What is going wrong with Iranian airlines?


My latest article published on Daily Azernews:


Eight years have passed since the first announcement of the Iranian government about privatization of the state airline IranAir, with no progress achieved so far. Several similar announcements were made later and the latest one came about four months ago from IranAir Chairman Farhad Parvaresh, who said the state-run company would be privatized soon.
So, why are there no potential buyers of the Iranian airline?
IranAir with more than 10,000 employees has 51 aircraft in its fleet. Iran has 25 U.S. manufactured Boeing aircraft, 18 of which belong to IranAir, and most of the airline's airplanes are becoming obsolete and outdated. This is the cause of the EU having banned the operation of some Iranian aircraft in the EU.
There are also 13 private airlines in Iran, with 10 of them operating at a permanent loss, according to the head of the state-run Iran Airports Company Mahmoud Rasoulinejad's statement published by Fars News Agency in August 2012.
Cancelling subsides for Iranian airlines, increasing costs and high expenses for aging aircraft, along with cutting support for airlines provided with US dollars at the official exchange rate, made airlines more vulnerable.
For instance, the Iranian Oil Ministry doubled the aviation gasoline price to 2,000 rials (Iranian national currency) per litre in 2011. Furthermore, about two months ago the Oil Ministry increased the gasoline price to 4,000 rials per litre, while the price for flight tickets increased by 65 percent, a move that reportedly caused a 25 percent decrease in the number of passengers.
Also, the Iranian government has cut injection of USD to airlines at the official rate, which is three times lower than the USD rate on the open market.
Besides, the rial has lost 40 percent of its value since August 2012.
The Iranian Oil Ministry stopped supplying aviation fuel to private airlines on Monday, saying their debt to the Ministry has increased to 7 trillion rials ($570 million based on the official USD rate). Indeed, that caused a massive cancellation of flights, and the ministry resumed supplying gasoline to airlines this week, giving them a seven-day deadline to pay off all of their debt.
Iran's Mehr news agency reported on January 8 that the costs of Iranian airlines have tripled and they are faced with tough challenges.
Some foreign airlines have left Iran because of increasing costs during the last few months, while others more than doubled ticket prices last November.
With the exception of IranAir, Iranian airlines are suffering from economic loss. The head of the Association of Iranian Airlines, Abdolreza Mousavi, said two months ago that Iranian airlines lose on average 15 billion rials ($1.2 million) per day.

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