There is a great need for new commercial airplanes in Iran, as Iranian airline safety is a critical issue.
According to Jet Information Services, the following table lists the 3Y20 in-service aircraft among Iran’s airlines:
From a US perspective, with Boeing’s problems and available MAX whitetails, there could be an immediate benefit from a thaw in relations. Relaxing commercial aircraft sanctions could benefit an industry in need of customers and create a win-win situation, reads an article published by Air Insight Group.
The prolonged period of time that IranAir was under international sanctions and barred from purchasing spare parts and new planes led to a dramatic rise in its average fleet age and plunging safety record.
The imposition of international sanctions over Iran's nuclear program exacerbated the situation for the flag carrier.
However, Iran’s nuclear deal with world powers, also known as JCPOA, paved the way for IranAir to renew its aging fleet.
IranAir signed contracts shortly after the landmark nuclear deal for 80 Boeing jets, 100 Airbus jets and 20+20 ATR turboprops.
An Airbus A321, two Airbus A330s and 13 ATR 72-600 turboprops, five of which were delivered hours before the first reimposition of the first batch of sanctions in August have been delivered to Iran as part of the contracts.
The rest of the orders have been cancelled, as OFAC revoked previously issued licenses allowing the sales of brand-new airplanes to Iran. This is while selling airplanes to Iran was among the issues directly addressed in the nuclear agreement.
Need to Re-Fleet
Excerpts from the Airinsight.com follow:
Iran’s airlines need to re-fleet. Bear in mind, the BAe, Douglas and Fokker aircraft are out of production. This means that spares are becoming less easy to find.
Iran, subject to sanctions, faces a higher hurdle in acquiring spares. Airlines outside Iran operate on tight budgets and one can only imagine how much tighter budgets are for Iranian airlines. The humanitarian argument to ease sanctions so Iran’s airlines can replace their old passenger aircraft is uncontestable.
Easing US sanctions on Iran could be a win-win for the currently troubled global aerospace industry. More specifically, the US aerospace industry and especially Boeing.
The US can focus on easing commercial aircraft sanctions, spare parts and associated financing or leasing. The number of jobs associated with aerospace is significant and Boeing has, for years, been the US’ most important exporter. Limiting the easing of sanctions to this one segment provides a mutually useful first step for both sides.
Easing sanctions will open more than aerospace supply chain opportunities. Any deals will require financing and this is another segment of the aerospace industry that would benefit from an opening.
Iran does not have the cash to buy aircraft for its national airline. The numerous private Iranian airlines also require access to financial markets to support their fleet renewals.
Based on dialogue with a seasoned Iranian airline executive, the following issues are likely of concern to the Iranian government that needs the easing of Office of Foreign Assets Control license rules:
OFAC
- OFAC policy, from the Iranian view, is not transparent and confusing.
- ATR got a license to export, Embraer and Sukhoi could not.
- Airbus got a license in 2016, Zodiac could not get one for seats on those aircraft.
- Boeing could not get an OFAC license for Aseman’s 30+30 new aircraft deal, nor for two used 777s.
- Another example is Airbus that did try to get a license for two A340-300s in 1999, but OFAC did not approve it.
- Iran feels that OFAC was familiar with Aseman before signing the contract between Aseman and Boeing, Airbus and Embraer.
Finance
Who can and will finance deals? It appears that currently, there is no priority within Iran to pay cash as they did for three A330s and 13 ATRs. Given the sanctions on Iran, global financial markets remain frozen. OFAC easing needs to see a parallel in associated financial markets.
Financial Action Task Force
Does this organization have any impact on OFAC or US government decisions? Iran is not yet a signatory to this organization.
Contracts
Iran likely wants to renegotiate its previous aircraft contracts. Things are very different in 2021 from 2016.
Should Iran Apply for OFAC Licenses on Used Aircraft?
This would ensure faster deliveries and overcome Iran’s fears of previously aborted deals.
Iran’s private airlines, given their financial condition, are likely to show an interest in used aircraft.
Currently, this is a favorable market to acquire relatively new aircraft, i.e., the Norwegian fleet.
