Domestic Economy

Gov’t Allocates $110m to Revamp Airports

Gov’t Allocates $110m to Revamp AirportsGov’t Allocates $110m to Revamp Airports

Although in the past two years government officials have reiterated Iran’s need to procure 400-500 passenger planes after the sanctions on Iran’s nuclear energy program are lifted, other aviation problems, such as the airlines’ limited financial resources for purchasing those planes and developing airport infrastructures, have been sidelined.

The government, however, has eventually revealed plans to refurbish domestic airports. On Monday, Rahmatollah Mahabadi, CEO of Iran’s Airports Company, a state-owned corporation affiliated with the Ministry of Roads and Urban Development, said the government has allocated more than $110 million worth of credit to renovate and equip Iran’s airports.

Speaking at a press conference in Shiraz, Fars Province, Mahabadi said the credit will cover 66 projects, which include upgrading the navigation systems, IRNA reported.

“We have also reached an agreement with a foreign company to invest in the construction of a 50,000-square-meter international terminal for Mashhad Airport to raise its capacity to 5 million passengers per year,” he added, without providing details of the agreement.

Mashhad, the capital city of Khorasan Razavi Province in northeastern Iran, is a major international religious tourism hub visited by millions of pilgrims every year. In the last Iranian year (ended March 20, 2015), the holy city was visited by 25 million domestic and 1.5 million foreign visitors, showing a considerable increase over the previous year.

This is while the city’s air infrastructures have not kept pace with its booming tourism.

“One of the biggest issues of Iran’s airports is that they have not kept pace with the increasing demand,” Mahabadi said, referring to Tehran’s Imam Khomeini International Airport as another example.

“IKIA currently receives 8 million passengers per annum while the airport has been designed and constructed to annually host 4.5 million passengers.”

  Mounting Debts

The aviation industry has been tussling with airline companies’ financial problems in recent years. The airlines’ debts to the government, according to Mahabadi, currently top $180 million.

“The airlines’ debts currently exceed their asset value,” he said.

Nevertheless, the government has lately implemented measures to make the business worthwhile for domestic airline companies. The Civil Aviation Organization of Iran earlier announced that airplane ticket fares have been liberalized in 170 domestic routes.

The move was said to be aimed at creating competition among airline companies, which would provide passengers with more choices and help raise the quality of transport services.

Earlier, Ali Abedzadeh, the CAO chief, stressed that all air ticket prices will be liberalized by the end of the current Iranian year (March 19, 2016) as part of the Fifth Five-Year Economic Development Plan (2011-16).

Mahabadi said air ticket liberalization is “the only way to help develop the aviation industry,” which will help bring about a big change in the sector.