Iran liberalizes air ticket prices

Business Materials 24 May 2014 16:24 (UTC +04:00)

Baku, Azerbaijan, May 24

By Fatih Karimov - Trend: Air ticket prices in Iran have been officially liberalized.

Iran Civil Aviation Organization has authorized the domestic airlines to liberalize air ticket prices, Iran's Mehr news agency reported on May 24.

However, on April 20, the Fars news agency quoted a senior Iranian aviation official as saying on the condition of anonymity that Iran is planning to liberalize air ticket prices in five months under the second phase of the subsidy reform plan.

The Iranian government announced petrol price hikes as high as 75 percent as part of the second phase of the subsidy reform plan which took effect on April 25.

The first phase of the subsidy reform plan kicked off in December 2010, when prices of staple foods and utility bills, as well as gasoline, soared overnight.

In the second phase of the plan, subsidized gasoline, available to each motorist in limited amounts, rose from 4,000 rials ($0.16, using the central bank's official exchange rate) per liter to 7,000 rials ($0.28).

The Civil Aviation Organization of Iran has announced that it will liberalize ticket prices in order to encourage domestic airlines to improve services.

It is estimated that the government will acquire 480 trillion rials (about $19.3 billion) in the current Iranian calendar year (March 2014-March 2015) in revenues through the implementation of the second phase of the economic reform plan.

The administration of President Mahmoud Ahmadinejad implemented the first stage of the subsidy reform plan toward the end of 2010 in an attempt to wean the country off food and fuel subsidies.

In the first stage the government paid 45,500 rials (about $18) to citizens to compensate for a partial cut of subsidies.

On February 16, MPs approved a bill according to which cash payments in the second phase will only be given to low-income families.