By Imran Aslam Khan
The aviation industry in Pakistan is in a state of severe decline—a crisis extensively documented by AOOA, Pakistan, which has authored several papers on the sector’s potential to alleviate the country’s economic woes. The white paper published by AOOA Pakistan in 2024 remains valid; in fact, the situation has worsened considerably.
Key indicators of business decline are closures and bankruptcies. While business failures are not unusual, the situation becomes alarming when state policy is a primary driver. The National Aviation Policy 2023 appears to be a significant factor in the industry’s struggles.
The License Cancellations: Facts, Not Innuendo
In July 2026, the Civil Aviation Authority (CAA) cancelled four Air Transport Licenses for non-compliance with the National Aviation Policy. These were Aerial Works Operations licenses, essential for:
· Air Ambulance Services
· Aerial Surveys
· Search and Rescue Operations
The companies which have surrendered their licenses due to exhorbitant security deposits are Hybrid Techniques, Airborne Aviation, Pakistan Aviators and Aviation and Askari Aviation.
These are not luxury services—they are critical public safety and economic infrastructure.
The public notice issued by the government portrayed these companies as defaulters. However, a closer examination reveals that the license surrenders were effectively coerced: companies were given an ultimatum to either double their security deposits—amounting to millions of rupees per license—or exit the industry.
The Core Problem: Policy Without Consultation
The National Aviation Policy 2023 was amended without adequate stakeholder consultation. Security deposit requirements were arbitrarily doubled, with no clear accounting mechanism for where these funds are held, how they are managed, or whether they accrue interest—and if so, to whose benefit. This lack of transparency is not just poor governance; it is a deterrent to investment.
To put this in perspective:
Affected companies were required to deposit between PKR 5 million and PKR 20 million per license, on top of the similar existing deposits already held by the state.
With no audited trail or return on these deposits, businesses reasonably chose to surrender licenses rather than sink further capital into an opaque system.
Acknowledging the Government’s Position—and Rebutting It
The government’s stated rationale for doubling deposits is likely financial compliance and operational safety. These are legitimate concerns. However:
No evidence has been presented that the affected companies were safety-compromised or financially distressed prior to this policy change.
The same regulatory outcomes could have been achieved through graduated deposit structures linked to company turnover, performance audits, or insurance-backed guarantees—lessons already implemented in jurisdictions such as the UAE and Turkey.
Treating established operators as potential defaulters without cause is not regulation; it is hostility toward enterprise.
The Economic Cost: Jobs, Revenue, and Foreign Exchange
The human and economic toll is staggering:
Flight schools: Pakistan, with a population of 250 million, now has only 7 flying schools—including just 3 in the private sector—down from 16 in 2016.
International benchmark: South Africa, with 65 million people, operates over 100 flight schools, training pilots for multiple countries—including Pakistan—and generating significant foreign exchange revenue.
If Pakistan had maintained even half of South Africa’s ratio, we could be training thousands of pilots annually, earning billions in foreign currency, and creating high-value jobs. Instead, we are exporting our own student pilots abroad due to a lack of domestic training capacity.
Who Is Being Served?
Several aviation companies have already shut down. Others are actively planning to relocate operations outside Pakistan or close permanently. Meanwhile, the security deposits surrendered by these companies—totaling billions of rupees—do not simply “sit in banks.” In the absence of transparent auditing, it is reasonable to ask who benefits from these funds. The government has not provided clarity, and this opacity fuels public distrust.
Government Acknowledgment—But No Action
The Federal Government was formally informed of these issues and assured stakeholders that action would be taken. However, to date, no corrective measures have been implemented. Instead, policy direction appears increasingly reliant on IMF loans and external borrowing—a strategy that perpetuates debt dependency rather than fostering indigenous economic growth.
One cannot help but question whether the systematic dismantling of a strategic sector is negligence or design. Either way, the outcome is the same: Pakistan loses.
Immediate Action Required
To avert further collapse, the following steps must be taken urgently:
- Restore the Aerial Works licenses of the four affected companies, effective immediately, pending a transparent review.
- Amend the National Aviation Policy 2023 to:
Reduce security deposits to pre-2023 levels or link them to a company’s annual turnover.
Mandate annual independent audits of all security deposits held by the CAA, with public disclosure of fund utilization and interest accrual.
Mandate formal stakeholder consultation for any future policy amendments affecting licensing. - Establish a dedicated Aviation Economic Task Force comprising government, industry, and independent experts to develop a 5-year growth strategy for the sector, with measurable KPIs and to Monitor such KPIs on regular basis.
Conclusion
The aviation industry does not need charity—it needs sensible, transparent, and predictable policy. The sector has the potential to be a net contributor to Pakistan’s economy, creating jobs, earning foreign exchange, and providing critical services to the nation. But this potential will remain unrealized if the state continues to treat aviation as an administrative afterthought rather than a strategic economic asset.
The clock is ticking. The industry’s doomsday is not a metaphor—it is a forecast. And without immediate intervention, it will become a reality.
