Iran sanctions removal means rivalry for regional airlines

Aviation industrialists are speculating that the removal of sanctions against Iran will put pressure on major Middle East carriers, creating new competition for those who have built a business on connecting regional and international traffic.

Leading regional airlines like Emirates, Etihad Airways and Qatar Airways will specifically find themselves in intense rivalry as a result of the opening that will be created in Iran’s aviation market.

“Traffic that has been flowing over the big three hubs will reduce as direct services take over. The big three will likely see a dip [in passenger numbers],” Addison Schonland, founder and partner at AirInsight, has told Gulf News.

“But the small carriers could see a bigger loss of traffic as Iranian regionals suddenly fly all over,” he added.

Analysts agree that Iran will be a growth market in 2016 but with thousands on backorder at the major manufacturers, the Iranian carriers will likely lease aircraft in the near term.

To counter this, the leading regional airlines will have to buy “some aircraft” and “other carriers will have to refurb cabins” to retain and attract new passengers, Schonland further told the Gulf News.

Under sanctions, Iranian airlines have been unable to buy new aircraft from Western manufactures. This is all expected to change when sanctions are lifted and with a population of 80 million that has been economically restricted, Iran represents one of a few important, but isolated markets, added the report by the Gulf News.

Airways News website reported in December 2015 that Iran is expected to order 450 new airplanes over the next five years.

It added that 400 of the new planes will be for mainline services, adding that 150 of them will be used for widebody services. The remaining 50 will be used for regional purposes and will be mostly turboprops.

Airways News added that demand for international flights that would require wide body aircraft will specifically rise.

“The [Iran-P5+1 nuclear] deal opens up an entirely new long haul market, with VFR and even business driven traffic to the US,” the aviation news site added.

No exact date has yet been set on when the sanctions against Iran will be lifted, but many are already speculating that it will happen in the first half of 2016 with some Iranian officials saying that it could take place in January.

By Press TV