Orient Airways was a privately owned company, with limited capital and resources. It could not be expected to grow and expand independently. It was then that the Government of Pakistan decided to form a state-owned airline and invited Orient Airways to merge with it. The outcome of the merger was the birth of a new airline, through PIAC Ordinance 1955 on January 10, 1955.

In addition to transport activities, Orient Airways had established the nucleus of overhaul and maintenance facilities and acquired trained pilots, engineers and technicians, measures which proved to be a great asset for PIA during its teething phase.