Domestic Economy

IKIA to Become Regional Air Hub, Dry Port

IKIA to Become Regional Air Hub, Dry Port IKIA to Become Regional Air Hub, Dry Port

The first phase of the project to upgrade Imam Khomeini International Airport to a free trade zone and the surrounding area to an airport city became operational on Tuesday.

Addressing the inaugural ceremony, Minister of Roads and Urban Development Abbas Akhoundi viewed the move as the first pragmatic step toward turning IKIA into a regional air hub and a dry port.

"Iran is the epitome of political and cultural equilibrium in the Middle East, the Central Asia and North Africa. This ceremony marks the beginning of a major overhaul in Iran’s economy,” Mehr News Agency quoted him as saying.  

Referring to the fact that all regional air, land, sea and rail transit corridors pass through Iran, the minister said, “Iranian policymakers believe in shared interests and their plans are based on win-win propositions. Therefore, we invite all major international institutions, including banks, hotels and exhibition companies, to invest in IKIA airport city and help turn it to a 'logistics park'."

Airport logistics parks are industrial centers created to support activities related to trade and air cargo.

Singapore's Changi Airport, located next to the Changi Airfreight Center, is a notable example of cooperation between the government of Singapore and local business leaders to increase the business competitiveness of the country.

Akhoundi noted that IKIA Special Economic Zone is not going to become a hub of imports and industrial activities.

“It will be seen as a platform for exports and transportation,” he said.

Also present at the ceremony was Mahmoud Navidi, managing director of the IKIA airport city.

The IKIA airport city project, which includes a 1,500-hectare free trade zone and a 2,500-hectare special economic zone in a 13,700-hectare area, is ready for investment.

“All economic players willing to initiate business in this FTZ will be exempt from paying tax for as long 20 years,” he said.

Businesses registered in IKIA’s Special Economic Zone can also enjoy benefits like exemption from duties and value-added tax, exemption from tariffs on import of manufacturing machinery and easy issuance of construction permits.

Developing the area surrounding IKIA to create an airport city has been on the Ministry of Roads and Urban Development’s agenda as part of the objectives outlined in the Fifth Five-Year Economic Development Plan (2011-16).

Accordingly, the government-owned IKIA Airport City Company was officially established in March last year to manage the project’s execution and supervise the investment activities.

An airport city or aerotropolis is an urban plan in which the layout, infrastructure and economy are centered on an airport. The plan stipulates that an airport can do more than extending traditional aeronautical services through new non-aeronautical commercial facilities, services and revenue streams.

The master plan for IKIA airport city entails the establishment of 25 commercial facilities encompassing a wide range of commercial activities, including manufacturing, telecommunications and logistics, hotels, retail outlets, entertainment complexes and exhibition centers.

Built in a 400-hectare area in the vicinity of the airport, the project aims to create a suitable platform for both national and international companies to cluster around the airport and engage in business activities. It is expected to create 500,000 jobs and generate non-aeronautical revenues amounting to 60% of the airport’s total revenues.

A health village to provide high quality medical services to both domestic and foreign patients, a rest area complex to serve transit passengers, a media city, a convention city, a knowledge city to enhance knowledge-based economic activities, a sports city, an IT park, a cultural village, a clean industries park, an archeological park, a recreational city and a hi-tech park are some of the facilities to be developed in the airport city.

Parallel with the implementation of IKIA airport city project, completion of the remaining three development phases is in progress to increase annual passenger capacity to 90 million from the current 6.5 million.

Completion of a special pilgrimage terminal and construction of the second passenger terminal of IKIA within the next five years are part of IKIA’s aviation projects.

The Ministry of Roads and Urban Development intends to raise the required financial resources for the project by leasing the surrounding plots of land to private companies and attracting private investments. It will also allocate 10,000 billion rials (around $300 million at official exchange rate) as initial investment.

Seven major objectives are pursued by IKIA's airport city project: creating sustainable sources of income to improve aeronautical, cargo and passenger operations, boosting foreign exchange revenues, promoting sustainable economic growth, increasing airline companies’ revenues, enriching the connection time of transit passengers and transforming IKIA into a multimodal passenger and cargo hub.