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June 2017, No. 84


Trade & Business

 

Iran Air Industry Faces Tough Competition in Region


There are numerous reasons for the emergence of the present condition but the most important of them is the shortage and exhaustion of the countryís air fleet.


By: Gholamreza Salami

This article has no intention to disturb the mind of the audience by offering astonishing statistics and figures on the potential air industry in the region; it is rather an attempt to point out the preparation of the regional countries (Turkey, the United Arab Emirates and Qatar) in the years not too far away, for annual traffic of at least 250 million passengers and 20 million tons of cargo at the airports of these countries.

According to its Vision Plan 2025 (i.e. in less than nine years), Iranís air industry is expected to stand in the first place with regard to cargo transportation and in the second place in terms of handling passengers in the region. But a glance at the unfortunate realities about Iranís air industry will make it clear that the gap between our country and the regional countries is so deep that with the continuation of the past trend realization of the target of the Vision Plan would look like a dream.

Unfortunately, presently our airports have the capacity to handle 7 million passengers and 200 thousand tons of cargo annually. By assuming the development of Imam Khomeini International Airport and other international airports of the country (which faces serious opposition from the opponents of the incumbent government), the maximum capacity of our airports for the traffic of international travelers will reach 20 million passengers in 2025. Clearly Iranís share would be minimal in comparison with the ambitious plans made by rivals in the region.

Even with the assumption of development of our international airports in the absence of improvement of Iranís airlines, these airports instead of playing a significant role in increasing exports would turn into facilities for imports just like our free zones. Due to the weakness and aging of the air fleet in Iran under the present circumstances, our share of several hundred billion dollars in exports of the air services of the region is almost zero; on the contrary each year Iranian passengers (with the countryís airports as the embarcation and destination) pay about 3 to 4 billion dollars to the regional airlines.

There are numerous reasons for the emergence of the present condition but the most important of them is the shortage and exhaustion of the countryís air fleet. At present the number of active planes of Iranian airlines is about half of those owned by such tiny states as the United Arab Emirates and Qatar. This is under conditions that these countries, due to small territory and air space, cannot operate domestic flights; therefore the number of planes operating on foreign flights in those countries is more than twice the number of planes used by Iranian airlines on qualified foreign flights.

The average life of the Iranian airlines fleet is more than 22 years whereas the average life of the air fleet of the rival countries is less than 5 years while the quality and capacity of their fleet is not comparable with the commercial fleet of Iran. For example, it can be said that the value of two wide-body aircraft of the UAE is more than the value of the entire exhausted Iranian fleet.

The tragedy is further revealed when we learn that investment in the air industry today is profit making, that is to say it is no more necessary for governments to boost their air industry through non-profit development projects; rather it would be enough to provide legal support for the development of this industry and in that case the investment made would be completely economical (either in aviation infrastructure or in air fleet) while the national authority and dignity and well-being and safety of the Iranian citizens would be safeguarded.

The Joint Comprehensive Plan of Action (JCPOA) known commonly as the Iran deal or Iran nuclear deal, is an international agreement on the nuclear program of Iran reached in Vienna on 14 July 2015 between Iran, the P5+1 (the five permanent members of the United Nations Security CouncilóChina, France, Russia, United Kingdom, United Statesóplus Germany), and the European Union.

Meantime, the European aviation giant, Airbus, has sealed a contract with the Iranian flag carrier, Iran Air, for the sale of 100 aircraft, worth over $18 billion dollars at list prices, to the Islamic Republic.

Earlier, Iran Air finalized a deal for 80 jetliners from US plane maker Boeing Co., with the planes scheduled to start arriving in 2018.

Even Russia and China are using the most prestigious aircraft building brands on their passenger airlines.

But despite knowing the realities about Iran air industry, a number of people influential in the process of decision making, without offering any logical reason, are opposing the deals.

With due regard to the present condition and position takings of the US Congress, these deals can be considered a turning point in economic relations and international rights of our country. Economic issues are highly important but our national authority, pride and dignity and maintenance of the welfare and safety of our citizens, which are among the responsibilities of the government, are more important.

 

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  June 2017
No. 84