Iranian Airlines Unable to Pay for Jet Fuel

Abdorreza Mousavi, director of Iranian Airlines Association, said today in Tehran that the domestic airliners do not have enough cash to pay for fuel and have been forced to cancel many flights. Mousavi said the state-run National Iranian Oil Company (NIOC) has threatened to confiscate airplanes for past due payments. His answer: Come and get them!

“We don’t have cash to pay for fuel. If the National Iranian Oil Products Distribution  Company (the company that provides jet fuel to Iranian airlines) wants to confiscate our planes, let them come and take them. We simply don’t have any money to pay for fuel,” Mousavi said. (Fars News Agency, 25 February)

Mousavi added that due to high fuel costs and the uncertainty in the value of the national currency, the Iranian airliners had to raise ticket prices and are now facing a decrease in demand.

“The currency fluctuations, the rising fuel cost and the (high) ticket prices forced on the airliners have caused a reduction in demand and decrease in passenger load factor,” Mousavi said.

Last November, Iranian airlines raised ticket prices for their domestic flights by 65 percent.

File photo: Iranian airliners (IRNA)

Iranian Airlines Face Turbulent Times

Iranian airlines face turbulent times as the fuel prices skyrocket, increasing ticket prices have pushed passenger traffic to its lowest levels in many years, and the high cost of foreign currency has pushed up the cost of buying equipment and maintaining the fleet, AFP reports from Tehran.

“It is likely that some small airlines will be out of business due to rises in fuel prices,” said Hamid Reza Pahlevani, director of Iran's Civil Aviation Organization. (AFP, 20 January)

The state-run National Iranian Oil Refining and Distribution Company tripled the price of jet fuel in October. Price of jet fuel for international flights has tripled to 21,000 rials from 7,000 rials per liter. Price of jet fuel for domestic flight has also risen by 75 percent.

High inflation, officially estimated at 25 percent, but believed to be much higher, and the plummeting value of national currency, the rial, has created upward pressures on ticket prices. The airlines have increased fare prices by 70 percent on domestic flights and 90 percent on international flights, leading to a 25 percent drop in passenger traffic, said airlines association chief Abdolreza Mousavi. (AFP, 20 January)

Airliners also need to pay for purchasing equipment and maintenance in hard currency. The cost of purchases and maintenance had doubled as the rial has lost more than half its value against dollar in the last year.

In January, the planes of domestic airlines, Mahan Air and Aseman, were grounded for a few hours by NIORDC that refused to refuel them because it said they were behind on their payments. The state-owned jet fuel supplier now demands cash up front from all airline companies, media reports say.

Austrian Airlines and Dutch carrier KLM are stopping their service to Iran, citing lack of demand due to higher ticket prices for Iranians. Other European carriers Lufthansa, Alitalia, Turkish and Aeroflot however still land in Iran.

File photo: Iranian airliner Mahan Air’s 747-200 plane. (Mahan Air)