SENATE SECRETARIAT

Subject: - MINUTES OF THE MEETING OF THE STANDING COMMITTEE ON DEFENCE AND DEFENCE PRODUCTION

 A meeting of the Standing Committee on Defence and Defence Production was held on Wednesday 31st October, 2007 at 10.30 a.m. in Committee Room No. 1, Parliament House, Islamabad. Senator Nisar A. Memon was in the chair. The following attended the meeting.

(1) Senator Mushahid Hussain Sayed   Member
(2) Senator Syed Dilawar Abbas   Member 
(3) Senator Naeem Hussain Chattha   Member
(4) Senator Asif Jatoi     Member
(5) Senator Mrs. Rukhsana Zuberi    Member

 The list of participants from Ministry of Defence is at Annex “A”.
2 The Agenda before the Committee was as under:-
  
i. Presentation by Director General Civil Aviation Authority (CAA) on the Aviation Policy pursued by the Government.
ii. PIA flights to European Union (EU)
iii. Presentation of Multan Fokker Crash report. 
iv. Any other item with permission of the Chair.

3. The meeting started with recitation from the Holy Quran by Senator Naeem Hussain Chattha.

4. After recitation from the Holy Quran the participants offered Fateha for the father of Senator Mahtab Ahmed Khan, who had passed away a few days ago. Thereafter Senator Nisar A. Memon asked DG CAA to brief the Committee on the agenda item.  
5. Mr. Farooq Rehmatullah, Director General, Civil Aviation Authority stated Honourable Senators, Secretary Defence and gentlemen. It is indeed a privilege and an honour to be here with you and to present you the draft of the national Aviation Policy. But let me on the outset mention to you that whereas we initiated the initial work on the aviation Policy in terms of having a re-look and to draft a new policy. The ownerships since has been transferred and I think, now the ownership rests with the Ministry of Defence and with the Board of Civil Aviation Authority who was the final authority which will approve and then I presume it will go to the Prime Minister for formal approval. But we being through a long process, it has taken us as you very rightly mentioned a long period of time and rightly so because we did not want to leave any outside stakeholder out of this process. So, I will firstly brief you on the process that we followed. In the initial process was that we studied Aviation Policies of the world, starting from the United States, right across to Australia. What are the current aviation polices in vogue? Where did our policy, the previous policy, where did it stand, which is drafted or which is currently invoked, which was done in 2000. And was there a need to have a re-look and there was a consensus that yes, there is a need to have a re-look at the policy. So, after looking at the various models, we had the stakeholders engagement which involved various parties that is the Airlines, the World Bank, ADP, the Planning Commission, even the Travel Agents, the Cargo handlers etc. So, we went through a very wide spectrum of the outside stakeholders, in terms of getting their views and opinions of the first draft that was developed. We have since then been a number of items to the Board of civil Aviation Authority. There has been a lot of interaction and good suggestions and recommendations, both from the Board and from the Ministry of Defence and those have since then been built into the policy. So, it has taken a little bit of time but for the good reasons and I am now in a position to say that with the assistance of the ministry of Defence, the last engagement which was led by Maj. Gen. Mir Haider Ali Khan, where a few irritants that were still there and needed to be resolved, have been resolved and the policy in the draft form is now being presented in the final shape. And of course, this honourable House and the honourable Senators, any view that you will have, will be taken on Board and I am sure that the Ministry of Defence will have a look at that and also the Board of Civil Aviation Authority will be given your views as a feed back. So, what you have on the screen is the consultation process that I have summarily gone through and the last one was of October 6, 2007 which I mentioned to you was, chaired by General Haider and there were some issues with regard to PIA and shared their point of views which have been since incorporated, all resolved and taken on Board.

6.  What is this draft policy all about; and let me first of all say that air transport plays a key role in the promotion of trade, tourism and economic growth of a country. Pakistan with a population of 160 million and DGP growth rate of about 7% per annum, has a potential to surpass the existing air traffic growth rate of about 8% per annum. So, we are looking at higher growth rates in the future, if this, the economy continue to grow and the middle class continue to grow. The growing domestic and International Aviation Sector in Pakistan need an environment which not only serves the public interest and the Aviation Sector but also supplements the growth of trade, tourism and national economy. The policies are aligned to the national trade corridor which encompasses the government’s vision to route international trade, tourism and passengers traffic through Pakistan. It also aims to provide public direct connections from Pakistan while ensuring safe, affordable and quality services. It also encourages that this happens in terms of even inviting the foreign airlines to operate through Pakistan. The vision, of course, is to have a progressive, liberalized and efficient Aviation Sector, based on competition and fair opportunities, regulated to safeguard public and national interests and provide impetus to national economy and to achieve national standards of safety and security. That is the vision that this Aviation Policy has. What are the primary objectives and those are right in front of you. One is forced to serve national public interest to comply with the I Card Standard of safety, security and the regulatory responsibility that Civil Aviation has. To promote Aviation Sector in the country allowing market forces to determine price quality, frequency, range of air services options and to increase contribution in GDP and this is something which the Planning Commission was very keen, is incorporated in the policy. In GDP from about 0.1% is a current contribution that we have to 1% for a period of 5 years. This is an achievable number if I may mention to you, provided we invest and we continue to pursue the policies that we are currently wanted to promote. To encourage development of passengers, hubs and cargo, transshipment hubs to support, facilitate the objective of the national transport, master plan and the national trade corridor. To regulate standard and service of Airports and Airlines, to separate regulatory functions from all other functions of C.A.A.

7.  Ladies and Gentlemen;  I think that is the crucial aspect that we have to recognize for the future that the regulatory aspect that currently is at the moment mixed with the commercial aspect of Civil Aviation or in due course completely separated so the regulatory continues to be the responsibility of the state and  of the Government and is delegated down to Civil Aviation Authority but as far as the commercial side is concerned or the Airport operations are concerned or  for that matter the ANS (the Air Navigation Services are concerned) those could be completely separated and also in future if the Government so wishes incorporated as entities even to the extent in extreme case be under the private sector.  So those are the options that we have already done in terms of the restructuring of Civil Aviation which we have achieved. Mr. Nisar Memon we have the privilege of having him, he inaugurated first workshop which we had at the Arabian Sea Club to do this restructuring and sir, let me share with you that the restructuring task has almost been completed within a period of one year and we are now in a process where we are filling up the human resources aspect as a part of the restructuring work and plugging in the gaps that we find and also focusing on the systems and let me give you one indicator of where we are in terms of Cargo and I was sharing that  little awhile ago with Senator Rukhsana Zubairi. For example our ADP for last year was 4 billion rupees that was coming from the private sector, the health of an organization is indicated its ability to expand, to invest in its future and if you cannot spend your capital money for capital projects you are an organization, which has got serious problems. You are not investing for the future and therefore, you will have serious problems in times to come and that is something that we are currently faced with.  For example our radars system are 20 years old they should have been replaced or upgraded sometime ago, our Air Navigation Aids should have been invested much earlier and upgraded and for example our known Aircraft that we have the calibration aircraft, the beach aircraft is 30 years plus old and we have had problems with it in terms of operation ability, we should have invested in additional aircrafts much earlier. We should have had our ERP system in Civil Aviation to manage or process to control our cost and facilitate the management to be an efficient and productive. We did not have computer-based system which was completely linked to all the mangers and the staff to perform properly. We are now with IBM working on ERP in implementation stage. Of course it will take us 80 months or two years to implement but we should have invested much earlier but let me share with you the exact results. For this year from 4 billion that we had for last year as ADP and we were only able to spend 1.2 billion and what did it reflect, it reflected that we did not have a capability, we did not have the systems and we did not have the people to do our projects and therefore, we are lagging behind even the budget that we develop ourselves in terms of spending for investment in Civil Aviation. This year we have increased that investment budget to 9 billion, which is a record, ever that has been set for Civil Aviation, it is for very good reasons for the new Airports. Senator Rukhsana Zubairi was mentioning about the aspect of facilities at the Airport, the passengers facilities, there is tremendous need to improve even a new Airportslike Lahore are choked if it is more than one big body aircraft lands there, we have serious problems and we need to invest even in our airport facility. So, we needed to have an appropriate investment plan. So, we made an investment plan of 9 billion and the question was when you cannot spend 1.2 billion how are you going to spend 9 billion? We have the capacity, we have the people, we have the system to support well but let me share with you figure that I am pleased with that in this quarter, the first quarter of the financial year 2007-2008 we have spent and spent for a good cause and a good investment of 3 billion already. So, it indicates that we are developing on a very fast track capacity to invest in our organization to improve it for the future. Of course, this process is to continue. So, I am talking about the aspect of how we have to play an important role in developing the infrastructure.  One aspect that we are doing is the development of passage, hubs and cargo transshipment and hubs to support the objective of the national transport policy and the national trade corridor. Now if we look at our cargo handling capacity it is at the moment has a lot of weaknesses. We don’t have a completely planned cargo complexes in any of our airports. For example in Karachi we are spread over on  four different locations, it is not coordinated an efficient way of working. We have now got master planners which are working on the master plan on the cargo side at all airports so that we can have these major hubs and can contribute both to the returns for Civil Aviation and also for our airlines and for the cargo handlers and also contribute to the exports of the country. To regulate the standard service in airports and airlines, this is an important aspect and I think Mrs. Zubairi was mentioning this aspect and what we now started doing for the information of the honourable Senators is that we start benchmarking.  We are now looking at the standards which are internationally applicable and where do we stand against them and let me share with you that we stand very low as against the international standards and our desire is that we catch up and we develop standards which at least bring ourselves the first stage at the 50% cartel of the standards of the leading Airports in the world. We are not saying that we can achieve to be the top 25% cartel; I think that will take sometime but at least as a first step achieve 50%. We have appointed a Chief Executive; we have restructured the Airport site. We now have a completely exclusive Chief Executive who is looking after the airport services and why did we do that. We did it for the reason that in the past organization, which we have since restructured, we did not have trained people to handle passengers. They were not trained on that aspect. They were not trained on the aspect of facilitation. They were not trained on the aspect of the airport security, the role which Civil Aviation has to pay. We have since appointed a Chief Security Officer as for the I’ card requirement. We have a Chief Executive of the airport services, who is completely independent and is responsible for maintaining standards. We have a Mystery Passenger Service which is a consultancy company, which visits airports as a passenger, give us a feed back on the standards at the airports and pinpoints and even take movies which provide us a feed back to us on our weaknesses and is primarily focused on improving our standards and we are very conscious of the fact that we have to do lot catching up in terms of our standards at our airports but structurally we are now in a position and what we have done away with his that in the past if we rose the air tower controller he used to become possibly an airport manager also. Now we are saying these are two separate roles the ATC control is very professional work and that should continue his growth and his promotion etc., and his career development should take place and that particular should be focused, development of individuals and simply on the airport service side our people should be developed and trained and we started now at Kutai for first time courses in handling passengers and services that we will be providing to the passengers. We have started training of our human resource for that. We are even exposing, we have arranged with Singapore, Malaysia and Dubai to send our Airport Managers for attachment and training so they can see the modern techniques that are being adopted and are more familiar with what the world the is doing. So, we are moving on numbers of fronts and it will take us a little time but Insha Allah I think we have the basic human resource, the capability of our people that we will be Insha Allah achieving what we are setting ourselves for the targets. So, separate function from all the functions to separate regulatory function from the all the functions, I talked about this I think this is a primary area. I need to interact more on this with the Board Ministry of Defence in terms of future course on this because at some stage we have to completely separate this because regulatory and other commercial I think is a conflict of interest and I think we need in due course of time resolve that but our priorities are different at the moment we are touching the basics and addressing those normally we will get into the phase where we will address the other aspects that we need to handle. If I take this opportunity to also introduce my team which is sitting with me…..

IFTIKHAR ULLAH BABAR
Secretary Committee SENATOR NISAR AHMED MEMON
           Chairman Committee

 
Annex “A”

List of Participants

1.  Mr. Kamran Rasool Secretary Ministry of Defence

2.  Maj. Gen. Mir Haider Ali Khan,  Additional Secretary, MOD
3.  Mr. Farooq Rahmatullah  DG, CAA

4.  Mr. Umar Ghafoor DMD, PIA
5.  Mr. Shaukat Nawaz JS, MOD
6.  Mr. Manzar Jamal  A/Director Air Transport, CAA

7.  Mr. M. Afsar Malik Corporate Manager R&D
8.  Mr. Irshad Ghani G.M. International Affairs, PIA
9.  Mr. Tariq Qureshi Gen. Manager Quality Assurance, PIA
10.  Mr. Junaid Amin  CEO, Airport Services, CAA
11.  Mr. Muhahid Islam Khan  Director, CATI, CAA
12.  Syed Naseem Ahmed Wg. Cdr
13.  Mr. Mubarik Shah PRM, CAA
14.  Maj. (R) Abdul Karim Gill Section Officer (Council),
       Ministry of Defence