Economy, Domestic Economy

Change in Jet Fuel Payment System Castigated by Airlines

Airlines say they have been paying for their fuel on credit, settling their debts with NIOPDC every 10-15 days.Airlines say they have been paying for their fuel on credit, settling their debts with NIOPDC every 10-15 days.

The National Iranian Oil Products Distribution Company has come up with a new method for airlines to settle their refueling bills, giving rise to chaos and strong opposition by airlines.

 As of Monday, airlines in six airports across the country are obliged to pay for their fuel by wiring the cost of each refill to the bank accounts of the NIOPDC using ATM or POS machines, according to NIOPDC chief executive Naser Sajjadi.

“Refueling aircraft owned by or belonging to Iran Air, Iran Aseman Airlines, Mahan Air, Kish Air, Taban Air, Caspian Airlines, Zagros Airlines, ATA airlines, Qeshm Airlines, Meraj Airlines, Iranian Naft Airlines and Atrak Air will only be possible using debit cards,” he was quoted by ISNA as saying.

He added that by September 21, the plan will be implemented at all airports.

Officials at the Iran Civil Aviation Organization reacted by expressing strong disapproval.

Urging NIOPDC to postpone the implementation of the new plan, director of CAO public affairs, Reza Jafarzadeh, voiced concern that the move could seriously undermine the operations of the airlines.

So far, Iranian airlines have been paying for their fuel on credit, settling their debts with NIOPDC every 10-15 days.

Although in November 2015, NIOPDC put the amount of airlines’ overdue debts at 10 trillion rials ($282 million), the Association of Iranian Airlines claims as of March 20 all airlines, except for one, had settled their burgeoning debts.

“Only one airline has not repaid its debts,” said Maqsoud As’adi Samani, the association’s secretary on Monday, without mentioning the name of the airline.

Mehr News Agency quoted an unnamed executive from an airline as saying that his company has threatened to suspend flights and that the NIOPDC will be responsible for the consequences. The NIOPDC has brushed off the claim saying the onus is on the airlines to operate with efficiency and pay their bills.

Samani’s payment claims stance could not be verified independently. The state oil company has compaliend for years that the airlines have not paid their huge debts. It once also threatened to cut off jet fuel supply to the indebted airlines. The threat, however, was never carried out.

Since last year airfares in Iran were “deregulated” to help competitiveness and efficiency of the airlines. Fares in most cases shot up 100-150% on all domestic and international routes but the service quality simply did not improve.  

Passengers have often complained to the domestic press that service quality has gotten worse instead of improving. There are many instances that a domestic flight of about 50 minutes is delayed by five to seven hours and at times also cancelled without any convincing explanation or respect for the rights of the passengers.