Economy, Business And Markets
0

Iran Air Blazes Trail With New Airbus

Iran Air Blazes Trail With New AirbusIran Air Blazes Trail With New Airbus

Captain Behnam Shirzad wears a broad smile as he walks into the hall where Iran Air is about to take delivery from Airbus of its first brand new aircraft in 23 years.

“It is fantastic,” he says of the A321 single-aisle passenger jet, visible just the other side of the glass wall facing the runway. “Everyone loves this aircraft.”

Top brass from Iran Air and Airbus were gathered in Toulouse on Wednesday for what the carrier’s chief executive, Farhad Parvaresh, called a “bright day” for his state-owned company and his country, reads an article published by the Financial Times. Excerpts follow:

The new aircraft is the first of 180 jets ordered from Airbus and its US rival Boeing after sanctions were lifted last year as part of the nuclear accord between Iran and global powers. 

Two more wide-body A330s will fly to Tehran in the next two months. For Iran, they are trailblazers for a revival of Iranian aviation and tangible proof that the relaxation of sanctions 12 months ago is finally beginning to deliver concrete results. 

For Airbus—and even Boeing—they mark the opening up of “one of aviation’s great untapped opportunities”, according to consultant and analytical group Centre for Aviation, Capa, just as global orders begin to slow.

 Pressing Demand

Tehran estimates the country needs more than 400 aircraft over the next decade. The speed with which Airbus was able to deliver the first aircraft—given that the final deal was only signed in December—is proof of how important the market is to jetmakers, says Will Horton, Capa aviation analyst.

“They go out of their way to send a message they are partners for the future,” he said.

Airbus has even offered to finance roughly 20 of the 100 aircraft it is selling to Iran Air. 

With a population of close to 80 million, about the same as Germany, Iran’s capacity for air travel remains sorely underexploited. In 2015, total scheduled capacity came to 22 million seats, according to OAG, the aviation consultancy, less than a 10th that of Germany.

Over the past six months, passenger traffic grew at more than 20%. The International Air Transport Association, IATA, the aviation trade body, estimates that passenger traffic could rise from 12 million in 2015 to 43.6 million by 2034.

But, after decades of sanctions, the country’s carriers are struggling to keep their aircraft flying. Of the 230 aircraft owned by Iran’s 15 airlines, fewer than 160 are in service. The rest have been grounded, mainly because of a lack of spare parts.

The average age of the fleet is 23 years old, twice that of Europe and the oldest plane in Iran Air’s fleet, an A300B2, has been flying for more than 30 years. 

The need for new aircraft is pressing, as Iran seeks to spur its economy with investment and tourism.

 Rising Competition

Parvaresh thinks that concern over the safety of this aging fleet has been keeping passengers off his flights.

Public anxiety has been fueled by seven fatal accidents since 2009, involving different airlines. 

“In Iran, I know many people are... not very willing to fly, maybe because we were using old technology,” he says. “These people will definitely fly if you bring in new aircraft.” 

Iran Air intends to start with a domestic route—flying from Tehran to Iran’s holiest city of Mashhad.

It will have to manage the integration of an unprecedented number of aircraft, having ordered more than four times as many as it has in its existing fleet, while at the same time adapting to a market opening up to new competition.

Not only have carriers from the Persian Gulf and Turkey already snapped up 40% of the market, according to aviation consultancy OAG, western carriers such as Air France, British Airways, Lufthansa and others are also establishing a presence. 

Parvaresh is betting, however, that years of operating under the constraints of sanctions have given Iran Air an edge over foreign competitors.

“We have very good maintenance, very good engineers, very good capabilities and pilots,” he says. “We have had so many tough times because of the sanctions, [and] they could keep these aircraft flying.”

Add new comment

Read our comment policy before posting your viewpoints

Financialtribune.com