The recently proposed rise in plane ticket prices are not credible and have been cancelled.
This was stated by Minister of Roads and Urban Development Mohammad Eslami late Saturday in response to the Association of Iranian Airlines’ release of a list of new ticket prices on different domestic routes to be introduced as of Oct. 22.
New fares range from 4.91 million rials ($15) to 26 million rials ($86).
“According to the Sixth Five-Year Development Plan (2017-22), air ticket prices on domestic routes are liberalized and are not set by the government or Ministry of Roads and Urban Development; airlines set the prices themselves,” Maqsoud Asadi-Samani, the secretary of the association, told Fars News Agency.
The rise in foreign currency exchange rates and the new social distancing guidelines regarding airlines’ obligation to sell tickets at up to 60% of plane’s total seating capacity are to blame for the increase in ticket prices.
List of New Rates
Prices of flight tickets for Tehran-Mashhad route were proposed to range from 6.47 million rials ($21.5) to 13.54 million rials ($45); Tehran-Shiraz 6.41 million rials ($21) to 11.83 million rials ($39); Tehran-Iranshahr 7.43 million rials ($25) to 18.21 million rials ($60); Mashhad-Ilam 7.27 million rials ($24) to 19.18 million rials ($64); and Tehran-Kish 7 million rials ($23) to 17.51 million rials ($58).
The maximum ticket price has been set for Bandar Abbas-Tabriz at 26 million rials ($86) and the minimum was set at 4.91 million rials ($16) for different routes.
Noting that ticket prices have increased by 80%, Asadi-Samani said, “Forty percent of this increase come from the decision made by the National Headquarters to Fight Coronavirus and 40% are due to the depreciation of local currency. In case of the revocation of the mandate by the coronavirus taskforce, fares might decrease by 40%.”
Asked whether the government’s coronavirus bailout for airlines weren’t enough to cover their expenses, he said “Only two airlines have received the loans and the rest are still waiting for the banking funds. Banks demand unaffordable, high collateral from airlines. Even those two airlines have increased their fares; the airlines incurred 40 trillion rials in losses following the grounding of planes in March and the government has paid them 20 trillion rials. Also note that for example, passenger traffic dropped by 39% in the month ending August 21 compared with the similar period of last year.”
“Airlines’ costs are calculated in foreign currency; the new ticket prices have been calculated based on the exchange rate of 270,000 rials per US dollar,” he was quoted as saying by IRNA.
Seating Capacity Set at 60%
Airlines will only be allowed to sell tickets at up to 60% of plane’s total seating capacity as of Oct. 22, Asadi-Samani said last week.
As per the decision of the headquarters to prevent the further spread of Covid-19, all types of aircraft need to observe social distancing by operating at a fraction of their passenger capacity.
In addition to the new measure, the rise in foreign currency exchange rates has increased airlines’ expenses and would leave them with no choice but to raise their fares, he added.
Stressing that the Central Bank of Iran did not provide airlines with foreign currency from the so-called secondary FX market, known by its Persian name Nima, Asadi-Samani said, “Airlines had to meet their forex needs at open market rates to import aircraft spare parts last year,” he was quoted as saying by Fars News Agency.
As part of the economic relief package worth 80 trillion rials ($266 million) approved by the government for the transportation sector, airlines are receiving a total of 20 trillion rials ($66 million) in loans to help them weather the hardship caused by the new coronavirus.
The lending rate is at 12%, according to Asadi-Samani.
“Air travel and tourism have been the hardest-hit industries in the early days of the Covid-19 pandemic," he said.
