Economy, Business And Markets

Why Qeshm Island Should Be Mainstream

Why This Island Should Be MainstreamWhy This Island Should Be Mainstream

Qeshm Island, like its smaller but better-known neighbor Kish Island, does not feature in the travel bucket-lists of many international tourists.

Of the 397,000 people who flew to the island in the Strait of Hormuz last year, three quarters were Iranian nationals.

Qeshm’s Dayrestan Airport ranks as only the 13th largest gateway in Iran by aircraft movements, despite being the main entry point for one of the country’s much-touted free-trade zones. No foreign carriers fly there on a regular basis.

“Our customers are Iranian tourists mostly,” confirmed Mahmoud Shekarabi, chief executive of Qeshm Air, the airline that provides two-thirds of seating capacity at the island, in an interview published in Arabian Aerospace magazine.  

“Due to the sanctions, there were some problems for businessmen to fly here [in the past]. But I believe there are going to be changes. Before, there was tourism and just maybe some students. Now it’s going to be businessmen, students, tourists, families.”

Qeshm Air currently operates to 19 domestic and 14 international destinations, including three points in Turkey and seasonal charter services to southern and eastern Europe. Its only long-haul destination is the Thai capital, Bangkok.

The airline has 13 operational aircraft: two Airbus A320s, three A300-600s, three BAe RJ100s, one RJ85 and four Fokker 100s. Another eight aircraft are held in storage, including four Fokker 50s that are in the process of being sold.

Only “two or three” of the carrier’s active aircraft are based in Qeshm, with the majority put to work plying domestic routes elsewhere in the Islamic Republic.

Asked about opportunities for expansion following the lifting of Iran’s nuclear-related sanctions, Shekarabi can hardly contain his excitement.

The chief executive has already pledged to add or expand flights from four domestic points–Isfahan, Gorgan, Tabriz and Kermanshah–as well as bringing Muscat, Oman, into the network.

The airline’s regional Middle Eastern footprint currently only extends to Dubai in the UAE and Baghdad and Najaf in Iraq.

 Fleet Expansion Plan

But far more ambitious growth lies on the horizon, with management aiming to grow the fleet by more than 50% this year alone.

“We are trying to lease or lease-purchase at least three A320s rapidly, maybe within two or three months,” Shekarabi said in late January. “And then after that, by the beginning of May or June, we will go for long-range aircraft like the A330. By the end of the year, we are trying to increase our fleet to 20 aircraft.”

Second-hand narrow-bodies between six and eight years of age will be targeted, he added, with long-term leases running for about a decade.

The “next phase of the project” will then involve placing direct orders for new-build aircraft.

“We have to see what’s going on in the market first, in order [that] we don’t put a lot of liability on our company,” Shekarabi said of the staggered renewal process.

The pace at which Qeshm Air receives the new Airbuses will also determine how quickly its older types are phased out.

“We are trying to get rid of the Fokker 50s [right now] and then the RJs [will be next to go],” the chief executive confirmed. “The Fokker 50s are grounded in order that we may sell them. The RJs may be grounded, but it depends on what kind of aircraft we get after the lifting of sanctions.”

 Foreign Charter Traffic: Key Driver of Expansion

If all goes according to plan, foreign charter traffic to Qeshm Island should be a key driver of the expansion program.

Today, most of Qeshm Air’s flights are operated on a scheduled basis from Tehran Mehrabad International Airport and Tehran Imam Khomeini International Airport. Iran’s capital city accounts for seven times as many seats as Qeshm Island when looking at the airline’s existing scheduled operations.

“Only 20-25% of our flights are charter,” Shekarabi said, referring to the group bookings favored by many holidaymakers.

 “I am sure this percentage will rise. We don’t operate as a tour company. We are a pure airline business, but we will offer [our aircraft] as charter.”

In April, Qeshm Free Trade Zone Organization hosted a consortium representing five countries–Russia, France, China, Italy and Germany–that is working to raise the island’s overseas profile. The authorities hope to entice 100,000 foreign visitors a year by promoting its ecotourism attractions, including its world-class caves, mangrove forests and reef formations.

Restoring UNESCO World Heritage status for the Qeshm Island Global Geopark–a 30,000-hectare site comprising many of the island’s most impressive sights–is one priority. The park was removed from the UN list in 2013 due to alleged mismanagement by the authorities.

Qeshm Air, meanwhile, plans to diversify operations by increasing charter flights for pilgrims in the northern city of Mashhad.

But it is Qeshm Island itself that remains the focal point of Shekarabi’s efforts, with optimism also growing about its corporate prospects after Russia’s Tempbank pledged to open a branch on the island.

Whether tourists or business travelers ultimately drive the growth, Qeshm Air is repositioning its on-board product to cater for higher-yielding clientele. Retrofitting its Airbuses with premium cabins–absent on all but one of the existing units, an A300–will be the first step.

“Most of our aircraft are all-economy, so we may now go for business class,” Shekarabi said, confirming that upgrades are being sought for both A320s plus the two A300s that lack premium seats.

Two-class cabins will also be a staple feature of the airline’s upcoming deliveries.

Asked how Qeshm Air plans to finance its expansion, the airline boss sounded an upbeat note about the willingness of foreign banks to lend assistance, despite uncertainty about Iran’s legal landscape and slow easing of financial restrictions.

“Nobody around the world buys aircraft with cash. We are the same. So we are looking for the financing [deals],” he said. “We have some financers internally [in Iran], but we prefer to get it from abroad.”

Initial overtures to foreign banks have already prompted “enthusiastic” responses, he added, while declining to name the institutions or countries involved.

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