Corporate Desk
Pakistan needs a comprehensive overhaul of its civil aviation sector, as the country has long lacked a unified national aviation vision and has largely treated aviation as an administrative function rather than a strategic economic industry, according to a report released on Monday by the Competition Commission of Pakistan.
The report, titled “Competition in the Skies: Pakistan’s Civil Aviation Market Assessment,” presents an extensive review of the sector based on nearly two decades of data from 2006 to 2025, along with consultations with industry stakeholders.
According to the study, Pakistan’s aviation sector handled nearly 340 million passengers during the review period. Annual passenger traffic rose from 12.8 million in 2006–07 to 24.3 million in 2024–25, marking an 89 percent increase.
However, the report notes that this expansion represents a moderate compound annual growth rate (CAGR) of about 3.42 percent over the past 19 years. The growth has largely been driven by international travel, which recorded a CAGR of around 5.46 percent, while domestic traffic remained almost stagnant with a CAGR of just 0.19 percent.
The report observed that although passenger numbers have increased, the sector’s structural depth and competitive strength have not kept pace, particularly when compared with Pakistan’s population growth and long-term economic potential.
“Civil aviation cannot be governed in silos,” the report said, highlighting the need for a coordinated national approach.
The study identified several structural gaps that continue to hamper the sector’s development. These include the absence of an integrated national aviation strategy, fragmented governance and policy inconsistency among regulatory, fiscal and financial institutions, and stagnation in the domestic aviation market despite growth in international traffic.
Other challenges include frequent airline exits and financial fragility among local carriers, weak aviation-specific financing frameworks, underutilized airport infrastructure, and growing dependence on Gulf-based airlines.
The report also pointed to competitive imbalances arising from regional macroeconomic factors and the presence of state-backed foreign carriers operating in the Pakistani market.
It noted that civil aviation is vital for economic connectivity, trade and mobility, but regional tensions and airspace restrictions in recent years have exposed Pakistan’s vulnerabilities.
The findings underline the need to develop a strong and self-reliant domestic aviation sector, rather than relying excessively on foreign carriers.
To address these challenges, the report recommends the development of a National Civil Aviation Roadmap alongside a long-term Reform and Stabilization Plan.
The proposed framework aims to build a resilient and investment-ready aviation ecosystem by integrating air travel, tourism, financing and commercial services while ensuring regulatory clarity, competitive neutrality and financial sustainability.
Among the key priorities outlined in the report are the modernization of airport terminals in Karachi and Lahore and the development of secondary airports such as Skardu and Gilgit.
The study also recommends the introduction of electronic gates, digital slot allocation systems, a unified aviation data hub, and real-time reconciliation through the Integrated Border Management System (IBMS).
According to the report, these measures should be implemented through demand-driven and fiscally prudent planning.
The CCP further suggested the creation of aviation- and tourism-specific financing and insurance mechanisms, more predictable foreign exchange and fee policies, tax rationalization, and commercially sustainable airport operations with strategic private-sector participation.
Additional recommendations include evidence-based bilateral aviation negotiations, promotion of low-cost carriers, domestic capacity building, greater participation of small and medium enterprises in ancillary aviation services, and the development of local maintenance, repair and overhaul (MRO) facilities.
The report emphasized that competitive neutrality must remain central to aviation policy, adding that historical privileges in the sector should be reviewed while keeping market entry open.
At the same time, it stressed that strategic oversight of critical aviation assets must remain with the state.
Overall, the report concludes that Pakistan must move beyond simple growth in passenger volumes and focus instead on building a structurally resilient and competitive aviation industry capable of supporting long-term economic development.
