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Iranian Airlines’ New Quandary: Turkish Tack

Iranian Airlines’ New  Quandary:  Turkish TackIranian Airlines’ New  Quandary:  Turkish Tack

They may not want to admit it, but Turkish Airlines has a monopoly on Iran’s air travel industry, at least when it comes to international flights.

And now, in what may constitute to be an unfriendly gesture, Turkey’s national flag carrier has increased the bank guarantee it demands from Iranian travel agencies ten-fold to 4 billion rials ($114,000), ISNA reported.

“Their monopoly has weakened Iranian airlines,” said Mohammad Hassan Kermani, the head of the Association of Air Transport and Tourist Agencies of Iran.

Turkish Airlines’ unilateral decision to increase the bank guarantee amount undermines Iranian tour operators and puts them in a tight spot: They either have to give in to the new demand or risk losing business.

“We tried to negotiate with them and went as far as asking them to increase the guarantee amount to 500 million rials ($14,285) — a 100-million-rial increase on the current amount — but they refused,” Kermani said.

Turkish Airlines has been accused of shortchanging Iranians in terms of service quality and hiring individuals with less-than-stellar track records to oversee the company’s Iran office to gain experience.

“Why don’t they send these people to Frankfurt to manage the company there? Why would they send them to Tehran?” Kermani asked. “The answer is simple; because in Iran they’re given free reign.

Even though Turkey is the most popular foreign destination for Iranian tourists, domestic airlines do not fly directly to major Turkish cities including the capital Ankara.

According to Kermani, Iranian airlines do not have permission to land in the Turkish capital, giving Turkish Airlines an unfair advantage over their Iranian counterparts.

“They need to understand this is a business relationship; as such, cooperation is essential. Just as we abide by Turkish regulations, Turkish companies should reciprocate when they work in Iran,” he said.

Kermani said he has told the airline’s representative in Iran that they need to “address our concerns or risk losing the Iranian market entirely.”

  Unfair Competition

Iranian airlines have endured a tough time against foreign competition in recent years.

The combination of low-quality airports and underequipped airlines has tipped the scales in favor of the 32 foreign airlines that offer flights to and from Iran’s international airports, according to a report by Eghtesad News published in August.

Iran’s market has proven to be highly lucrative for foreign airlines, as it generates $3 billion a year in revenues for them.

Using foreign airlines to travel outside Iran is not trouble-free: Having to switch flights, enduring long transits, paying hefty fares, making do with restrictive luggage weight limits, and putting up with poor service aboard are problematic.

Yet, Iranians prefer foreign airlines to their domestic counterparts.

The rivalry between domestic and foreign airlines can hardly be labeled fair competition because Iranian companies do not have the means to compete with larger airlines.

Once western-imposed sanctions are lifted, Iran plans to buy a total of 80-90 airplanes a year from American planemaker Boeing and its France-based counterpart Airbus in the first phase of renovating its aging air fleet.

This will not only help increase the frequency of flights but also allow domestic airlines to offer direct flights to more destinations.

Experts believe that the lifting of sanctions will not be enough to improve Iranian airlines. The government must support domestic airlines by providing low-interest loans to help the industry and, by extension, the economy grow.

 

Financialtribune.com