The authorities in Pakistan have approved a landmark plan for the United Arab Emirates (UAE) to assume operational control of the Islamabad International Airport. The plan is part of its strategy to outsource management of major state assets through government-to-government partnerships.
Cabinet Committee Decision on Islamabad Airport Operations
This decision came during the meeting of the Cabinet Committee on Intergovernmental Commercial Transactions led by Deputy Prime Minister and Foreign Minister Ishaq Dar. A negotiation team led by the Prime Minister’s advisers on privatisation, Mohammed Ali, and supported by senior officials from the Defence, Finance, Law, and Privatisation Ministries, has been tasked to cement the terms of agreements with Abu Dhabi.
Privatisation and Economic Reform in Pakistan’s Aviation Sector
Officials have described this government-to-government partnership as a strategic pivot in Pakistan’s broader privatisation and economic reform programme designed to attract foreign capital, modernise infrastructure, and reduce financial losses from underperforming state-owned enterprises. The newly constructed International Islamabad Airport was inaugurated in 2018 for USD 1 billion. It is the country’s largest aviation facility. Located in the country’s federal capital, the Islamabad International Airport is the country’s largest aviation facility.
The Islamabad Airport handles an annual passenger capacity of 15 million and is designed for future expansion to 25 million. It is indeed a critical asset in Pakistan’s connectivity and trade ecosystem. Despite its modern design infrastructure, the airport is facing operational inefficiencies and financial losses, making it a priority candidate for outsourcing.
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IMF Bailout and Pakistan’s Privatisation Strategy
The handing over of the operations of the Islamabad International Airport to the UAE is part of Pakistan’s broader economic reform and privatization strategy, aligned with conditions from a $7 billion international monetary fund bailout secured in September 2024. Officials aim to leverage the UAE’s expertise in aviation to improve efficiency, upgrade infrastructure, enhance passenger services, and attract foreign investment. This move is expected to reduce financial burdens on state-owned enterprises, boost investors’ confidence, and position the airport as a regional hub for trade and tourism.
Outsourcing Model Protects Pakistan’s National Interests
Bilateral trade between Pakistan and the UAE reached $8.5 billion in 2024, and this deal could further strengthen economic ties. The agreement focuses on outsourcing operations and management, not ownership or full privatization. It will involve a G2G model to ensure national interests are protected while aligning with international aviation standards. Similar arrangements may follow for other airports like those in Karachi and Lahore. The approval marks a significant step, but it is still in the negotiation process. No specific timeline for the full handover has been announced.