Subscribe Free
in Features / Airports

Iran's master plan

Posted 10 October 2017 · Add Comment

Iran has expressed interest in the continued development of its airports, particularly in the capital, Tehran. Keith Mwanalushi discusses the importance of this initiative with an expert from Lufthansa Consulting.

It’s been widely reported over the last year that Iran’s civil aviation organisation has called for private sector partnerships in aviation-related projects in the country.
A number of memorandums or understanding (MoUs) have been signed with various international organisations to attract more investors to develop the country’s network – airports in particular.
Local sources say at least 27 existing airports will be undergoing rehabilitation and refurbishment that should go a long way in reigniting Iran’s aviation industry following the lifting of international sanctions last year.
MoUs include those announced for interest in the construction of a new passenger terminal at Mehrabad International Airport (THR) and the renovation of the terminal building at Imam Khomeini International Airport (IKA) – the two major commercial airports serving Tehran and the busiest international air passenger gateways to Iran.
Tehran-Mehrabad has historically been the capital’s primary gateway. However, that title now firmly rests with Imam Khomeini as the main international airport.
IKA, about 35km southwest of the Iranian capital, currently has capacity for around 6.5 million passengers per year. The airport’s new terminal, reportedly due to be built in five years, will increase that capacity to 20 million.
Iran Airports Company (IAC) recently announced that the airport development projects, worth $2 billion, are planned for five airports in the cities of Tehran, Shiraz, Mashhad, Isfahan and Ahwaz.
Alexander Manakos, partner and head of market - Middle East at Lufthansa Consulting believes that, in light of the long-term plans to establish a central hub for passengers and cargo in Iran, the renovation and expansion of airport infrastructure is of great relevance, particularly taking into account the existing hubs in the region.
“However, the airport infrastructure is only one aspect,” he pointed out. “The key to success will be to establish a framework and infrastructure at existing airports that attract business, like the airport city that is planned to be developed at Imam Khomeini International Airport.”
Furthermore, Manakos indicated that future infrastructure needed to allow for a smart integration of different modes of transport for the development of the cargo business. “With the specific situation of Tehran, it might be worth looking deeper into connectivity, which obviously is not ideal with the two airports. The development of a rail link between the city of Tehran and Imam Khomeini Airport is one step to improve this situation. However, in the longer term, connectivity would be enhanced if passengers could connect from one flight to another in the same airport.”
Last year, several MoUs were signed for proposed expansion works. But it remains unclear how far these ‘understandings’ have gone towards actual confirmed contracts.
In January 2016, the Iranian Ministry of Roads and Urban Development, the Iran Airports Company, and VINCI Airports of Italy, signed a MoU for the concession for Mashhad and Isfahan airports, with plans to renovate, extend and operate both facilities.
The airport in Mashhad, which recorded 8.2 million passengers in 2014, is located in the northeast of the country and serves the country’s second largest city – a holy place that attracts more than 20 million pilgrims every year.
Isfahan Airport, with 2.6 million passengers in 2014, serves Iran’s third largest city, the capital of the Persian Empire in the 16th and 17th centuries, which is renowned for its rich cultural and historic heritage.
During the same month, another MoU was signed between the Iranian authorities and Aéroports de Paris, within its consortium, to develop IKA. The plan was for the renovation of the existing terminal and also the design, construction and operation of new terminals. The project should have brought the capacity of that airport up to 34 million passengers by 2020, a huge uplift on the current capacity of 6.5 million. However, sources in Paris have revealed that, while the French company is still prepared to assist the Iranian authorities, the MoU has since been cancelled in favour of launching a public tender for the airport concession – and the process is reportedly on-going.
Iran has a large number of airports of different sizes and in various condition states. Manakos feels that, from the perspective of growth of the civil aviation sector and the positive socio-economic impacts, the key to success will be to look at the bigger picture and make sure that development measures are effective for the country as a whole.
“This means not only including the large, profitable airports but also ensuring that airport infrastructure will complement and interlink with the development of other modes of transport,” he said.
Another aspect is that airports can offer great potential for private sector investments. “Countries like Iran provide huge opportunities from the perspective of both the private sector and the government. Bearing in mind that access to the market was limited for quite some time, there is obviously a backlog for airport infrastructure investment, which could trigger additional growth,” he said.
However, after the enthusiasm that was visible about a year ago among many foreign companies, things seem to be getting back to a more realistic level. “Foreign companies and their Iranian counterparts are now looking into the long-term perspective,” Manakos observed.
Of course, there are manifold challenges with the Iranian market, as with other parts of the world. “A key challenge that we see in the current environment is the geopolitical stability,” observed Manakos, pointing to the current period of instability in the Middle East region. When discussing terminal construction, airport expansion and development of related infrastructure, he emphasised the importance of substantial long-term investments. “When private investors become involved, they will take a very close look at the levels of stability that they expect for their investment. This will certainly affect financing and risk premium as well as contractual exit and termination clauses.”
The situation in the region might not directly influence the situation in a country, but it might have a strong effect on the neighbouring markets, which are also key for the development and growth of air traffic and logistics in the country.
The expectations for long-term stability and geopolitical developments in the region might be the greatest challenges presently.
Despite the difficulties, the good news is that, post sanctions, it seems there is the political will to unveil the investment potential of Iranian airports to global investors and to gain their confidence.
According to Airbus, Iran is forecast to require some 400 to 500 new aircraft to modernise as well as to grow its existing passenger fleet to catch up with years of pent up demand on domestic, as well as international, routes.
Just months after sanctions were lifted, flag-carrier Iran Air and Airbus signed a firm contract for 100 aircraft – covering the narrow and wide-body product lines. The agreement was subject to US Government Office of Foreign Assets Control (OFAC) export licences, which were granted in September and November 2016. These licenses are required for products containing 10% or more US technology content.
Airbus coordinated closely with regulators in the EU, US and elsewhere to ensure understanding and full compliance with the joint comprehensive plan of action (JCPOA).
In January this year, Iran Air took delivery of its first new aircraft, an A321, in a handover ceremony in Toulouse (France).
By March, the carrier welcomed its first wide-body from that order – an A330-200 – to coincide with the airline’s 56th anniversary.
Meanwhile, Lufthansa Consulting will be on hand to provide its portfolio of consulting services for airports in the Iranian market. “Although our brand is rooted in the airline industry, we are a consultancy that serves a wide range of clients in the aviation industry. We support airport clients with our international expertise in infrastructure, commercial and operations,” Manakos summed up.

* required field

Post a comment

Other Stories
Latest News

Bombardier reports fourth quarter and full year 2017 results

Bombardier has released its fourth quarter and full year 2017 results, highlighting solid financial and operational performance across the company.

Bruno Even appointed CEO of Airbus Helicopters

Airbus SE has appointed Bruno Even, 49, Chief Executive Officer (CEO) of Airbus Helicopters, effective 1 April 2018. He will report to Airbus CEO Tom Enders and join the company’s Executive Committee.

CTT Systems announces first Cair VIP order for BBJ MAX 8

CTT SYSTEMS AB, providers of aircraft humidity control systems, has a launch customer order for a Cair VIP Inflight Humidification system from Jet Aviation for one Boeing BBJ MAX 8.

Emirates SkyCargo transports first space satellite manufactured in the UAE

Emirates SkyCargo has transported KhalifaSat- the first satellite developed and built by Emirati engineers in the UAE at the Mohammed Bin Rashid Space Centre (MBRSC).

Etihad Airways honours its record breaking executive

Etihad Airways has honoured its high flying executive Andrew Fisher following his record-breaking feat of travelling around the globe in the fastest time and in the fewest number of flights.

SaudiGulf Airlines approved for activation of WIFI Internet services

]SaudiGulf Airlines has obtained regulatory approval for the activation of WIFI Internet services onboard all its domestic as well as its international flights.

TAA SK0902311218
See us at
BIAS BT271017161118ArabianTravelMkBT250418Global Aerospace BT2018SOFEX BT2018Abu Dhabi AirExpo BT2018AirportShow BT1502090518MEBAA BT2018Aviation Africa BT18418Istanbul Airshow BT22018