Headlines about Iranian airlines striking deals (tentative or not) or receiving deliveries from major plane makers have been regularly appearing in the news for the last half a year. The chain of agreements has polarized politicians and aviation experts, with the naysayers being as vocal as the supporters. The ambitious plans to revive Iranian aviation are hanging by a thread, as the sanctions can be reinstituted for any serious offense to the JCPOA agreements that had allowed aircraft exports to the Islamic Republic in the first place.
In a couple of years, Iran is going to celebrate the 40th anniversary of the Islamic Revolution, which shaped the fate of the country. After decades of embargoes and a second-class status on the world arena, the country is slowly mending ties with global powers, while at the same time expanding its influence in the Middle East. Following a contraction of close to 2% percent in 2015, the country’s economy swiftly bounced back in 2016, with an estimated growth of 6.4%. Oil is still the main economic driver – especially after the implementation of the Joint Comprehensive Plan of Action (JCPOA), dynamism is seen in other sectors as well, air travel being no exception. The trade barriers might be slowly falling down, but nothing guarantees they will not be back hindering cooperation between foreign enterprises and Iranian partners.
The JCPOA agreements coupled with a green light from the US treasury led to Iran now having the possibility to import aircraft and update the fleet of its airlines.
“Aircraft orders from Airbus, Boeing and ATR are massive, but include political undertones and are complex deals,” said aviation analyst Richard Maslen.
The much needed fleet upgrade has finally started, with A321s serving already domestic routes and A330s connecting the Islamic Republic with Europe. The early delivery of the first Boeing, rumored to happen by the end of 2017, will probably have to wait a little more.
Indeed, the US Congress has many times attempted to block aircraft sales to Iran. The Trump administration has brought an even more hostile tone towards the Islamic Republic, which can be worrying for Boeing.
Major deals signed with Airbus and Boeing in 2016 are far from being carved in stone, as a whole range of issues could possibly lead to their termination.
“If in Iran is caught utilizing the planes acquired as a result of the nuclear deal for illicit or non-civilian purposes, the US and EU will have the ability to curtail their exports and cancel the licenses,” Richard Nephew, nonresident senior fellow at the Brooking Institute said.
It’s only fair to say that not everyone is on board with the deals struck by Boeing. US Senator Marco Rubio, among others, speculates that the Islamic Revolutionary Guard is flying civilian planes to bring weapons to the Syrian army and Hezbollah, a Shi’a militant group with strong presence in war-torn Syria.
One of the most vocal critics, political scientist Emanule Ottolenghi, backs these claims pointing out at the ties of certain executives – like Aseman Airlines’ CEO Hossein Alaei – with the Islamic Revolutionary Guard Corps. In his recent article Ottolenghi wrote that as deputy defense minister and the Iran Aviation Industries Organization’s director, Alaei likely oversaw Defense Ministry programs including the development of Iran’s air defense and ballistic missile program.
Trying to shed light on the situation, in his Twitter account Ottolenghi tracks flights between Tehran and Damascus. The expert hints that Iranian planes might have supplied the cargo that triggered the recent Israeli air strike against a Hezbollah arms depot close to Damascus International Airport.
Having the accusations in mind, it would still require strong evidence to bar Boeing from exporting aircraft to the Islamic Republic. As of April 2017, Boeing has a memorandum of agreement for 100 planes with an option for an additional 30, with a combined value at $24 billion. One might go as far as speculate that Boeing is aiming to increase the number of agreements with Iranian airlines in order to make the accumulated transactions too large for the Trump Administration to ban. And money is not the only thing at stake, as an aircraft deal of such scale helps create or maintain around 18,000 jobs in the States, according to the US Department of Commerce.
Precarious as they might be, the deals are likely to stay on the table. That is unless the Trump administration revokes the export licenses, which would affect not only Boeing but also Airbus and ATR that include Amercian manufactured parts in their aircraft. In fact, the same would apply to Embraer, Bombardier and Mitsubishi, leaving Iran with virtually nothing to choose from.
Russia – Iran’s long-time trade partner – is unlikely to succeed with its Sukhoi Superjets, despite an interest in 100 units, oftentimes quoted by the Russian side.
“Iran wants ATRs, and they will get them,” Canadian analyst Tomas Chlumecky told AeroTime. “They want Airbus aircraft and they will get them and already have, they would like Boeing, BUT can do without them.”
Iran’s convenient geographical position would have probably led it to become a major aviation hub akin to what we see on the other shore of the Gulf today, if not for the political and economic isolation that had continued for several decades. With the trade barriers slowly tumbling down, is there hope for Iran to build its own air travel empire from scratch?
“Iran is a major opportunity for everyone concerned,” aviation analyst Richard Maslen told AeroTime. “There is so much potential from simply replacing and upgrading the nation’s existing fleet to putting Iran back on international route maps as both business and leisure demand rises.”
In fact, Iran attracts more and more travelers, both expatriates and foreigners, and this trend is only going to continue in 2017, according to a study by ForwardKeys, a leading travel intelligence analyst. Total international arrivals were up 18.3% last year, sustaining an upward path since 2013 (up 2.7%), 2014 (24.8%) and 2015 (12.7%).
Of course, for at least a semi-successful repetition of the Gulf scenario, Tehran-Imam Khomeini Airport (IKA) must become a global hub. At the moment transiting is quite a rare occasion at Tehran-IKA.
“The airport runs on overcapacity (with only 8M pax!) and is not much of an airport compared to Dubai or Abu-Dhabi,” Amin Chini of aviationiran.com told AeroTime.
Currently, a second terminal is being built called Salam Terminal (4M capacity), which is supposed to open in 2018. Another terminal called Iranshahr is opening in a few years and it has much more capacity than Salam.
“Political change in Iran is making the country more approachable on the international stage and an attractive place to visit and potentially do business,” aviation consultant Richard Maslen told AeroTime. “Infrastructure though is a key issue for Iran and the big question is whether the airports and local hotels have the capacity to support the expected growth in demand being delivered by the improved air connectivity. This is an issue for any emerging destination and we have already seen this past year how a raft of new flights can impact a destination with the expansion of US air services into Cuba.”
Having all said in mind, Iran does seem to have a potential to become a viable player in the Middle Eastern air travel market, but it is impossible to tell how long the proverbial sword of Damocles is going to be suspended over its head.
