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IranAir

IranAir

Mehrabad International Airport
IranAir Headquarters Building
Tehran,
Iran
Telephone: (+98-21) 665-9003
Fax: (+98-21) 603-1343
Web site: http://www.iranair.com

State-Owned Company
Incorporated:
1944 as Iranian Airways Company
Employees: 9,000
Sales: $407.44 million (2003)
NAIC: 481111 Scheduled Passenger Air Transportation; 481112 Scheduled Freight Air Transportation; 481211 Nonscheduled Chartered Passenger Air Transportation; 481212 Nonscheduled Chartered Freight Air Transportation; 488119 Other Airport Operations; 488190 Other Support Activities for Air Transportation

IranAir is the national airline of Iran. About eight million passengers a year fly the carrier and its Iran Air Tours subsidiary. IranAir's route network includes 21 domestic destinations and three dozen international ones. In addition to the airline, the group includes engineering and maintenance, catering, and airport services operations. One of Iran Air's major challenges has been sourcing aircraft and spares following a U.S. embargo on aircraft sales to the country following the 1979 Islamic Revolution. Nevertheless, it has maintained a fleet of about three dozen American and European aircraft, while its Iran Tours unit operates Russian Tupolev airliners.

RAPID GROWTH AFTER WORLD WAR II

Iran's civil aviation industry dates back at least to the late 1930s, when Iranian State Airlines, a joint venture between the Iranian government and Britain's Imperial Airlines, operated a route between Tehran and Baghdad using de Havilland Rapide biplanes. However, the airline that would be known as IranAir was launched as a private company in 1944 under the name Iranian Airways Company. It operated its first passenger flight from Tehran to Mashhad in 1946 and was flying as far as Baghdad and Beirut by the end of the year. The fleet was originally made up of U.S.-made Douglas DC-3s, the civil version of the ubiquitous U.S. military transport of World War II that equipped dozens of civil airlines after the war. Trans World Airlines (TWA) provided technical expertise and held a 10 percent interest in Iranair until 1949, notes R. E. G. Davies in A History of the World's Airlines.

According to a 1958 profile in Aviation Week, there was some intrigue behind the airline's founding, which was credited largely to an Iranian businessman, Reza Afshar. The Soviet Union occupied the northern half of Iran at the close of World War II and was beginning to use some of its wartime lend-lease transport aircraft for commercial purposes in the region. Afshar told Aviation Week he bought 19 of these DC-3s directly from the planes' owner, the U.S. government. Later, dismayed with the high fees TWA was charging for support, he bought out other shareholders to become the sole owner.

In the late 1950s, the fleet had evolved to eight DC-4s, three Convair 240s, and three Vickers Viscount turboprops, recorded Aviation Week. Its main emphasis was operating domestic routes. The country spanned vast distances of extreme terrain and had primitive ground transportation. Facilitating trade and tourism with the immediate region was another priority for the airline. The route network extended as far west as Karachi, Pakistan, and Kabul, Afghanistan. The airline was carrying 80,000 passengers a year.

MERGER IN 1961

A separate airline, Persian Air Services (PAS) or Pars Airways, had been launched in 1954 to provide a freight connection with Europe. PAS had technical assistance from the British airline Skyways and later, SABENA of Belgium, according to A History of the World's Airlines. Following a government decree to create a state airline, PAS was combined with Iranian Airways in 1961 to create United Iranian Airlines, which was later renamed Iranian National Airlines Corporation. Annual revenues were $5 million at the time and the carrier flew 142,000 passengers. Its staff numbered 700 employees. The emblem chosen for the new state airline represented the Homa bird, a mythical bearer of good fortune. The letters HOMA also formed an acronym of the airline's name in Persian.

Pan American World Airways began providing technical assistance to the growing airline in the mid-1960s. The U.S. government, eager to promote trade and displace Soviet influence, was providing a $1.5 million low-interest loan to fund its development, noted Aviation Week & Space Technology in a feature story on IranAir. In the Iranian year ended March 20, 1967, revenues were $22 million as the airline carried 403,000 passengers. Like airlines throughout the Muslim world, IranAir carried thousands of pilgrims during the annual hajj to Mecca.

The fleet had been updated with a couple of Boeing 727 jets for long-haul international flights. The airline was establishing its own training facility and flight kitchen at Tehran's Mehrabad International Airport. The staff, which numbered 2,000 people, was by then made up mostly of Iranians, although foreigners continued to hold certain technical positions. Though its chief pilot was from Pan Am, the flight crew was no longer dominated by Americans. At the time, the company was led by Lt. Gen. Ali M. Khademi, who had been a pilot with IranAir's predecessors since the 1940s.

According to American Aviation, the carrier was more modest in its international expansion than some status-seeking airlines in other developing countries. It was maintaining a 25 percent market share on the heavily traveled Tehran-Beirut route in heavy competition with several world carriers. Such was IranAir's stature that its CEO became head of the International Air Transport Association, and Tehran hosted the group's convention in 1970.

SOARING IN THE JET AGE

By 1972, IranAir was flying nearly 800,000 passengers a year. Staff had grown to 3,800 employees. Iran Air had been consistently profitable since 1962. Its financial strength allowed it to shop for the most advanced aircraft on the market, and in the early 1970s it announced its intention to buy Concorde supersonic transports. It was also looking for wide-body aircraft for high density, short-haul routes and eventually ordered five Boeing 747s.

Revenues were $151.4 million in the year ending March 20, 1975, while earnings were up to $22.4 million. The airline had grown to 5,600 employees in spite of a temporary halt on hiring earlier in the decade, noted International Management. IranAir was connecting to KLM's computer reservation system in Amsterdam via a microwave link while its own was being readied.

KEY DATES

1944:
Iranian Airways Company is established.
1954:
Persian Air Services (also Pars Airways) is launched to fly freight between Iran and Europe.
1961:
State-owned Iranian National Airlines Corporation (originally United Iranian Airlines) is formed by merger of Persian Air Services and Iranair.
1965:
Airline receives first jets (Boeing 727s).
1979:
United States imposes sanctions on sales of aircraft to Iran following Islamic Revolution.
2001:
Eight million people fly on IranAir and its Iran Air Tours subsidiary.
2006:
IranAir grounds a half dozen planes due to problems getting spares for U.S.-made engines.

CHANGES AFTER THE ISLAMIC REVOLUTION

In 1979, militants took over the U.S. embassy in Tehran, detaining hostages there for over a year. The United States then broke off relations with Iran and imposed an embargo upon aircraft sales to the country. There were also changes to IranAir's in-flight service after the Islamic Revolution. Female flight attendants were clad in burqas and alcoholic beverages were banned from the cabins.

IranAir was able to acquire a half dozen European-made Airbus A300s between 1979 and 1982. One of these aircraft was lost in July 1988 when the USS Vincennes mistakenly shot it down, killing 290 people. Another would be lost in a wreck.

Iran was at war with Iraq between 1982 and 1988. Although one of IranAir's Airbuses was hijacked and stranded in Baghdad for six years, the airline fared well. It benefited when foreign airlines canceled services to Tehran, observed Air Transport World.

IranAir bought its first new aircraft in several years in 1990 when it acquired six Fokker 100s for regional routes. Its fleet was still made up of mostly Boeing aircraft, including eight 747 jumbo jets. It was flying as far as Tokyo and Beijing, though most of its six million passengers a year were on domestic flights. IranAir was also moving significant amounts of cargo and three of its jets were dedicated freighters. The company, which included maintenance, catering, and other support operations, then had about 11,000 employees.

Though Iran's relations with the United States remained strained, IranAir was reaching out to other Western countries, reported Air Transport World. On some international flights, it brought back its famed first class service, which had been banned after the Islamic Revolution. The airline's overseas flights were more profitable than its internal services, where money-losing routes were operated at low fares for the benefit of the population. A handful of small private airlines had begun to sprout, providing some domestic competition.

IranAir acquired two more Airbus 300 aircraft in late 1994. Included in the sale were a couple of U.S.-made GE engines, approved in a rare exception to the U.S. embargo. An order for four new A330s followed a few years later; however it was hampered by export restrictions on aircraft with more than 10 percent U.S.-made content.

STILL FLYING AFTER 20 YEARS OF SANCTIONS

All of Iran's civil airlines together carried more than 13 million passengers in 2000, according to Air Transport World, IranAir accounted for approximately 9.5 million. The staff numbered 10,000 to 12,000 employees and revenues were around IRR 2 billion. After the retirement of some of the older planes, its fleet included eight Boeing 747s, five Boeing 727s, and four 737s. IranAir soon acquired a couple of previously owned Airbus A310s. A new subsidiary, Iran Air Tours, was flying leased Russian-made Tupolev Tu-154 aircraft. A bid to buy four Airbus aircraft with Rolls-Royce engines from the United Kingdom fell apart within two years over pressures related to U.S. sanctions.

Air Transport World was given rare access to the airline in the spring of 2001 and reported that IranAir was running smoothly even after more than 20 years of U.S. sanctions. A company spokesperson told the publication that it had been allowed to acquire the original replacement parts that were critical to safety. However, though it still flew to Europe and Asia, Iran had been relatively isolated. An official in the civil aviation ministry said the country hoped to eventually return to its place as an international gateway. By this time, there was also talk of partially privatizing the airline and merging it with a couple of the small, privately owned upstarts.

The issue of U.S.-made equipment availability came to the forefront after the crash of two Russian airliners operated by Iran Air Tours. A couple of the Fokker aircraft had also been lost since 1994. IranAir Chairman Davood Keshavarzian lamented to Flight International the high price the company had to pay to get spares for its Boeing aircraft.

IranAir carried about six million passengers in 2001; another two million flew with the Iran Air Tours subsidiary. IranAir experienced a temporary falloff in international traffic in the global aviation slowdown following the September 11, 2001 terrorist attacks on the United States. Yet there were positive developments on the international front. The carrier signed code-sharing agreements with KLM and Austrian Airlines. In 2003, IranAir signed an agreement to connect Iranian travel agents to the Amadeus computer reservation system.

IranAir had been able to acquire a handful of Airbus and Fokker aircraft in the previous several years. Though the airline acquired a couple of used A300s in 2005, it was soon forced to ground a half dozen of its Airbuses with U.S.-made GE engines due to a lack of spares, its chairman told Flight International. Plans were underway to buy more Airbus and Tupolev airliners in the used market, though company leaders had expressed a preference for new Boeings in the past. Iranian civil aviation officials expressed optimism in one day resuming flights to the United States, which was home to about a million Iranian expatriates.

PRINCIPAL SUBSIDIARIES

Homa Hotel Group; Iran Air Tours.

PRINCIPAL DIVISIONS

Airport Services; Catering; Commercial & Field Operations; Cultural, Entertainment & Sport Complex; Engineering & Maintenance; Flight Operations.

PRINCIPAL COMPETITORS

The Emirates Group; Iran Aseman Airlines; Mahan Air; National Air Company Azerbaijan Airlines.

FURTHER READING

Bramley, Eric, "Iran Air Sketches Bright Future in Black Ink," American Aviation, September 1967, pp. 49-52.

Davies, R. E. G., A History of the World's Airlines, London: Oxford University Press, 1967.

Dinmore, Guy, "Sanctions Clip Iran Air's Wings; U.S. Restrictions Prevent Tehran's Flag-Carrier Buying New Aircraft," Financial Times (London), October 15, 2002, p. 14.

Doty, L. L., "Iranian Line Gains Solid Financial Status," Aviation Week, November 24, 1958, pp. 38-39.

Duffy, Paul, "Iran Air to Push Airbus for Deal; 'Inflated' Prices for Spares and Support on Boeing Fleet Puts European Manufacturer in Driving Seat," Flight International, November 19, 2002, p. 24.

, "Looking Out Through Closed Windows," Air Transport World, June 1, 2001, p. 153.

"Iran Air Evaluating Wide-Body Jets for Long-Haul Operation," Aviation Week & Space Technology, June 11, 1973, p. 32.

"Iran Air to Merge with Two Local Regional Carriers," Aviation Daily, March 11, 2002, p. 5.

Iranian Airways, "About IranAir," http://www.iranair.com.

Kaminski-Morrow, David, "Iran Air Taps Amadeus for Distribution Package," Air Transport Intelligence, October 8, 2003.

Karimi, Nasser, "Iran Air Says It Hopes to Buy U.S. Planes, But Doesn't Explain How Embargo Can Be Evaded," Associated Press Newswires, March 6, 2006.

Lelyveld, Michael S., "Questions Fly Over Sale of GE Jet Engines to Iran," Journal of Commerce, January 20, 1995, p. 1A.

"Never Mind the Turbulence," Middle East Economic Digest, July 12, 2002, p. 28.

Oates, David, "Iran Air Gets a Rein on Its Expansion," International Management, April 1976, pp. 32-36.

"One-on-One with Iran Air's Ahmad Kazemi," World Airline News, December 10, 1999.

Parrish, Wayne W., "The Remarkable Record of Iran Air," Airline Management & Marketing, February 1970, pp. 48-49.

"Sanctions Force Iran Air to Ground A310 Fleet," Flight International, June 13, 2006.

"Tehran Faces Up to Turbulent Times," MEED Weekly Special Report, July 16, 2004, p. 33.

"Top Airlines in Africa/Middle East by Operating Revenue, 2003," Air Transport World, World Airline Report (annual), July 2004, p. 31.

Vandyk, Anthony, "To Raise a Profile; Iran Air, a One-Class Carrier Since the Islamic Revolution, Is Resurrecting First Class and Aiming to Rebuild Its Once-Excellent Service Tradition," Air Transport World, July 1, 1991, p. 119.

Watkins, Harold D., "Major Challenges Face Iranian Effort to Build Carrier," Aviation Week & Space Technology, June 26, 1967, pp. 42-52.

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