IKIA Grappling With Pandemic

EghtesadOnline: Imam Khomeini International Airport City Company has received 2,000 billion rials ($7.84 million) in coronavirus loans at the lending rate of 12%, says Mohammad Mehdi Karbalaei, the airport’s managing director.

News ID: ۷۵۱۷۶۴

01 January 2021

“The government-backed financial assistance package was supposed to be paid to transportation companies hit by the pandemic, but IKIA was found eligible to receive these loans as well due to the sharp decline of revenues. Following the Ukraine plane crash and the outbreak of coronavirus, IKIA’s revenues slumped by 85% from last year’s 7,000 billion rials [$27.45 million],” he was quoted as saying by Fars News Agency.

“As per the budget bill for the next year [March 2021-22], Imam Khomeini International Airport City will receive 50 billion rials [$196,078]. It also has 10,000 billion rials ($39.21 million) in unpaid credits. Following their allocation, they will be spent on improving the airport’s infrastructures such as runway renovation and completing the airport’s free trade zone to attract foreign investors,” he said.

“Negotiations are ongoing with three foreign investors to complete the capacity of Terminal II [formerly called Iranshahr]. Once completed, the capacity of the airport will increase from 10 million to 40 million passengers per year.”

Commenting on airport traffic, the official said passenger traffic has dropped by 91% over nine months to Dec. 20 and the number of flights has declined by 81% over the period.

“Only in the first Iranian month ending April 19, the airport saw a 97% decline in the number of flights and a 90% decrease in the number of passengers. Under normal circumstances, more than 250 airplanes would have landed and taken off from IKIA on a daily basis but now the number of flights has slid to 30. Only five flights were operated from IKIA in the first month of the current year,” he added.

Karbalaei noted that Imam Khomeini International Airport City Company has 800 employees on permanent contracts and 1,400 employees on temporary contracts.

“Twenty-five companies provide us with various repair and maintenance services. When factoring in the number of police personnel, a total of 4,000 people are working at Imam Khomeini Airport. For reasons of economic efficiency and lowering expenses, operations at Salaam Terminal have been shut down temporarily without downsizing,” he said.

IKIA has the biggest share of international flights operated in Iran. It has been distinguished as the third fastest-growing airport in the world.

Operated by Iran Airports Company, IKIA is located 30 kilometers southwest of Iran's capital city Tehran.

IKIA's new Salaam Terminal officially launched its first flight in June 2019. It is Iran’s first smart terminal designed by domestic experts and designers.

The terminal has a transportation capacity of 5 million passengers per year. The new terminal has increased IKIA's overall capacity by 80%.

IKIA authorities have placed the construction of a third terminal on its agenda.

Iranshahr Terminal’s first phase is expected to be completed in the next five years with a capacity of transporting 25 million passengers per year. The final phase will lead to the transportation of 110 million passengers annually.

Exploring New Sources of Revenue

Tehran's Imam Khomeini International Airport has focused efforts on exploring new sources of income to cover expenses during the ongoing financial hardships resulting from the outbreak of Covid-19 over the past couple of months.

Fostering commercial activities in IKAC's Special Free Zone now tops its agenda, Karbalaei said air revenues have significantly declined, following the virus spread, and the solution is to focus on non-aviation revenues.

Developing the area surrounding Imam Khomeini International Airport to create an airport city has been on the Ministry of Roads and Urban Development’s agenda as part of the objectives outlined in the Fifth Five-Year Economic Development Plan (2011-16).

Accordingly, the government-owned IKIA Airport City Company was officially established to manage the project’s execution and supervise investment activities.

A report by the Financial Tribune’s sister newspaper Donya-e-Eqtesad reveals details of the project.

An airport city or aerotropolis is an urban plan in which the layout, infrastructure and economy are centered on an airport. The plan stipulates that an airport can do more than extending traditional aeronautical services through new non-aeronautical commercial facilities, services and revenue streams.

The project to develop commercial facilities around IKIA is aimed at creating a suitable platform for both national and international companies to cluster around the airport and engage in business activities. The master plan for the IKIA airport city includes 25 commercial facilities and townships around the airport.

A health village to provide high quality medical services to both national and international patients, a rest area complex to serve transit passengers, a media city, a convention city, a knowledge city to enhance knowledge-based economic activities, a sports city, an IT park, a cultural village, a clean industries park, an archeological park, a sports complex, a leisure city and a hi-tech park are only some of the facilities to be developed in the airport city.