Pakistan’s cabinet has approved a deal to transfer the operations of Islamabad International Airport to the United Arab Emirates (UAE), aiming to attract foreign investment and revitalize the country’s struggling aviation sector.

The agreement is set to be finalised under a government-to-government (G2G) model, is part of Pakistan’s broader effort to privatise or outsource management of various state-run enterprises in line with conditions agreed upon with the International Monetary Fund (IMF) as part of a $7 billion bailout approved last September.

The national airline, Pakistan International Airlines (PIA), along with state-owned electricity generation and distribution companies, are already on the privatisation agenda, while authorities are actively seeking international partners to modernize airports and enhance services.

Officials believe that foreign partners can bring operational expertise, improve passenger experiences, and restore confidence in the aviation sector.

“Today we decided to finalize arrangements with the UAE government through a G2G framework agreement for the transfer of operations of Islamabad International Airport,” said Deputy Prime Minister and Foreign Minister Ishaq Dar following a Cabinet Committee on Inter-Governmental Commercial Transactions meeting.

A Negotiation Committee will be established to work out the details, led by the prime minister’s adviser on privatization and including representatives from the ministries of defense, finance, law and justice, and privatization.

Inaugurated in 2018 at a cost of over $1 billion, Islamabad International Airport has faced criticism for construction delays, inadequate facilities, and operational inefficiencies. It was built to replace the older Benazir Bhutto International Airport, which had been overwhelmed by passenger traffic.

This handover is part of a larger government initiative to secure foreign investment in critical infrastructure. Earlier this year, the government indicated it was considering management contracts for airports in Karachi and Lahore, though no final agreements have been made.

Pakistan’s aviation sector has been under pressure since the European Union banned PIA flights in 2020 due to a pilot licensing scandal. Although the EU ban has since been lifted, the Civil Aviation Authority continues to face challenges with safety oversight and revenue shortfalls.