Baku, Azerbaijan, Jan. 30
By Farhad Daneshvar - Trend:
Over the past ten years and after the removal of crippling nuclear-related sanctions on Iran, Hassan Rouhani was the first Iranian president to visit Europe breaking the deadlock over ties between the Islamic Republic and its traditional trade partners.
In addition to a raft of deals ranging from energy to industry and environment, Rouhani paved the way for signing a deal which surely opens a new chapter in the history of Iran's aviation which has suffered from a worn-out fleet over the past decades claiming at least 1,168 lives between 1979 and 2014.
After 21 years of embargo on Iran's aviation, finally on January 28, Tehran signed a historic deal with Airbus for the purchase of 118 airliners (73 widebodies, 45 single aisle) including 12 A380 superjumbos worth $25 billion at list prices. Under the memorandum of understanding (MoU), the European aircraft manufacturer will train Iranian pilots as well as technicians to maintain the planes. According to Iranian officials the country will receive eight airbus planes this year and the rest will be delivered until 2024.
The billions dollar payoff
The airbus deal would not be inked if was not the financial contribution that Rouhani secured at the first stop of his Europe tour in Rome, where the Italian Export Credit Agency, SACE, and Iran's Central Bank (CBI) signed a settlement agreement for the recovery of the sovereign credit due to SACE by Iranian counterparties.
The Export Guarantee Fund of Iran (EGFI) has suggested that several European banks agreed to pay for airliners purchased by Iran and Italy's SACE would cover insurance for the European banks. Now, Iran will pay back the installments in a course of 15 to 20 years while the names of the European banks have not been disclosed due concerns over the unclear terms of the removal of international sanctions against Iran.
Despite the fact that EU and the UN Security Council have lifted nuclear-related sanctions on Iran; the restrictions snapped by the US on its banking system to deal with the Islamic Republic appear to be on place. Therefore, observers question how easy it will be for Iranian banks and companies to pay off the costs of the deals which are mostly expected to be delivered in dollars.
Advanced airliners vs Iran's aviation infrastructure
Only a couple of hours after striking the Airbus deal in Paris, thousands of kilometers faraway in the northeastern Iranian city of Mashhad, a Boeing aircraft failed to land safely going off the runway due to snowy surface which hospitalized several passengers.
The second issue that Iranians should be concerned about is the capability of the country's airports to accommodate wide-body planes, though the Airbus contract includes support services to help the entry into service and efficient operations of the new aircraft.
However, the Islamic Republic's airports organization planning to compete with mega-hubs in Dubai and Istanbul has announced projects to develop three international airports in Tehran, Esfahan and Mashhad cities.
Rouhani's administration as a symbolic sign to indicate the country's advance under his term, intends to increase the capacity of Tehran's Imam Khomeini airport. The capacity of the capital city's main international gateway is projected to reach 45 million passengers annually which currently stands at about five million, compared to the capacity for 75 million passengers in Dubai airport, and Istanbul's Ataturk airport which served more than 38 million passengers in its international terminal in 2014.
To fulfill the ambitious plan, Aéroports de Paris (ADP) will assist Iran to construct the country's largest transport project, the second terminal at Tehran's Imam Khomeini international airport. This is while Rouhani has purportedly got French construction firm Vinci SA through a separate MoU to cooperate in expanding the country's other key airports in Esfahan and Mashhad cities.
In reference to what has been said, the documents signed in Paris for the purchase of the Airbus planes and the development of the country's international gateways were only formal preliminary contracts while the parties still need to reveal more details on the procedure for fulfilling the agreements.
Farhad Daneshvar is Trend Agency's staff journalist, follow him on Twitter:@farhad_danesh