Iranian Aviation Looking at Fast Expansion

The road seems wide open for future investors in Iran since an agreement was reached to ease and eventually diminish the sanctions laid upon the country by the western powers many years ago.
After long and hard discussions, Iran confirmed its intention of not following plans to develop nuclear weapons and in return, the powers decided to lift sanctions.
It will take quite some time for this to get into motion and it would be naive to think that Iran will go onto an industrial expansion course overnight.


Iranian aviation requires a complete overhaul
The aviation sector is surely just one of many, which will need a massive investment in infrastructure, aircraft fleets and training programs in order to get back on its feet and be able to meet international standards once more as well as becoming a competitive member of the aviation family.

Tehran’s Airport appears modern but needs to undergo a thorough technical update.
Tehran’s Airport appears modern but needs to undergo a thorough technical update.

A start has already been made
Iran Airports Holding Company (IAHC), which is of course state owned, plans to start a large amount of development at Iranian airports over the coming 15 years.
Some will have to start from scratch and others will have much needed updates and modernization. Aside from Tehran - Esfahan, Tabriz, Mashhad, Shiraz and Mehrabad airports are high on the list for heavy investments.
There are more than 60 airports operative in Iran although annual passenger traffic is said to be only around 47 million and an annual rise of 6 percent is expected for the coming years.
The IAHC leaders have indicated that a total of US$ 3 billion are available in 2016 alone for airport investment.
A staggering figure.

Cargo will play an important inbound role in the future
If we are to believe the figures being shown with regards to future investment, then one has to realize what potential there is in Iran for air cargo handling facilities, aircraft fleets and new routes.
However, at the moment this would be somewhat a one-sided business which would concentrate mainly on inbound cargo shipments.
Iran exports have almost diminished in the past years due to the strict embargoes, but can steadily grow again.

The above might not be so bad during the start-up years as Iran’s main airports lie directly in the Gulf region and are basically ideal for a split-destination operation either from Europe through Iran or from the Far East to Europe.

But - we are not that far yet.
There’s a lot of trust which has to be built up or renewed between Iran and their European, American or Far East counterparts.
Iran will surely not want to strengthen economic ties with all of them at the same speed.
Then -  there is the question of financing, no matter what project is involved.
Iranian bank accounts which have been frozen for many years will be released, but where will the money be distributed.

The days seem to be numbered for Iran Air’s aging A300 fleet.
The days seem to be numbered for Iran Air’s aging A300 fleet.

Iran can now export oil again. On the one side good, but on the other side bad as the oil price is at an all-time low and when Iran starts exporting the price will drop even further.
This will not bring much needed foreign currency into the country overnight.
Iranian oil reserves are still estimated to be the fourth largest in the world and it is said that the country holds the second-largest gas reserves of all countries.

Aircraft fleet renewal opportunities are huge
There are quite some airlines operating various cargo and passenger services out of Iran.
Most, except the national carrier Iran Air are regional operations using very old aircraft.
Iran Air which has presently a fleet estimated to be around 45 aircraft and desperately needs a complete fleet revamp. The average age of their aircraft are well into 30 years and past sanctions have dried up urgently needed spare parts.
The Iranian government announced yesterday that they would now place a firm order for 114 aircraft with Airbus today (25 January) in France.
Whether any of these are going to be A330 freighters remains to be seen, or if Iran Air will lease in cargo capacity from other carriers or leasing companies.

CAPA Centre for Aviation recently reported that Iranian carriers will need up to 300 new aircraft within the next 5 years, and up to 500 within the coming 10 years.
Competition in the Arabian Gulf may grow once again if Tehran can establish itself as a further international hub in the region in the next 15-20 years.
Why not! - Abu Dhabi, Dubai and Doha have done it. But the significant difference is that they don’t have a home market, whereas Iran’s population is estimated at 80 million.

Interesting times ahead in the Iranian aviation sector.
Much speculation at the moment, but the new economic era is opening up for this large and beautiful country.

John Mc Donagh

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