Category: Interviews

CEO PIA, Air Marshal Arshad Malik

Talks About his First Year Performance!

41% increase in revenues, 5 points increase in seat factor and over 90% reliability of schedule. PIA has achieved unprecedented numbers of performance and all set to take more aggressive course.

Signs of improvement have started to appear in PIA in just one year’s time, though there are still many challenges ahead to overcome and many more new heights to achieve. In a video message to the people of Pakistan, CEO PIA, Air Marshal Arshad Malik shared the future plans, achievements and challenges. He asked us to fly PIA and support PIA, as it is only when all of us give the national flag carrier our patronage that it will fly higher in the skies.

Highlighting the airline’s one year’s performance, he said that PIA’s revenue during the past six months had increased by 41 percent, seat factor also improved and was now between 80 to 84 percent which is considered a good performance indicator in the Aviation Industry. The airline’s cargo space utilization increased from 20 percent to almost 80 percent. PIA also enhanced its engineering capabilities and now aircraft maintenance i.e. line maintenance and Check A can be performed at Lahore and Islamabad. This facility was previously only available at Karachi. This allows for better positioning of aircrafts and maintenance which leads to cost savings.

He said two aircraft that were grounded since long, were made serviceable this year and now all Boeing 777s and A320 aircraft in PIA fleet are operational and contributing towards revenue generation. A proper aircraft spares inventory planning program which was lacking before, has also been implemented in PIA that has reduced the aircraft down time and better serviceability of aircraft. He said that the ground service equipment which plays an important role for any airline was left neglected in the past. The ground service equipment that was left as scrape has been overhauled utilizing the airline’s own resources thus saving millions which was given to other service agencies. PIA this year renewed its IOSA certification and now in the process of attaining EASA certification. PIA’s property assets in Pakistan and abroad were neglected and abandoned in past, this year we identified these properties in USA, Amsterdam, Iran, Tashkent and other countries and are trying to make better use of them. 

PIA has introduced new routes and more destinations will be added to its network based on demand prospects and commercial viability and all business decisions are now made collectively unlike what was being done in the past. CEO PIA said that plans are underway to have flights for USA and preferably for operating direct flights to New York, preliminary meeting have been held in this regard. Two narrow body aircraft will also be inducted in PIA fleet by the end of this year. He said that no planning or up-gradation was made in the past for inflight entertainment and passengers comfort on board the aircraft. This year, the in-flight system is being upgraded for the convenience of passengers of long haul flights. Co- branding initiatives has also been taken to promote tourism in Pakistan and for providing better services to the passengers.      

He said that merit has been implemented in PIA and all promotions and foreign posting have been done purely on merit without any outside influence. He thanked the Government for giving their full support in this regard. Referring to overstaffing in PIA, he said that majority of the airline operations are from Islamabad and adjoining cities while most of the Human Resource was based at Karachi. Terming the Human Resources in PIA as an Asset, he said that now employees have been positioned according to the size of operation & number of flights number of fights that are operating from Islamabad.

It is heartening to see these achievements in such a short time. This is the kind of commitment and dedication that is needed for the progress of Pakistan. PIA is our national airline and we need to play our part as well. In the words of CEO PIA, “Make us proud and we will look after you and together we will achieve greater heights not only for PIA but for our pure land Pakistan”

 

an interview with Ahmad Khan- CEO at Cheetay Logistics

Ahmad Khan, CEO of Cheetay.pk, a last mile e-commerce start-up based in Lahore. Ahmad was previously the head of Rocket Internet in Pakistan where he spearheaded, established and successfully launched some of its well-known ventures such as Kaymu.pk, Daraz.pk, EasyTaxi.pk, Carmudi.pk and Lamudi.pk. He is a big force in transforming the nascent landscape of the e-commerce industry in Pakistan and Cheetay.pk has seen phenomenal growth so far. Ahmed is a LUMS and Cambridge alumni and has also worked for top-tier firms including McKinsey and Procter & Gamble. We discuss the e-commerce industry in Pakistan and the growth story behind Cheetay.pk.

NUT:  Let’s us begin with a general outlook of the e-commerce industry in Pakistan. What do you estimate the size to be?

Ahmad Khan: Well, that’s a tough question to answer, because there is no hard data as such. We have done some estimates and they point to sales crossing the Rs 120 billion ($1 billion) mark by year-end. Till now there have been sales worth Rs 65.3 billion in 2018.The market is growing faster than expected as earlier reports predicted that the market would hit the $1 billion mark by 2020 but it’s likely to achieve this figure by 2018.

NUT: What has the growth of the industry been like?

Ahmad Khan: The growth has been pretty phenomenal, and it has been almost doubling every year on a regular basis. Our business for example, has been quadrupling every year while the bigger players like Daraz and Careem have doubled as well.

NUT: So tell us about Cheetay, how did it come about?

Ahmad Khan: When I was at Rocket Internet, the two challenges we faced were logistics and payments. When that journey ended, the idea was that in Pakistan, if we wanted e-commerce to flourish, we needed to solve these two problems. So Cheetay came about as a solution to fulfillment and payments. We’ve actually coined the term “now commerce.” The idea behind Cheetay is not only fulfillment, but instant fulfillment.

NUT: What are your target markets?

Ahmad Khan: Well, we started with food, the reason being, it’s something you want instantly. For example, you would be willing to wait a few days for a phone or some other product, but food is something that has to be delivered instantly. Our target market is very Pakistan focused, and what we are going to do is expand in geography. We are considering expanding to Islamabad and other cities in the next few months.
Right now, we are operating out of Lahore only. Our strength and growth will come from different cities, as well as different verticals. So we started with food, experimented with beauty and health care products, and now we’re looking at books and groceries as well.

NUT: Who is your main competition right now?

Ahmad Khan: In food delivery our main competition is Foodpanda, but now Careem and Uber Eats have entered the space as well. As we grow into multi-category, our competition will be with Daraz and Yayvo.

NUT:  Right now, how much of your sales are still based on food?
Ahmad Khan: About 90 percent. The rest is from other deliveries we do, in fields like healthcare and beauty.

NUT: In terms of gross merchandise value, what number do you go up to on an annual basis?

Ahmad Khan:  On average we get around 600 orders a day, and our ticket price is Rs 1000. While a year back we were on about 150 orders a day.

NUT: Where do you see this in the next 5 years?

Ahmad Khan: In the next five years, we want to be at a 100,000 orders a day operating in multiple geographies and verticals. We want to increase our ticket size over time, to something around 20 dollars, as we increase our categories.

NUT: Based only on Lahore’s food market, how much of the delivery business is shared between you, and Foodpanda?

Ahmad Khan: We do not have any exact numbers, but we can be anywhere from 20-30% of the market in Lahore and remaining is Foodpanda.

NUT: Let’s talk about financing. What type of investment did you start off with?

Ahmad Khan:   We started off with seed capital of USD750,000. After about a year, we went into the market and raised USD1-1.1 million.

NUT: How many customers have you served so far? And how many employees do you have.

Ahmad Khan: About 160,000 is the approximate number. We have close to 200 employees currently, including about 30 managers, with the rest being riders, and rider admins, as well as support staff.

NUT: Based on your experience so far in e-commerce, what are the most critical success factors that are needed for an online marketplace or startup like yourself to succeed?

Ahmad Khan: That is something that on which the verdict is still out. However, amongst the most important factors is getting your business model right. Back when I was in Rocket, the focus was only on the number of gross orders. Now at Cheetay, our focus is on profit and revenue.

We understand that we need to scale, and that we are losing money. But on a per unit basis, on what we call the path to profitability, our unit economics has to be good, and only then can you break even.

We have a enormous focus on customer satisfaction; we have an 85% on time delivery rate, and a 90% fulfillment rate.

The challenge that most people in Pakistan face, is that they are unable to raise consistent capital, nor is it easy to find investors patient enough to wait long enough for a company to become profitable. Another challenge most players face is finding talent. The founders are always very committed, as well as the CEOs and partners but looking around for talent is difficult. It’s no secret that the best talent wants to go work for top-tier firms. So whatever amount of people is left, go to work with startups. Our company has been blessed and very lucky to find the right talent, and keep our people motivated. In short these are two things are critical for start-ups to become successful; capital and then human capital.

NUT: What are your thoughts on mobile payment solutions?

Ahmad Khan: This is the second part of the Cheetay mandate is solving the payment problems. The State Bank of Pakistan is still is unsure of what it wants to do with digital payments. So for us, an E-Commerce business, the lack of payment solutions is a huge challenge. Cash on delivery (CoD) is good, but there are also some restrictions. Credit card penetration is extremely low, as is debit card penetration. So I really feel that if someone can come up with a good digital wallet it will be a huge win.

NUT: What are the steps that are needed to be taken by the government to promote the e-Commerce space?

Ahmad Khan: The government does not have the concepts behind e-commerce and digital businesses. Just a few days ago, they’re imposing an advance income tax on international transactions on payment by credit cards. We use Google and Facebook for our marketing and we have no way to pay them, except via credit card. This new tax really cuts into our profits, as we have to make payments of thousands of dollars for these advertisements.Setting up a company and corporate structure is hard. We have investors from abroad, and we cannot even issue them equity in Pakistan. In fact, we’ve been waiting on our first round of investors to be cleared for almost two years now. This discourages foreign investment.
Then there is the tax structure which needs to facilitate start-ups and give them incentives. These are all hindrances, and there is no actual support from the government.

NUT: AliBaba has recently entered the e-commerce space in Pakistan. Can we expect more international players to enter?

Ahmad Khan: When one player comes and the market gets bigger, other companies follow. Take India for example. FlipKart was pretty big, but Amazon still went in there and other companies like Jabong, Myntra and Snapdeal entered as well. It all boils down to money; if it can be made, other people will come in. The minute the Pakistani market is big enough, everyone will want to come in and get a piece of it.

NUT: Is there any advice you have for aspiring entrepreneurs who would like to start off in the e-commerce space?

Ahmad Khan: It’s tough. There are diverse problems and lots of them. The mantra has changed over the years. Now the idea is not as important as the execution.
Another thing everyone should learn and understand is data. Data is becoming more and more powerful, and your decision-making needs to be a lot more analytics based. So to solve the problem, you need to structure it. I feel that a lot of start-ups do not structure their problems properly. Until you phrase and structure the problem properly, you can’t really solve it.