What Airbus Deal Means

Professor of Economics
What Airbus Deal Means
What Airbus Deal Means

The Iranian government has officially placed an order with Toulouse-based aircraft manufacturer Airbus for 118 airplanes. By any standard this is a large order estimated at $27 billion.

The order includes 45 single-aisle planes: 21 from the current-generation A320 family and 24 re-engined A320neos. The 73 wide-body aircraft ordered include 27 A330s, 18 A330neos, 16 of Airbus’s latest A350s–in the stretched -1000 variant, plus the A380s.

This is an intriguing mix of airplanes. While some aircraft like the variety of Airbus 320 are suitable for regional operations and will serve medium-range routes within Iran and between Iran’s neighboring countries and destinations in Iran, the larger Airbus 380 can only be profitably employed in continental flights.

In the Middle East, Airbus 380s and Boeing 777s have been successful. Emirates and Qatar Airways use the long range continental airplanes to establish passengers’ air transit corridors connecting North America and Europe to the subcontinent, East Asia and Africa.

Iranian airlines are well aware of the potential of international air travel market. They are also aware that Iran’s Imam Khomeini International Airport is much closer to Europe–Asia corridor than airports located on the southern shore of Persian Gulf.

Iran’s purchase of Airbus 380 only means one thing: Iranian airlines are returning to international competition for air transit from Europe to Asia and Africa.

Iranian airlines also benefit from the increasing demand for air travel to Iran. The Iranian expatriate communities in North America and Europe, American and European citizens of Iranian parents and an increasing number of foreign tourists travel to Iran regularly.

The Airbus deal is Iran’s first strategically significant move to become an economic regional power in the 21st century.

No one in the aviation community has any doubt that this order means Iran wants to be a significant player in aviation markets across Europe, Asia and Africa and even across North America.

Committing itself to such a large investment in renovating Iran’s aging air fleet means that Iran’s determination to return to market is no longer questionable.

Iranian airlines are returning to the skies to face the competition, and to face it on equal terms.