Airline operators convened a meeting with officials from the Iran Civil Aviation Organization on Saturday to try to boost demand in the aviation market by revising the ticket pricing policy following a government decision to deny airlines cheap foreign currency.
During the session, cap rates for flights until the end of summer (Sept. 21) were set and airlines are not allowed to sell tickets at higher prices. The government ceased its plan to supply foreign currency at subsidized rate for airlines earlier this month 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%.
"Given the government's decision to liberalize airfare prices, in the meeting, the Iranian airlines voluntarily announced their readiness to contribute to the national economy and aviation policies by moderating the rates of their domestic flights and keeping them unchanged until the end of summer," said Maqsoud As'adi Samani, secretary of the Association of Iranian Airlines, according to its website.
The new pricing policy is meant to rein in the soaring ticket prices in the wake of the government's decision, As'adi Samani said.
Provisional Arrangement
He noted that the prices are provisional and should they fail to revive the market, further cuts would be applied.
"These prices set the ceiling for flight fares and if the market does not respond positively they could be reduced by the collective decision of airline companies. No company is allowed to charge higher prices."
The government's decision to remove airfare subsidies has also adversely affected the Iranian airlines' international flights.
As'adi Samani left open the possibility of ticket price cuts for foreign flights.
Since April, Iran has been grappling with a currency crisis that saw the rial's value fall by over half against the US dollar.
Peculiar Trend
Normally, currency depreciation would have spurred the inbound tourism market by making trips more affordable, but the profits have fallen short due to the unchecked rise in the prices of travel services as a result of ever-changing forex policies.
Official data for April and May indicate there has been a 20-30% decline in the number of inbound tourists traveling for leisure or religious purposes. With less demand for the routes, foreign airlines would possibly eliminate Iran from their destinations.
Fewer flights to the country would naturally mean fewer incoming passengers. A number of airlines have already shut down their sale systems. 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.
