largely from uncertainty triggered by the US-Iran war, which has disrupted shipments through the Strait of Hormuz and driven international jet fuel prices dramatically higher. In Pakistan, the domestic increase has far outpaced global trends, placing local carriers at a severe competitive disadvantage.
Habib, speaking in an interview clip shared by Bol News and later to Arab News, described the hike as unsustainable. He noted that PIA had barely navigated the current month but warned that continued high prices would make operations impossible without government intervention.
The businessman, whose consortium secured a 75 percent stake in PIA for Rs135 billion ($482 million) in December 2025, stressed that the airline could not remain viable under such cost pressures. Local reports from The News Eyes and other national outlets quoted him saying that without rollback, PIA might have to suspend operations entirely.
PIA, long burdened by heavy losses and legacy debt exceeding Rs650 billion before restructuring, was privatised to inject fresh capital and efficiency. The Arif Habib Consortium, including partners like Fatima Fertilizer and Lake City Holdings, plans to invest around Rs125 billion in rehabilitation, fleet expansion and service improvements.
Yet the timing of the fuel crisis threatens these revival efforts. Fuel typically accounts for a major portion of airline operating costs, often 30 to 40 percent for full-service carriers like PIA. A 150 percent jump could force significant fare increases, route cuts or frequency reductions, analysts suggest.
Regional media reports highlight similar pressures on other Pakistani airlines, with some already imposing fuel surcharges of up to $100 on international routes and $20 on domestic flights. International coverage of the specific PIA warning remains limited, but Arab News reported Habib urging the government to rationalise refining margins to bring domestic jet fuel costs in line with regional benchmarks.
The privatisation valued the entire airline at around Rs180 billion. The consortium is reportedly considering acquiring the remaining 25 percent government stake by the April 29 deadline to gain complete control and accelerate turnaround plans.
Before privatisation, PIA had shown signs of improvement in 2025, posting an operating profit of Rs9.3 billion and a net profit aided by accounting adjustments after two decades of losses. Legacy debt of over Rs670 billion was largely shifted to a holding company, easing immediate financial strain on the core airline.
Despite these steps, structural challenges persist, including fleet modernisation needs and competition from private carriers. Habib’s warning underscores how external shocks like the Iran conflict can rapidly undermine even well-intentioned reforms.
Aviation experts point out that global jet fuel prices surged from under $100 per barrel to as high as $150-200 per barrel in recent weeks due to the Middle East tensions. Pakistan, heavily reliant on imported energy, faces amplified effects from currency weakness and limited hedging capabilities.
If unaddressed, the situation could lead to higher ticket prices for passengers, reduced connectivity on both domestic and international routes, and potential job impacts in the aviation sector. PIA currently operates a modest fleet serving key destinations, with plans for expansion under new ownership.
Government officials have yet to comment publicly on Habib’s remarks or possible relief measures. Earlier, authorities absorbed much of PIA’s debt to facilitate the sale, reflecting the strategic importance of maintaining a national carrier.
The development raises fresh questions about the resilience of Pakistan’s privatised entities to global commodity volatility. With Eid travel season approaching and summer demand rising, any operational disruptions at PIA could have broader economic repercussions for tourism, trade and overseas Pakistanis.
Habib has called for swift policy action to prevent irreversible damage to the airline. Whether the government intervenes by adjusting fuel margins or providing targeted support remains to be seen, as the new owners prepare to take the helm of a carrier with a storied yet troubled history.