Iran Is Transforming Its Aviation Industry
Around 40 New Routes Opened up between Iran and Destinations around
the Persian Gulf and in Europe and Asia since Sanctions Were Lifted
In the space of 18 months, Iran has set about what amounts to a complete
overhaul of its aviation sector. Since most international sanctions were
lifted on the country in January 2016, its airlines have placed orders for
more than 300 new aircraft and options for a further 50 planes.
To put that in context, these orders are twice as large as the entire fleet
of planes currently being flown by the country’s 17 commercial airlines.
Until sanctions were eased early last year, Iranian airlines had found it
impossible to buy new aircraft or spare parts and they were often forced to
cannibalize some planes to keep others in the air. Although they
theoretically had a fleet of 250 planes, around 100 of them were sidelined,
having broken down or been stripped for parts, meaning only 150 were taking
off and landing on a regular basis.
The main beneficiary from the spending spree to date has been Europe’s
Airbus, which has attracted a mix of firm orders and memorandums of
understanding for 173 aircraft. Its chief rival Boeing has accrued orders
and options for 140 planes, while the smaller European turboprop-maker ATR
has attracted orders and options for 40 aircraft.
The most active buyer has been Iran Air, the country’s flag carrier. It has
placed orders and options for 220 new planes from Airbus, Boeing and ATR,
covering both wide and narrow-bodied jets as well as turboprops.
Among the country’s smaller carriers, Iran Aseman Airlines has lined up 30
new Boeing 737 Max 8 jets, with options for 30 more. Iran Airtour has signed
a memorandum of understanding for 45 Airbus A320neo aircraft. And Zagros
Airlines has signed a memorandum of understanding for 28 Airbus aircraft,
including 20 of its A320neo model and eight of its larger A330neo.
In total these orders add up to several tens of billions of dollars’ worth
of business. For example, the Iran Air order with Boeing – which covers 80
aircraft – is worth a total of $16 bn at list prices. The deal with Iran
Aseman Airlines is valued at $6 bn, assuming options on all the aircraft are
The first contracts were announced in February 2016, when Iran Air signed
the deal for 40 ATR planes. There followed several months of talks and
negotiations with potential suppliers and no further deals were announced
until December of that year. Since then, though, there has been a flurry of
new orders. Deals covering 180 aircraft were announced that month, followed
by agreements for 60 more in April 2017 and a further 73 aircraft in June
These aircraft orders remain controversial in some quarters and require
approval from the US Treasury’s Office of Foreign Assets Control to go
ahead. To date, Boeing has yet to make any deliveries, but new planes from
other manufacturers are already carrying paying passengers. The first of
Iran Air’s new Airbus A320s arrived in January and an A330 was delivered to
Tehran’s Mehrabad airport in March this year. In May, the first ATR 72-600
aircraft touched down in Iran; the rest of them will arrive before the end
Not everyone is winning though. Some other manufacturers have yet to
announce any firm orders, including Canada’s Bombardier, Brazil’s Embraer,
Japan’s Mitsubishi and Russia’s Sukhoi, with some deals mooted but then
abandoned. However, with a dozen or so Iranian airlines yet to announce any
new purchases, there is still the potential for these producers to win
There is little doubt that the new planes are badly needed. Most of the
aircraft in service with Iranian airlines are well over 20 years old,
according to data from Airfleets.net. Safety concerns mean some airlines and
aircraft are banned by international regulators. For example, Iran Aseman
Airlines is barred from flying to or from the European Union while Iran Air
is not allowed to fly there with its aging Boeing 747 plane, which will be
30 years old next year.
The opening up of the Iran market also holds benefits for airlines from
other countries. Around 40 new routes have opened up between Iran and
destinations around the Persian Gulf and in Europe and Asia since sanctions
Airbus says that from 2015 to 2016 the number of seats available on flights
between Iran and both the UAE and Turkey – the two most important
international routes – increased by 10%. There are now more than 3.5 million
seats available between the UAE and Iran every year, and more than 2.5
million to and from Turkey.
Growth in traffic between other destinations has been even more dramatic.
There was a 65% increase in seat availability to and from Italy, a 68%
increase with the UK and 109% with France. For passengers on those routes,
opting to fly with an Iranian airline in the years to come will be an easier
decision if they know it will be on a modern plane. (Forbes.com)