The Forum for Partners in Iran's Marketplace
 
 
 
 
 
 
 
 
 
 
 
     

May 2003 / No. 23


Transport Industry

Airbus Deal
Aloft or Crash Landed?

In the absence of a suitable air fleet, Iran Air will inevitably lose its international passenger market to foreign carriers, who are gradually controlling more and more of Iran’s market share.

The ink on the contract between Iran and France for the purchase of Airbus airplanes has had nearly five years to dry, yet a shadow of uncertainty has recently been cast on the still vacant spaces of these aircraft alongside Iran’s aging air-fleet.

The sanctions imposed have deprived Iran from owning new, modern aircraft for sometime. As the years advance, Iran’s aging aircraft continue to be plagued by incidents. In the contract between Iran and France it was agreed that in return for Iran’s initial prepayment of $41 million, France would supply four A-340 aircraft manufactured by the European aircraft manufacturer’s consortium, the Airbus Industries.

Minister of Roads and Transportation, Ahmad Khorram, has repeatedly heralded the imminent delivery of the new aircraft, only to be given the cold shoulder from the manufacturing countries –France in particular. But only recently, Member of Parliament from Ardebil, Valiollah Azarnoush, said that France is reluctant to defy the U.S.-imposed sanctions by selling Iran Airbus aircraft, and has in effect cancelled the deal. Khorram however, maintains that despite the U.S.-imposed sanctions, France is bound by the terms of its contract and Iran will –through negotiations– convince France to deliver a number of aircraft by the end of the year. The Minister has announced no other alternative plans for modernizing Iran’s aging air fleet.

Another take on the matter is presented by a senior official of Iran’s Civil Aviation Organization (ICAO) who believes that France’s Airbus Industries has unavoidably rescinded its contract with Iran because England’s Rolls Royce Company has failed to provide the necessary aircraft engines. France has returned Iran’s repayment of $41 million and has also undertaken to pay the interest it has incurred over the years. The Rolls Royce Company and the British government have given in to American pressure and refuse to sell aircraft engines for Iran's aircraft.

In the absence of a suitable air fleet, Iran Air will inevitably lose its international passenger market to foreign carriers, who are gradually controlling more and more of Iran’s market share. Last year, foreign carriers stationed in Iran enjoyed a 40% increase in the number passengers they carried abroad, while Iranian carriers saw a meager 1.2% rise in passengers. With the imposed sanctions still firmly in place, it does not appear Iran will be able to acquire new and appropriate aircraft to get itself out of this slump any time soon.

 

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