Domestic Economy

Iran’s 1st Airport City Blueprint New Way of Doing Business

According to the master plan, Imam Khomeini Airport City becomes a nucleus around which commercial centers, residential zones and transport infrastructure would be organized
It is estimated that Tehran’s airport city will require $50 billion of investment.It is estimated that Tehran’s airport city will require $50 billion of investment.
The government negotiated a joint-venture with French construction firm Bouygues and French airports operator Aéroports de Paris to construct a new passenger terminal in a $2.8 billion deal that would increase airport capacity to 20 million passengers per

Travelers to Tehran often wonder why Imam Khomeini International Airport was built so far from downtown Tehran, requiring at least an hour’s drive and often much more, given the city’s notorious traffic.

Many Iranians miss the ability to fly to international destinations from the centrally located Mehrabad Airport, from which IKIA inherited all international flights in 2007.

While Mehrabad is a 20th-century airport built to serve Tehran, the international airport is built for the 21st century, with a wider range of priorities in mind, reads an article written by Maryam Kiaie, director of Rah Shahr, an Iranian infrastructure group developing IKIA’s master plan, in Bourse & Bazaar. Below is the full text.

Today, airports are the key engine of economic growth for cities competing in a globalized economy and in the last decade, airport development has become a central focus for urban planners and economists alike.

The 2011 book Aerotropolis, written by John Kasarda, director at the Center for Air Commerce at the University of North Carolina’s Kenan-Flagler Business School, helped establish the concept of the “airport city”.

Kasarda argues that the airport deserves a more central role in how urban spaces are created.

“Rather than banish airports to the edge of town and then do our best to avoid them, we will build this century’s cities around them,” he said.

The master plan for IKIA includes the vision to create a world-class aerotropolis by building a city around IKIA.

The Ministry of Roads and Urban Development has positioned IKIA to investors as “an international crossroad connecting north to south and east to west” which “makes it profoundly eligible to evolve as a regional hub, leading to [the development of ] an airport city or an Aerotropolis”. This is precisely why the airport was built so far from Tehran; it needed room for a new city to grow.

Moreover, the airport was meant to connect geographies, and is accessible from Semnan Province in the east, Qom and Isfahan provinces to the south, Markazi Province to the southwest and Alborz and Qazvin provinces to the West.

The master plan concept for Iran’s first such airport city, the Imam Khomeini Airport City has been in the making for several years now. In this plan, the airport becomes a nucleus around which commercial centers, residential zones and transport infrastructure would be organized.

The IKIA Airport City will hopefully decentralize a good portion of Tehran’s congestion by moving many offices and businesses to the new mega-site. It is estimated that IKIA Airport City will require $50 billion of investment.

  Four Major Zones

The scope and size of the IKIA project echo Kasarda’s view of airports as “components of large technical systems” that work like machines to create logistical efficiency and economic productivity.

In the technical system for IKIA, there will be four major zones, an Aviation Zone (2,800 hectares), a Free Economic Zone (1,500 hectares), a Special Economic Zone (2,500 hectares) and a Mixed-Use Zone (7,000 hectares).

Each zone will house different facilities such as light industry, hotel and convention spaces, warehouses and logistics centers, commercial offices and even public parks. To work effectively, these zones will need to be linked by road and rail to Tehran and Iran’s four corners in a “smart” transport network.

The main highway from Tehran to Bandar Abbas (with access to Isfahan and Shiraz) passes by IKIA to the East. Saveh Highway passes to the West. In terms of rail access, the extension of the Tehran metro network to a new terminus at IKIA, which is nearing completion, reflects a positive first step. The proposed Isfahan-Tehran high-speed bullet train will connect through IKIA.

Clearly, the master plan for IKIA is one of the most ambitious in Iran and it will, therefore, require Iran to innovate new ways of fostering cooperation and economic development between a wide range of stakeholders. This may be the most important legacy of the airport city project.

Airports and their surrounding developments rely on enterprise zones and tax abatements to attract tenants, urban development corporations to manage the project delivery and public-private partnerships to fund the construction of critical infrastructure.

As anthropologist Brenda Chaflin explains about the airport in today’s globalized world, “Redesigned and reimagined, the airport is... a site of contestation and collaboration between a plethora of state overseers and the private sector, including architecture and construction firms, investors and development banks.”

Getting these different groups to cooperate will be a significant challenge, but it may also be the critical outcome for Iran’s long-term economic success. IKIA can serve as a test-bed for developers, contractors and investors from both Iran and abroad.

  Gamut of New Cooperative Ventures

We can already see evidence of new collaborations at IKIA. In 2015, the Ministry of Roads and Urban Development established the IKIA Airport City Company to serve as the contracting party in public-private partnerships around airport city development.

Through this entity, the government negotiated a joint-venture with French construction firm Bouygues and French airports operator Aéroports de Paris to construct a new passenger terminal in a $2.8 billion deal that would increase airport capacity to 20 million passengers per annum in the first phase.

A possible further three phases have been planned that would help the airport handle 90 million passengers per annum in total capacity.

When such agreements are concluded, the challenge will be to secure financing. One of the debates surrounding infrastructure development in Iran is whether the country should be looking to the West or East for support.

Given the current economic conditions in Iran, the contractor, not the client, is expected to bring the majority of financing. Chinese infrastructure firms have proven their ability to fund infrastructure projects in Iran, particularly prior to the lifting of sanctions.

Though Iranian officials would prefer to use European technology and expertise, most European firms have limited means to finance projects. But as a recent report on Iran from aviation industry body CAPA notes, airport development is so strategic that it may be possible for Iran to work with both sides.

French and Chinese companies are already involved in financing development and renovation of Mashhad Airport through the Iran Airports Holding Company, the national airports operator.

Moreover, reports point out that “The French and Chinese have got used to working with each other. France’s Toulouse Airport is managed by two Chinese companies, and relations between the two governments are positive.”

As the Wall Street Journal has reported, companies from South Korea and the Netherlands are also involved in consulting on aspects of airport city development. In this way, IKIA might be a project so large that it enables cooperation across a wide range of countries seeking to invest in Iran, with both economic and political dividends for the country.

In this way, the lesson of IKIA Airport City project is that Iran’s next phase of infrastructure development must focus on both physical and organizational integration.

Physical integration means positioning IKIA and Iran’s other airports as part of a larger transport system, improving the mobility of goods and people both within Iran and across its borders.

Organizational integration means using airports as specific sites to bring companies from different countries into closer collaboration, even in investing and developing the airports themselves.

Taken together, a new way of doing business becomes clear. The subtitle of Kasarda’s Aerotropolis claims that the airport city is “the way we will live next”.

For Iran, there is another important outcome to consider. The creation of airport cities will teach us how we will do business next in Iran.

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