In 1995 the US government imposed sanctions which, among other things, included a ban on aviation companies from selling aircraft and repair parts to Iranian airlines. Since the sanctions have been lifted, Iran has made revival of its civil aviation a priority. There are many hurdles they will have to jump over to get back in the aviation sector, seeing as the sanctions have been in place long enough that the financial restrictions and aging infrastructure have hobbled Iran’s civil aviation growth potential. There are some large obstacles to work through before these ambitions can be executed.
Iran announced in fall of 2016 that they had committed themselves to purchasing over 100 commercial jets to replace the fleet of aircraft that it has had since before sanctions were put in place. Some of these jets were bought before the Iranian Revolution in 1979. The price tag for updating and purchasing that many jets from Airbus Group SE could run as high at $20 billion. Tehran has additionally signed contracts with some French firms to help rehabilitate Imam Khomeini International Airport.
Can Iran’s residual financial sanctions, and the capital restrictions of the entire country, allow for such a major overhaul? Certainly, foreign business travel that comes from those who are looking to take advantage of sanction removal can boost the economy. As will the potential of future tourism, which is currently stunted by the capabilities of the small, crumbling airport and aging jets. These revenue streams could go a long way to boosting Iran’s overall economy, and can also help demonstrate to the layperson in Iran the benefits of the controversial nuclear deal with international powers. If you show that making concessions in some places can lead to a brand new international gateway and modern airlines, it makes it easier for Tehran to make future deals with outsiders and still maintain some power.
It was not just airline restrictions that were lifted in the sanction, but this seems to be the biggest single industry boost from the sanction removal, and it seems to be what the country is making the biggest priority. Obviously they are looking to sell to buyers in the West now that there is no sort of embargo in the realms of crude oil and natural gas, but in looking for an economy boost that can also legitimize a country in the eyes of the masses, airfare is a commitment that Tehran seems to be making in spite of the financial toll it might take.
Though they have begun receiving their first Western-made aircraft, there are a host more obstacles for Iran, including banking sanctions that remain in place which would prevent the Iranians from making the deals in dollars, which is the most common currency. In just the decade from 2005 to 2015, Iranian airlines experienced 16 incidents that resulted in 586 deaths showing a structural deficiency. There is also a global aviation-payment system from which Iran has been suspended, and if they are not re-admitted it will make international ticketing much more difficult. They will need to work to rebuild flight paths and open up slots for their planes at other international destinations due to limitations that have been imposed previously due to the age of Iran’s current fleet. There is also a limited amount of trained workforce due to lack of previous demand that will need be grown internally as plans take shape. According to Iran’s Transportation Analysis and News Network, Iranian airlines owe more than $200 million to Iran Airports Company (AIC), the holding and operating company of the country’s civilian airports, and $500 million to the National Iranian Oil Company for fuel.
With costs for infrastructure renovation and expansion needing an estimated $4 billion, and only an estimated $450 million in revenue returned from the airports, it seems unlikely that Iran can find the backers they need to finish the project they have already begun.
This major overhaul of a creaky, outdated system is ambitious, and not without it’s share of obstacles for the country. The government is not daunted, however, and continues pursuing these goals avidly.