Iran DESTINATIONS
TAKE-OFF T
o describe the mood of the Iranian aviation industry as “upbeat” would be something
of an understatement. After a decades-long embargo that
blocked Iran from forging ties with the rest of the world, the Islamic Republic flung opens its doors on January 16, 2016 – Implementation Day for the lifting of all nuclear-related sanctions. Its reintegration culminated from years of diplomatic wrangling between Iran and the P5+1 (USA, UK, France, Germany, Russia, and the People’s Republic of China) group of international negotiators. As the first global conference held in
Tehran for nearly 40 years, CAPA’s Iran Aviation Summit in January was considered a litmus test for overseas interest in the Middle East’s second largest economy. It did not disappoint: 160 foreign
delegates from 35 countries descended on the summit en masse, scrambling for the attention of senior officials in the government and Iran’s 16 domestic airlines. Aircraft manufacturers, lessors, financiers, IT specialists, spare parts suppliers, maintenance firms and interior designers were among the myriad companies looking to drum up business. When it came to route development
opportunities, it was clear that some carriers already had a first-mover advantage. “During sanctions we started very heavy
cooperation: six [daily] flights to Tehran, seven cities [in total],” Temel Kotil, CEO of Turkish Airlines, says. “We will continue as usual, but now we
increase the pace. When the sanctions are removed, travel between Turkey and Iran will be as usual, and also travel from Iran to the world will be as usual, but other outsiders – international travellers – will come here in big numbers. For that, Iran needs us to bring them from all over the world.” He said demand for flights between
Turkey and Iran will double within one year, fuelled by a post-sanctions boom in business traffic that will increasingly rely on sixth-freedom connectors. Whether or not Turkish Airlines is
permitted to carry those passengers – the flag-carrier has already used up its
landing rights under the existing bilateral agreement – remains to be seen. But Kotil seems confident that Tehran will take a pragmatic approach to liberalisation given the wider economic benefits. “If they allow us more frequencies that will be lovely, otherwise we increase the size of the aircraft,” he says, noting that load factors on Turkish Airlines’ flights to Iran average about 85%. “I believe they will increase [the traffic rights], because they need us, we need them.” There is no denying that Istanbul became a crucial bridging point for Iran during the country’s decades of isolation. Turkey now accounts for the single largest
share of Iran’s outbound capacity when measured by Available Seat Kilometres (ASKs). Alongside Turkish Airlines, which has the strongest presence in the country pair, five Iranian carriers and two Turkish low-cost carriers are active in the market. However, Istanbul is just one of several
sixth-freedom hubs in the region. Despite falling behind the Turkish
gateway in terms of ASKs, Dubai is still ahead when it comes to seating capacity – a consequence of the shorter flying time on most routes from Iran. In March, 127,000 seats were flown between the Islamic Republic and Dubai, with nearly two-thirds being provided by Emirates and its short- haul affiliate FlyDubai. The corresponding figure for Istanbul was 106,000. Further afield, point-to-point traffic is
also steadily picking up. In Germany, for example, early growth by Germania is now giving way to expansion by flag-carrier Lufthansa, which will increase its Frankfurt- Tehran service this summer as well as adding a new link from Munich. ASK capacity in the country pair has risen 32% over the two years to July, with Tehran-based Mahan Air also launching Munich flights to complement its pre- existing Düsseldorf service.
Sanctions setback Though eager to hit the ground running as the country reconnects with the world, Iran’s long-suffering airlines are severely handicapped against their foreign rivals. Some carriers, including Mahan Air, which has overtaken flag carrier Iran Air to become the Islamic Republic’s largest airline, remain subject to terrorism-related sanctions. The designation excludes them from business dealings with international companies, impeding their growth prospects as the market opens up. w
routesonline.com ROUTES NEWS 2016 ISSUE 3 33
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