The sky’s the limit: Aviation in Pakistan

The ‘aerospace and avi­ation industry’ is a crucial sector of the global economy, making a significant contribution to air transpor­tation, trade, employment, nation­al security, as well as the overall economic growth of the world.

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According to a report by the Aerospace Industries Asso­ciation (AIA), the aerospace and defense industry gener­ated US $892 billion in revenue and employed more than 2.1 mil­lion people during 2021, despite all the inflationary pressure and continued pandemic recovery.

According to the Pakistan Aerospace Council (PAeC), the commercial avia­tion industry contributed US$ 2.7 tril­lion (3.5 percent of GDP) to the glob­al economy in 2020. The industry still has the capacity to grow exponentially, as Boeing — a leading aircraft manufac­turer — forecasts that there will be a de­mand for more than 43,500 new aircraft worth US$ 7.2 trillion by 2040.

The aerospace and aviation industry in Pakistan, relatively small compared to other countries, is gradually mak­ing some progress. According to a Daily Times report, the estimates of the over­all market size of the aerospace and defense industry in Pakistan amounts to US $8.7 billion approximately. Howev­er, the value of aircraft, spacecraft, and parts-related exports from Pakistan has been minimal, amounting to US $52 million only in 2021, as reported by ‘Trend Economy’.

In Pakistan, the industry is primarily dominated by state-owned companies, namely, Pakistan Aeronautical Complex (PAC) and Pakistan Space and Upper At­mosphere Research Commission (SU­PARCO). The PAC is responsible for air­craft manufacturing, and maintenance, repair, and overhaul (MRO) facilities — mainly for military aircraft, whereas the SUPARCO focuses on conducting scientif­ic research in space technology, remote sensing, and satellite communications.

Apart from the PAC and SUPPARCO, a number of maintenance and repair as well as R&D centers exist in numerous campuses of the PAF, dispersed in vari­ous cities, but they lack the requisite in­ter- and intra-facility formal linkages.

Considering these gaps, the present Chief of the Air Staff (CAS) Pakistan Air Force, Air Chief Marshal Zaheer Ahmed Baber Sidhu during his stint as Director of General Projects formulated a strat­egy to develop an umbrella organiza­tion alongside a compatible ecosystem for addressing issues of capability and capacity upgrading, sustainability and efficiency enhancement, and partner­ships at national and international lev­els to enhance self-reliance by conserv­ing national resources.

Thus, a comprehensive study was un­dertaken to assess the PAF capabilities developed so far and to identify centers of excellence for each core capabili­ty. Drawing inspiration from Silicon Val­ley, the conceptual model for the NASTP traces back to the triple helix model of innovation. This model refers to a set of interactions between academia (Uni­versities & Think Tanks), industry and the government, to foster economic and social development.

The NASTP envisioned setting-up of a state-of-the-art Special Technology Zones (STZs) which accommodate high-end aerospace-focused technologies’ design centers, public and private na­tional & international aviation industry, MRO facilities for commercial & military aircraft encompassing but not limited to aviation logistics, aviation vocational training institutes and expo centers etc.

The CAS launched the NASTP in Is­lamabad, on October 19, 2022. The flagship cluster of NASTP has been set up at Kamra and is operational, the re­gional clusters at Rawalpindi, and Ka­rachi have also become operational, while another regional cluster is being established at Lahore which will be op­erational by the end of 2023. The NAS­TP is being spearheaded by the PAF and it is a project of strategic national im­portance for Pakistan.

In addition to the potential of defense-related aerospace and aviation in Paki­stan, commercial aviation also has tre­mendous potential, as Pakistan has a strong air connectivity ranking, cur­rently placed 45th out of 219 countries on the Air Connectivity Index. Similarly, according to IATA’s forecast, air trans­port in Pakistan is expected to increase by 184 percent in the next 20 years, re­sulting in 22.8 million additional pas­senger departures by 2038.

This growth can contribute around US$ 9.3 billion to GDP and create around 786,300 jobs. These statistics are from 2019, and although these rankings have changed a bit due to COVID-19 and sub­sequent developments since no updat­ed county-wide rankings are available yet, these statistics still demonstrate Pakistan’s air connectivity potential.

Despite having an enormous potential for growth in commercial aviation, cur­rently, no airport in Pakistan, except Ka­rachi to some extent, can be considered a “connectivity hub.” However, there is enormous potential in Lahore and Is­lamabad to be the connectivity hub. Pakistan must take initiative to improve infrastructure, such as airports and air traffic control systems, to leverage its geostrategic location for becoming a re­gional air connectivity hub.

Furthermore, in order to take advan­tage of the growth opportunities in the aerospace and aviation market, Paki­stan must focus on the adoption of the fast-evolving digital transformation and emerging technologies. The setting-up of NASTP seems to be a step in the right direction as it can be a game changer.

As envisaged by Air Chief Marshal Zaheer Ahmed Baber Sidhu, NASTP — when implemented fully — would pro­vide the necessary ecosystem and enabling environment required to cul­tivate design, research, development, and innovation in the aviation, space, IT, and cyber domains.

Another critical, and yet-awaited, in­tervention is the reform and transfor­mation of the PAC, on the corporate governance model, making it efficient and competitive in the global market. For instance, in Turkey and China, the aerospace and aviation industries are mainly state-led, but they work on a corporate model, ensuring market com­petitiveness and efficiency. Similarly, offset contracting and technology trans­fer agreements in aviation imports also need to be adopted.

Pakistan’s aerospace and aviation in­dustry is relatively small, but it has vast potential for growth. Leveraging and prioritizing the initiatives like NASTP can play a significant role in attract­ing investments through public-private partnerships and international collabo­rations, which are the pre-requisite for the growth of this industry, facilitating the transfer of technology and generat­ing employment opportunities.

This article was first published in ‘The Nation’ on April 18, 2023.

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The writer is a Senior Pakistani Economist currently based in Saudi Arabia, holding a PhD in Economics with 18 years of diverse experience in research, analysis, and writing. Twitter Handle: @moheyuddin