The sharp depreciation of the rial which should normally boost the inbound tourism market by making trips more affordable for foreigners has failed to bring the country the anticipated profit due to the unchecked rise in the prices of travel services as a result of ever-changing forex policies.
Air transport was the first link of the travel industry chain that was affected by the policies with ticket prices more than doubled in recent days. The government ceased its plan to supply foreign currency at subsidized rate for airlines as of Thursday and the companies now have to obtain their needed forex at the daily average of currency exchange rates.
As a result, Iranian airlines' ticket prices have reportedly increased by 70% to 100%.
"The aviation industry is heavily dependent on foreign trade and over 60% of airlines' expenditure is in foreign exchange. These companies need currency to pay for airport costs and maintenance, repairs, rental and spare parts of aircraft," Maqsoud As'adi Samani, secretary of Airlines Association, was quoted as saying buy Chamedan news website.
In addition, the price of flights by foreign airlines has more than tripled, although only for Iranian customers who need to pay the fares in rials.
Nevertheless, experts fear that this would influence the inbound travel trends as well since the price of other services are highly likely to rise in accordance with transport costs and forex rate hikes.
"When airfares go up, domestic travel will become more expensive and hotels [and other service providers] will accordingly raise their prices; in this situation, how is it possible to attract foreign tourists?" said Hormatollah Rafiei, head of the Travel Agents Guild Association, the Persian daily Donya-e-Eqtesad reported.
Secretary of Iran Tour Operators Association Hadi Shirazi had earlier said that since airfares have remained the same for those who pay in foreign currencies, this is unlikely to affect foreigners' intentions to travel to Iran on its own "unless service providers raise their prices wildly to compensate for their losses."
Political Factors
He predicted the incoming travel will continue to decline at the same rate of 20% to 30% experienced during the first spring months but rather due to political complications and US threats against Iran than any other factor.
"Domestic politics as well as the US threats and sanctions have impelled foreign tour operators to reduce their operations in Iran's market," he was quoted as saying by ISNA.
The data indicating a 20-30% decline in inbound tourists in April and May only includes travelers for leisure or religious purposes. Statistics by Iran's Cultural Heritage, Handicrafts and Tourism Organization point to a 30% rise in incoming travel by taking into account all arrivals including business travelers, workers and students.
Besides, with less demand for the routes, the airlines would possibly eliminate Iran from their destinations.
"Reduction in the number of passengers will make it economically unjustifiable for foreign airlines to run flights to and from Iran because they won't be able to meet their costs with one or trips per week," Reza Abazari, board member of Tehran Travel Agents Guild Association, said.
Fewer flights to the country would naturally mean fewer incoming passengers.
A number of airlines have already shut down their sale systems, according to Rafiei.
While certain groups believe that tourism and its related industries such as aviation need further support from the government, others maintain that the current chaos is short-lived and the market will stabilize in a few months if forex rates do not fluctuate dramatically.
