Iran's Aviation Industry May Not Recover From Covid-19 Until 2023

EghtesadOnline: Iran's aviation industry, a sector harshly hit by the spread of the new coronavirus, needs at least three years to make a comeback, says Siavash Amirmokri, managing director of Iran Airports Company,

News ID: ۷۵۱۳۲۱

22 October 2020

“Revenues raised from overflights account for nearly 68% of Iran Airports Company's annual income. Overflight is where we suffered the most during the pandemic,” Amirmokri was quoted as saying by Fars News Agency.

"We need to diversify our sources of revenues in order to compensate the decline in income under the influence of Covid-19."

Iran Airports Company’s revenues from overflight charges decreased by 46% or $69 million in the first half of 2020 compared with the same period of 2019.

Optimistic projections put the number of aircraft flying over Iranian airspace in 2020 at 112,000 and expect revenues to reach 10,000 billion rials (around $36 million), aviation officials were quoted as saying earlier this month.

Amirmokri put an extra emphasis on non-aviation revenues, as he believes these revenues have the potential to help prop up the sector during the ongoing stagnation.

"Our statistics indicate that non-aviation revenues had a 10% share of total revenues earned by major Iranian airports in the fiscal 2019-21," he said.

Iran Airport Company has recently installed a comprehensive retail platform in 11 airports across the country, in an attempt to supervise the operations of duty-free shops and contractors.

"Unfortunately, some retailers have failed to settle their debts to airports in recent years ... The new platform helps enhance the transparency of contracts and allows airport officials to receive debts from contractors," he said.

Iran Airports Company hopes to recover about 50% of the delayed debts by March 2021, using the newly-installed platform.

Air travel and tourism have been the hardest-hit industries in the wake of the Covid-19 pandemic. Currently, domestic flights are carried out at some airports in the country, but aircraft fly 40-50% short of full capacity to allow social distancing.

Latest statistics released by Iran Airport Company indicate a 23% growth in the total number of foreign flights using Iranian airspace during the month to Sept. 21.

A total of 10,376 foreign flights passed through Iran's airspace during the month, which figure stood at 8,431 in the previous month.

However, a year-on-year comparison reveals a 56% drop in the number of overflights, mostly due to the outbreak of Covid-19 and the subsequent suspension of airlines' operations.

The number of overflights has increased from 130 per day nearly 8-9 months ago to more than 330 these days. The outbreak of coronavirus has reduced the number of flights by 75-80%.

Hundreds of Thousands of Airline Jobs at Risk Globally

Hundreds of thousands of aviation jobs are at risk without more state aid, a global industry body has warned.

The International Air Transport Association downgraded its 2020 traffic forecasts, after "a dismal end to the summer travel season".

The association, which represents 290 airlines, says it expects traffic to be 66% below the level it was in 2019.

IATA estimates that it will be at least 2024 before air traffic reaches pre-pandemic levels.

A second surge in Covid-19 cases and more government restrictions meant the sector has not seen a strong rebound.

The travel industry saw a precipitous drop in business after the coronavirus developed into a pandemic.

In the current year, major airlines, airports and tour firms have collectively announced thousands of job losses.

"Absent additional government relief measures and a reopening of borders, hundreds of thousands of airline jobs will disappear," IATA chief executive, Alexandre de Juniac, was quoted as saying by BBC.

He called for Covid-19 tests to be routinely carried out on passengers before flights depart to increase consumer confidence in air travel and make governments more willing to open borders.

Airlines have already shown signs of struggle this year.

Last month, Virgin Atlantic announced it was cutting 1,150 more jobs, on top of 3,500 jobs it had already cut earlier in the year.

The move, it said, was necessary for its survival and was part of a £1.2 billion ($1.5 billion) rescue plan to secure its future for at least 18 months.

In August, the world's biggest airline American Airlines said it would cut 19,000 jobs in October when a government wage support scheme comes to an end. The jobs being cut make up 30% of its pre-pandemic workforce.

And earlier in the year, United Airlines said as many as 36,000 jobs were at risk. Germany's Lufthansa warned it could cut 22,000 positions and British Airways said it was slashing up to 13,000 jobs.