Economy, Business And Markets

Air Renaissance

Air RenaissanceAir Renaissance

Last year (2014) was probably the best year in over a generation for Iran’s domestic airline industry. In fact, with the help of the interim nuclear agreement, and its offer of airplane parts to Iran’s ageing national fleet, local tour agencies saw an upswing in their local flights.

Other good news followed the announcement of Iran Air’s multiple plane upgrades. These included the increase in overhead flights through Iran due to ongoing conflicts in Iraq, Syria and Ukraine, which made the countries’ airspace unsafe.

Ebrahim Shoushtari, deputy head of Iran’s Aviations Operations Service, announced on Feb. 14 that flights over Iran had increased more than 70 percent since August 2014, Mehr news agency reported.

“Fifty-four airports are active with about 700 international and domestic flights being handled in these airports daily; 6 percent is the figure for rise in the number of domestic passengers, with 20-25 percent growth in international flights,” Shoushtari asserted. “By the end of March 2016, nine percent of Iran’s international airports will be equipped with satellite aviation system.”

 Least Bad Option

In addition to the positive developments, Imam Khomeini International Airport (IKIA), 30 kilometers southwest of Tehran, signed a contract with a French company to start work on its long-awaited second and third terminals.

The good vibes are also flowing through to 2015, with announcements last week of Flydubai – a low cost Emirate carrier – of increasing its flights to Iran later this year. The no-frills carrier announced on Arabian Business that it plans to launch flights to Ahvaz, Hamadan, Isfahan, Shiraz and Tabriz in March. The airline also stated that it wishes to increase the frequency of flights to two currently served cities of Tehran and Mashhad.

“Six months ago, Tehran and Mashhad joined the Flydubai network, and we have seen strong demand from travelers between these two cities and Dubai. The addition of flights to the five points increases our frequency to the Republic to 23 flights weekly, allowing more people to travel conveniently between UAE and Iran,” Ghaith Al Ghaith, the CEO, said.

This week, German airline, Germania announced it had officially launched. The event was so momentous that the event was attended by the Iran’s Ambassador to Germany, Ali Majedi at Berlin Schonefeld Airport, IRNA reported. Germany announced it now offers five weekly flights to Iran with its first flight heading off on Sunday to the Iranian capital.

The airline which touts itself as “low cost” said last year it was aiming to kick-start flights between Tehran-Mashhad and Berlin-Dusseldorf. Iran Air used to do this route, but with the advent of sanctions and the shuttering of Iran to outside markets, Iran’s national carrier thought better to keep the loss-making service running. In actual fact, it really isn’t a low cost carrier and the service has been knocked online by many travelers on websites like, with one disgruntled traveler using Germania’s charter service to Crete.

“I had a very poor experience of Germania in the summer of 2014. On the way out they changed the schedule from a 6.00 am flight to Kefalonia from Gatwick by over 3 hours but did not inform the travel agent – a sleepless night and a 5 hour wait in Gatwick! On way back again changed departure times – this time bringing forward by an hour – but the plane was almost 4 hours late. Having paid full prices for 4 tickets I wrote to them regarding possible compensation. They just refuse to reply,” the traveler said.

Unlike European customers, Iranians when travelling are not going to have the same recourse to compensation, and if events like above are anything to go by, business travelers to and from Iran are going to be somewhat disgruntled before arriving due to dodgy airliner service.

 Potential Problems

If Iran further relaxes visa requirements for foreigners, then the country has a potential problem on its hands. Its airport industry is not at all ready for the number of foreigners coming through. Iran’s largest airport is currently IKIA, and with its one terminal designed over 15 years ago, is already at overcapacity. So, the French engineering deal to triple up the number of terminals for visitors is an on time move.

IKIA is by-and-far the best airport in the country. It is also the most modern, and with additional transport links, including a new direct-metro line to Tehran, it will continue to be the lead aeronautical center. But by international standards it is small and severely under-developed.

There is still no word of whether major international carriers, like British Airways, Air France and Cathay Pacific wish to restart their flight to Iran. The major problem for the foreign airlines themselves is, by their absence, rivals have long since mopped the last gaps in the market, albeit with long delays.

Even if European, American and East Asian airlines wish to resume flights to Iran, they now have to play in a wildly different market to that of ten years ago. Persian Gulf Arab airlines have taken over internationally, with their bottomless budgets and hard-to-beat offers, they are now even encroaching on US domestic carriers.  

What will remain for the old European and American airlines once Iran becomes a major market for foreign airline companies? Probably little at first stage, but they are still likely to fare better than Iran Air in the next 10 years.