In November 1947, Nelson headed for India and Pakistan looking for business. While in Calcutta he met with executives of Orient Airways to sell them three twin-engine C-47s and two twin-engine Beechcraft. Through these contacts Nelson and TAL became involved in the founding of Pak-Air, Ltd. This new airline was to serve Pakistan which had recently become self-governing, yet still within the British Commonwealth.

After many months of negotiations between Pak-Air and Transocean's Bill Rivers, a contract was forged to establish air service for Pakistan with the Haroon family, one of the ten wealthiest families in the world at the time. The agreement called for Transocean to provide Pak-Air with flight crews, operations and maintenance staffs for Pak-Air routes from Karachi to London and Singapore, and to assist in the establishment of domestic routes. TAL's Sam Wilson was sent to Karachi to assist the young airline in its operations. Later, when the Haroons decided they needed experienced management, Transocean was given the contract to run the airline. But a crisis was already brewing when Flight Captain Dan McCarthy arrived in Pakistan in the spring of 1949 to relieve Sam Wilson from his TAL duties. Sam had been Transocean's first-in-command of their operations in Pakistan. The crisis began when many of the Pak-Air copilots felt they had served their apprenticeship and wanted to be checked out as captains. Some of these copilots had trained at the Taloa Academy of Aeronautics (a subsidiary of TAL at Oakland International), and some had flown in the Royal Indian Air Force. Still others had gained their experience flying domestic routes throughout India and Pakistan.

Captain McCarthy was distressed to find that most of the men who had not been previously trained at Transocean's academy were unqualified as copilots and immediately fired five of them as he feared they might cause an accident. The firing brought a swift and angry reaction from Pakistani pilots who promptly complained about their termination to relatives who were among the principal investors.

The administration of the airline had been delegated by the Haroon family to Hussain Malik, a Pakistani lawyer and a graduate of Cambridge University in London. Malik conceded that McCarthy was right in principle, but he was under substantial pressure from the Pakistani investors. Finally, he directed McCarthy to put the pilots back on flying status with the airline. Captain McCarthy immediately canceled Transocean's management contract. An orderly transfer of management was accomplished over the next thirty days. This was with the understanding that TAL would no longer assume responsibility for the operation.

Ten days following TAL's pullout, a Pak-Air DC-3 with a full load of passengers crashed on a mountaintop during a flight from Calcutta to Karachi, killing all on board. At the controls were two of the pilots McCarthy had fired. They had apparently miscalculated the force of the wind and descended too soon on an estimated time of arrival (ETA) over Karachi.