The Iran Aviation Finance Summit organized by the Center for Asia-Pacific Aviation opens at Tehran’s Imam Khomeini International Airport today.
Iranian officials, alongside 150 officials and business executives from Britain, France, Germany, the Netherlands, Brazil, Canada and China, among others are participating in the two-day event, Mehr News Agency reported.
According to an announcement posted on CAPA’s website, the event has been organized with the aim of providing a forum to identify financing solutions for transactions related to Iran’s aircraft acquisition, leasing and the development of airport and airspace infrastructure. In light of Iran’s pressing need to renew its aging fleet of passenger airplanes battered by years of sanctions, the country has already placed orders with big names like Airbus and Boeing. According to Akhoundi, Iran needs 400 mid- and 100 short-range planes in the next 10 years, requiring an investment of about $50 billion.
A preliminary deal between Iran’s flag-carrier Iran Air and the French company to purchase 118 airplanes worth $25-27 billion, was struck in January soon after the lifting of nuclear sanctions. Iran has also signed a preliminary deal with American jetmaker Boeing to acquire 100 planes worth more than $20 billion.
However, despite the lifting of sanctions, there remain several hurdles and uncertainties. Financing is central to most of these issues and securing a degree of certainty and transparency of process in international financial markets will be essential to stimulating new growth.
Aircraft and related orders are ready to be implemented, but much hangs on decisions that must be made at a political level across a range of disciplines. Despite the removal of nuclear-related sanctions, the US maintains a set of its own embargoes against the Islamic Republic preventing US nationals and entities from trading with Iran.
Now, both Airbus and Boeing orders are awaiting the US Treasury Department’s Office of Foreign Assets Control approval, whose licenses remain necessary for aircraft sales and leasing to Iran. Non-US entities are also required to obtain OFAC approval to sell, lease or transfer aircraft if they include more than 10% of US-origin content or technology.
The challenges do not end there. Even with OFAC approval, the use of US dollars in transactions involving Iran is banned, and banks remain nervous about transactions passing through the US financial system, fearing the possibility of hefty fines and additional scrutiny.
