The number of Iranian citizens' outbound air travels to their most popular destinations has halved in recent months due to skyrocketing prices caused by a freefalling national currency.
"Istanbul, Tbilisi, Kuala Lumpur and Dubai are the most travelled flight routes for Iranians and the number of those flights has reached half the levels they were at the moment," Morteza Qorbani, secretary of Iran Flight Services Guild Association, told ISNA.
According to the official, some flights to other cities in Georgia and Turkey have witnessed steeper declines in demand as high as 60%.
Qorbani conceded that a portion of the decline may be due to seasonal stagnancy, but maintained that the most important factor has been the hefty costs of travel.
The main reason behind the decline must be sought in an ongoing currency crisis caused by the US unilateral withdrawal from Iran's nuclear deal with world powers in May and the worsening structural issues in the economy.
Iran's rial has lost approximately two-thirds of its value against the US dollar in 2018, meaning that outbound travel is now much costlier for Iranians.
Domestic and foreign flights have become significantly more expensive in recent months. Although airfares are expected to become slightly more affordable as the rial is finding a degree of stability on the back of recent market intervention by the central bank, they are still way more expensive than last year.
Price Hike Under Different Guises
Qorbani said flight ticket prices may have decreased to a degree in recent weeks, but airlines in effect maintain high prices through other avenues.
"On the face of it, ticket prices have come down, but air flight companies have actually increased prices under different guises, including additional taxes and airport and airplane tolls," he explained.
Ticket prices initially grew following the government decision in early April to fix the rate of the rial at 42,000 against the US dollar. The administration vowed to meet all currency needs at that rate, but it soon emerged that this would be impossible.
Airlines also said they have failed to gain access to the cheap currency and consequently hiked their prices.
Then, the government turned to a secondary foreign exchange market and obligated exporters to repatriate their foreign currency yields there. Those resources are to be employed by importers and other service providers, including airlines.
Local vs. Int'l Flights
Some airlines have reportedly managed to gain access to secondary market rates that are again almost fixed, having minor fluctuations hovering at about 80,000 rials to the US dollar. This has led to a decline in ticket prices, mostly in the case of local flights.
However, outbound flights are still very costly, especially as the purchasing power of the general public has significantly declined in recent months.
However, some believe local airlines have no justification for raising their prices.
"The rate of exchange only imposes increased costs for international flights. Local airlines pay their costs in rials. They only having to pay a portion of their taxes for outbound routes in foreign currencies," Qorbani said, adding that currency fluctuations must not have a significant impact on these flights.
He pointed out that some airlines claim that up to 70% of their costs are in foreign currencies, saying "based on existing information, a majority of the expenses of air flight companies, including their administrative, current and plane fuel costs, are in rials".
The flight agencies, on the other hand, say they pay their pilots, crew, rents, fuel and parts in foreign currencies. They increase prices by claiming that they have no access to cheaper government currencies and therefore price their tickets based on open market rates that currently stand at much higher rates of about 140,000 rials against the greenback.
Now, due to rising prices and falling demand for outbound flights, many travel agencies have fallen on hard times because the bulk of their operations depends on foreign tours.
Two Stark Choices
Experts believe that these firms are now facing two choices. They can either wait for ticket prices and costs to come down as Iran's national currency finds a modicum of stability, or they can replace outbound tours with local travels.
Both options are less than ideal and present many challenges.
Currency fluctuations and rising prices have changed the landscape of Iran's tourism sector in recent months.
According to the latest official data, 3,092,759 Iranians travelled abroad during the first five months of the current fiscal year (started March 21), down by 11% compared with 3,474,692 in the similar period of last year.
The head of Iran Cultural Heritage, Handicrafts and Tourism Organization had announced recently that the number of inbound tourists jumped by 51%.
