Saturday, September 02, 2006

A Tragedy and Revisiting A Policy

Another tragedy in Iran has happened; yesterday ISNA reported that a TU 154 M caught fire after hitting a stair in Mashhad International Airport at north east of Iran. From its 148 passengers 29 were killed and 43 are injured according to the reports. This has been the 10th lethal accident in Iran aviation since 2000 and the fifth crash of a Russian aircraft operating civilian routes in Iran.

Because of US imposed sanctions Iran cannot acquire parts for its aging fleet of Boeings, including B 707, B 727, B 737 and B 747 operated most by Iran Air and Aseman two public airlines in Iran. The sanctions also discourage any Iranian private airline from acquiring western built aircrafts. The only aircrafts available to Iranians are Russian built Tupolovs, Antonovs and YAKs as well as second hand aircrafts offered by other airlines, such as Turkish Airline. These have already flied thousands of flight hours and their original owners are eager to sell them to acquire new top of the line aircrafts. Under these circumstances Russian aircrafts are attractive because of their availability and technical supports provided by Russian manufacturers and providers. This has mixed consequences for Iran’s domestic commercial aviation industry, which has seen many changes in the last decade.

During 1990’s Iran aviation industry began a fundamental change. During 1980’s it was dominated by government and constitutionally, according to Article 44, it was a government’s monopoly. However the expansion of free zones of Kish and Qeshm islands and an increase in the local demand for air services at provinces far from Tehran encouraged many semi public organizations to start airlines of their own. This resulted in a surge of the number of airlines in Iran. Although mostly owned by the official and public sector organizations or semi public ones these new airlines began their operations to produce profits. Subsidizing two officially public airlines, Aseman and Iran Air, heavily Iran Civil Aviation Administration treated these second cousins as strangers and unwelcome rivals. Most recently truly private airlines became operational whose relations with public sector are that of a regulator and a private company and not that of an owner and its property.

During these years Iran also carried an ambitious program to construct new airports in several cities and provincial centers across the country. In designing new facilities the local population’s demand and the profitability of aviation operations played little role. Public sector built some very fine airports capable of handling large wingspan aircraft in some small cities and provincial centers. This boosted country’s infrastructure to a new level and made the potentials ahead of private aviation far more promising than before. However private airlines lack the aircraft suitable for these local markets and operating at these airports mostly are not profitable.

Meanwhile Iran’s domestic customers welcome the new Russian additions by mixed feelings. On one hand the expanded fleet and competition kept airfares relatively low, in most cases the increase in prices was forced upon private airlines by government decision to increase the price of aircraft fuel, whose soul provider in Iran is government. On the other hand many miss the comfort of new Boeings nostalgically. The Persian Gulf Countries Airlines also set a very high standard, inaccessible by many in the world. Benefiting from several government subsidies and considered a justifiable expense to attract tourism, most region’s public airlines fly some of the finest aircrafts available in the world market.

During past years Iranian airlines efforts to purchase new aircrafts have been blocked on several occasions because of US imposed sanctions and on some because of lack of financing because of sanctions. To a neutral observer it seems that sanctions targeting Iran’s commercial aviation industry does not take into account several facts. First the nature of Iran’s aviation industry has changed permanently. Its civilian sector has transformed from a dominantly public domain to a private one. Government would soon privatize the last two public airlines in Iran, thus domestic aviation will be a purely private business in coming years.

Second these sanctions do not take into account the growing population of Iran and available infrastructure. With a population of 75 million and a very well placed network of domestic airports Iran domestic aviation industry is the only one in the Middle East region that could be profitable on its own. Unlike Persian Gulf countries domestic traffic supersedes international one in Iran and the number of domestic flights is growing. Thus Iranian airlines would compete at domestic markets with companies who use similar aircrafts. Sanctions hurt their chances in the region but not in the country. Not allowing investments in this market and blocking sale of aircrafts are hurting American businesses more than Iranian ones. By endangering civilian lives the existing sanctions also are hurting American image among Iranians more than anything else.

Thus here we are. United States government hoping to press Iranian government into compromise has put in place sanctions against an industry that is not a primary concern of Iranian government. In doing so it has endangered Iranian civilians’ lives and has denied itself a 75 million strong market. Iranians may nag about Russian aircrafts but no one has any doubt that lack of alternative aircrafts is because of Washington DC reluctance to accept uselessness of this policy rather than Iran’s unwillingness to allow its private entrepreneurs to operate them. One wonders how many more deaths Washington needs to re-think its sanctions; because this one is not even working.

Summary of Aircraft Accidents since 2000 in Iran[1]

Date Aircraft Casualty
September 2006 TU-154 M / Russian -29 killed
December 2005 Falcon Jet /French -12 killed
December 2005 C 130 /American -106 killed
April 2005 B 707 /American -2 killed
November 2004 Fokker 50 / Dutch -50 killed
February 2003 Ilyushin/ Russian -276 killed
December 2002 Antonov /Russian -46 killed
February 2002 TU 154-M/Russian -119 killed
May 2001 YAK 40 -29 killed
February 2000 Air Crash -6 killed

[1] From ISNA (Iran Students News Agency)

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