Industry Spotlight: Airlines (2024)
/By Brooke Lowe, Research Associate
Introduction
On May 19th, 2024, a helicopter crash resulted in the death of Iran’s President Ebrahim Raisi and several other Iranian officials. Whilst the crash has been attributed to bad weather conditions, several other factors, such as outdated aircrafts and difficulty obtaining necessary airline parts due to sanctions, must be considered as potentially contributing to the crash. The aircraft that carried Raisi was outdated and its model had not been in production since 1998.
Between 1960 and 2024, there have been 217 plane crashes in Iran. According to the Bureau of Aircraft Accident Archives, plane crashes in Iran have killed more than 2,000 people between the years 1979 and 2023. A significant number of crashes involved older aircraft, particularly from the Russian fleet, increasing concerns regarding the reliability of older Russian planes. Sanctions and difficulties in procuring spare parts have contributed to maintenance challenges and affected safety, which will be discussed below in this Industry Spotlight.
Iran’s Aviation Crisis: The Impact of Sanctions
One of the more visible impacts of sanctions against Iran are the country’s aging and deteriorating fleet of aircraft. The crash that killed President Raisi was a decades old United States two-blade Bell 212 - not the kind of aircraft that high-ranking government officials around the world would normally be flying. However, given restrictions on purchasing new planes and acquiring spare parts, Iranian airlines have often been forced to extend the operational lifespan of their existing aircraft far beyond what is considered safe by international standards. This has led to an increase in maintenance challenges, safety concerns, and operational inefficiencies. For instance, Iran Air and other national carriers are operating planes that are decades old, some even from the pre-revolution era, posing significant risks to passenger safety and reliability. The average age of planes in Iran Air’s fleet is nearly 33 years old. For a point of comparison, the average age of Delta Airlines’ fleet is 15.3 years; Qatar Airways’ fleet is on average 9.27 years old, and the average age of Royal Jordanian Airlines’ fleet is 11.05 years. Additionally, more than 50 percent of Iran’s aircrafts are grounded due to a lack of spare parts, a difficulty brought about by sanctions. Exact percentages for other countries are unavailable, however after grounding 13 Qatar Airways planes in 2021, all 13 have since been reactivated, highlighting the ease other countries have in keeping planes in the air. Despite a relatively large fleet, with 21 airlines operating within Iran, only a mere 171 planes are functional due to a lack of parts. The lack of available resources has contributed to a drastic increase of domestic flight prices, which have risen by 30 percent in 2023, making air travel difficult for the average Iranian citizen. Indeed, while inflation is a problem for all transport methods, the cost of airfare has risen more dramatically. For example, in the 1990s the average price of a flight between two Iranian cities was approximately double the relevant bus fare. Today, the bus price between Mashhad and Tehran, Iran’s two largest cities, is roughly 570,000 IRR (one way, which is equivalent to 13.54 USD); meanwhile, a one way flight between the two cities comes out to over 250 USD.
The inability to procure new aircraft has stymied efforts to expand and modernize Iran's aviation infrastructure. Prior to the re-imposition of sanctions in 2018, there were deals in place with major aircraft manufacturers such as Boeing and Airbus, which would have brought much-needed new planes to Iran's fleet. Boeing and Airbus both signed contracts with Iranian airlines worth 39 billion USD in 2016, however these contracts were terminated upon the reimposition of sanctions on behalf of the US. The cancellation of these deals has not only hampered fleet renewal but also limited the potential for growth in the aviation sector. This has had a cascading effect on tourism and international business travel, sectors that rely heavily on a robust and modern aviation network.
Sanctions on the Iranian aviation sector have also had significant knock-on repercussions for Iran’s economy as a whole. The aviation industry, being a vital part of Iran's transportation infrastructure, plays a crucial role in trade and commerce. The restrictions have led to increased operational costs in all industries that rely on aircraft for transport of people or cargo, which ultimately feeds already rampant inflation in the country. As described above, this has reduced the affordability of air travel for ordinary Iranians, stifled economic growth by limiting connectivity both domestically and internationally, and deterred foreign investment.
Private Airline Industry
Historically, Iran's aviation industry was tightly controlled by the state, with significant participation from the government in airline operations. However, in recent years, despite the failed privatization of Iran Air, there has been a noticeable shift towards privatization and deregulation. As of 2024, several private airlines operate in Iran, competing with state-owned carriers such as Iran Air. Notable private airlines include Mahan Air, Kish Air, and Aseman Airlines. These airlines have been pivotal in increasing the overall capacity and connectivity within the country and to international destinations.
Mahan Air, established in 1991, is one of the leading private carriers, known for its extensive network and relatively modern fleet. The airline has focused on expanding its international routes, despite facing sanctions and operational challenges..
Kish Air, established in 1989, is another significant player, primarily focusing on domestic routes and popular tourist destinations. The airline’s strategy revolves around catering to the growing domestic tourism market, leveraging Iran’s diverse cultural and natural attractions. Kish Air’s fleet modernization efforts have contributed to its success. Kish currently has a fleet size of 9 aircrafts, with an average fleet age of 29.6 years.
Aseman Airlines is Iran's third largest airline by fleet size, headquartered in Tehran. With a history dating back to 1980, it has gradually transitioned from a state-owned entity to a more privatized model. The airline’s focus on regional connectivity and underserved routes has filled critical gaps in Iran’s aviation network. Aseman Airlines in particular is banned from flying in European Union airspace due to failures to meet safety demands.
The private airline industry in Iran faces significant challenges. Most importantly, US sanctions have prevented private airlines such as Mahan Air from obtaining new aircraft. This is due to concerns that Iran is using private aircraft for a military agenda. For example, in 2011 Iranian aircraft, under the control of Mahan air, entered Iranian airspace to provide military equipment to both Hezbollah and the Assad regime in Syria. In 2017, the Iranian government introduced a new airline named Qeshm Fars Air, which was under the control of Mahan Air and that ‘ferried weapons and sanctioned merchandise’ around the world to countries including Venezuela, Russia, Myanmar, and Ethiopia.
Despite US efforts to sanction these private airlines, results have been mixed. Though flights have not stopped entirely, they have prevented Iran from acquiring new aircraft and prevented travel to European destinations, thus hurting potential profits in the aviation industry in Iran.
Iran-Israel Tensions: The Impact on Airlines
As of 2024, tensions between Iran and Israel have significantly exacerbated Iran's aviation crisis, as Israel, a key U.S. ally, continues to lobby for stringent measures against Iran.
Beyond the direct implementation of sanctions, increased animosity (which has seen direct attacks between Israel and Iran), has understandably deterred visitors and resulted in a sharp decline in Iran’s tourism sector, which is now reported to be at its ‘lowest point.’. The situation is confounding: on the one hand, tourism relies on a reliable and functioning aviation system - the lack thereof, which will deter tourists. On the other hand, a downturn in tourism directly impacts the airlines and their ability to provide said reliable service.
Finally, a growing hostility with Israel also affects Iran's aviation indirectly through regional alliances and airspace restrictions. Several countries that are allied with Israel or opposed to Iran’s policies, including German operated airline Lufthansa, have closed their airspace to Iranian airlines due to safety concerns regarding flights. This forces Iranian carriers to take longer, less efficient routes, increasing operational costs and travel times.
Conclusion
Looking ahead, the prospects for Iran's aviation sector remain bleak. Unless there is a substantial easing of tensions between the new Iranian government under reform president Pezeshkian and the next administration in the US, a re-evaluation of sanctions is highly unlikely. As such, Iran will continue to face an aviation crisis marked by outdated aircraft, safety risks, and economic losses. The 2024 landscape suggests that without diplomatic breakthroughs or substantial policy changes, the aviation sector's struggles and unfortunately poor safety record, will persist.
