Soon after sanctions were removed Iran Air placed firm orders for 118 Airbus aircraft and 20 ATRs,

Iran has huge pent-up demand and potential after almost 40 years of isolation from the international community. Despite the isolation, Iran’s economy approaches those of Turkey and Spain. The country has a young population with a median age of 28 years, which is active on the internet and social media (despite restrictions), having strong aspirations to travel and engage with the rest of the world. 

Soon after sanctions were removed Iran Air placed firm orders for 118 Airbus aircraft and 20 ATRs, with options for a further 20 ATRs. Private airlines are estimated to have an interest in entering into commitments for a further 100 aircraft over the next twelve months. The fact that Iran’s airlines have continued to operate and expand during the lengthy period of isolation is testament to the resourcefulness of their people and their commercial and technical skills.
Geographically, Iran enjoys almost the same aviation advantages as the Gulf states; for now, that is where the similarities end. But the potential is self-evident.

Financial arrangements and uncertainty still remain as obstacles

Due to sanctions on the acquisition of new aircraft the average age of Iran’s commercial fleet of 230 aircraft is one of the oldest in the world, at around 24 years. As of 16-Jan-2016, up to 40% of the Iranian commercial fleet had been grounded due to the inability to acquire parts or contract maintenance services. However, with the lifting of sanctions a number of these grounded aircraft have been returned to service.
Given the challenges of operating an ageing fleet without the ability to access full maintenance services, it is perhaps not surprising that Iran has a poor recent safety record, with seven fatal accidents since 2009.
In addition to wearing away the ability to keep aircraft in the air, sanctions have imposed legal and operational obstacles in virtually all of the day-to-day activities of airline management, particularly for international operations. Iranian airlines have faced difficulties in procuring even the most basic supplies, from fuel to catering.
The fact that Iran’s airlines have continued to operate and expand during this period is testament to the resourcefulness of their people and their commercial and technical skills.

Passenger traffic has continued to expand – despite sanctions

Despite all of the challenges the passenger traffic handled by Iranian airports has doubled over the past 10 years. The acceleration in growth in the past couple of years is expected to continue following the lifting of sanctions. 
Iran’s airports handled an estimated 48 million passengers in the 12 months to Mar-2015, of which domestic movements account for just over 75%. (The latest airport-wide breakdown is only available for the prior year, 2014.) There are more than 50 airports in the country but the top 10 handle 90% of traffic.
In fact, the cities of Tehran and Mashhad alone represent 65% of the total traffic. Tehran has two airports, Mehrabad which is primarily domestic, and Imam Khomeini International Airport which is exclusively international.
The development of a domestic-international hub at Tehran will be difficult if traffic continues to be distributed in this manner. The two airports are situated on opposite sides of the city, with substantial connection times.  For the time being, this increases the likelihood that international traffic to/from regional centres in Iran will connect over offshore hubs in Dubai and Istanbul on foreign airlines, subject to bilateral access being permitted.

Posted in: Airlines