As a flag carrier airline, Iran Air is materially exposed to the vagaries of international politics and security developments. Iran’s aviation industry has faced international sanctions since 1979, the year of the Iranian nationalist and religious revolution. Specifically, over the last decade, the United States and European Union have imposed a tighter sanctions regime on Iran in response to Iranian policies deemed contrary to American and European national interests, in particular the possible military dimensions of Iran’s nuclear program. The sanctions have blocked Iran Air from obtaining new aircrafts and spare parts. Without the ability to import foreign aircrafts, Iran Air has struggled to maintain a fleet to support customer demand in terms of quality and scope of service. The central issue facing the management of Iran Air is how to avoid the progressively increasing threat of a major accident.
Foreign isolationist measures have forced Iran Air, as well as other Iranian carriers, to operate some of the oldest fleets in the world. Iran Air Chairman, Farhad Parvaresh, said that his primary challenge was to “keep the company alive” in dealing with the problems arising from operating an elderly fleet. The lack of access to spare parts has grounded approximately 130 aircrafts in the nation’s fleet, the majority of these belonging to Iran Air. Maintenance, repair and overhaul expenses account for approximately 25% of total costs of Iranian airlines, compared to the global industry benchmark of 10-15%. Due to Iran Air’s shortage of long range jets, its current network is geographically limited to destinations within a six to seven hour flight radius. Overall, operational costs have been rising, the performance constraints of an aging fleet cannot meet the growing demands of a developing country, and, most importantly, the operational risks that arise pose massive safety concerns. Since 2009, Iranian airlines have suffered several fatal accidents. Iran Air Flight 277 was a highly publicized crash in 2011 that killed at least 77 passengers onboard.
In 2016, Iran Air benefitted from sanctions relief. Under general license J-1, the US Treasury filed an amendment to the Iranian Transactions and Sanctions Regulations “authorizing the Reexportation of Certain Civil Aircraft to Iran on Temporary Sojourn and Related Transactions.” Iran Air immediately concluded two parallel deals for aircrafts with the world’s two leading aircraft suppliers; Boeing of America and Airbus of the European Union in December 2016. Both contracts were huge. Boeing announced a $16 billion agreement for 80 aircraft that would provide nearly 100,000 jobs in the US economy. The first planes under these terms are scheduled for delivery in 2018. Similarly, Airbus recorded 98 firm orders placed by Iran Air. The first Airbus aircraft was delivered in March 2017. Iran Air’s managers are pursuing a short and medium term aggressive purchasing strategy that is almost entirely dependent on these contracts remaining legal. However, the Trump Administration has stated that a return to the formerly held isolationist policy may be imminent. The potential snapback of sanctions would bar both Boeing and Airbus from doing business with Iran Air. Airbus requires a US license to trade with Iran due to the aircraft’s reliance on US parts.
In an effort to head off the imposition of new sanctions and realize the large numbers of aircraft orders, Iran Air should work intensely and closely with Boeing. Boeing’s influential and well-connected lobbyists on Capital Hill are in constant contact with Senators and Congressmen. The purpose of this approach is to ascertain which, if any, Iranian government statements or acts could sway congressional votes in the matter – and then pass on such recommendations to the Iranian government. Secondly, Iran Air should place any politically required commercial orders regardless of economic cost with manufacturers in swing vote congressional districts. Again, this should be done in close coordination with Boeing, which has so much to lose financially if Congress imposes sanctions. However, any acts by Iran Air to save its orders for Boeing or Airbus jets may, in the end, prove ineffective given the strength of the political forces in play.
Some questions remain. Could Iran Air coordinate Airbus and Boeing’s support to effectively have European governments address American congressional concerns directly through their Washington Embassies? Could exposure in media be pursued to highlight the benefits of the Boeing deal as it bears on the United States economy?
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 Adebahr, Cornelius. Europe and Iran: the Nuclear Deal and Beyond, Routledge, Taylor & Francis Group, pp60, (2017).
 Centre for Aviation, CAPA, Iran Air’s Fleet Order Signals Serious Intent for the Iranian Aviation Industry, (2016), https://centreforaviation.com/insights/analysis/iran-airs-fleet-order-signals-serious-intent-for-the-iranian-aviation-industry-266339
 Centre for Aviation, CAPA, Iran, with an Educated Populace of 80 Million, Becomes a Potentially Major Aviation Force, (2016) https://centreforaviation.com/insights/analysis/iata-iran-with-an-educated-populace-of-80-million-becomes-a-potentially-major-aviation-force-282989
 Department of the Treasury, Office of Foreign Assets Control, Iranian Transactions and Sanctions Regulations 31 C.F.R. Part 560, (2016)
 Boeing, Boeing, Iran Air Announce Agreement for 80 Airplanes, (2016) http://boeing.mediaroom.com/2016-12-11-Boeing-Iran-Air-Announce-Agreement-for-80-Airplanes
 Airbus, 2016 Annual Report, pp31 (2017)
 Bloomberg, Trump’s Iran Decision Throws Uncertainty Into Business Plans, (2017), https://www.bloomberg.com/news/articles/2017-10-12/trump-s-iran-decision-throws-new-uncertainty-into-business-plans
 Reuters, Treasury chief says reviewing Iran’s aircraft licenses, (2017), https://www.reuters.com/article/us-usa-iran-sanctions/treasury-chief-says-reviewing-irans-aircraft-licenses-idUSKBN18K2U4