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09/12/2016

Europe eyes Iran as alternative aviation route

Transport

Europe eyes Iran as alternative aviation route

A deeper cooperation in the aviation sector is seen by the EU and Iran as a building block to bolster the bilateral relation.

[EBS]

The EU and Iran will discuss a horizontal agreement on air transport in the coming months, seen as a first step to bolster cooperation that could reduce the influence of United Arab Emirates and Qatar as hubs for long-haul flights.

The landmark visit of eight European Commissioners to Iran on 16 April signalled the beginning of a new phase of the bilateral relations between the EU and Iran, the second largest country in the region.

Air transport is seeb by both sides as one of the areas to deepen cooperation and, at the same time, to exploit the potential of a nation at the centre of East-West flight routes, but with urgent needs to modernise its aviation sector.

Commissioner for Transport, Violeta Bulc, told EurActiv.com that “an important issue” of this new period would be to negotiate a horizontal agreement with the Iranian authorities.

“This is a simple and quick procedure negotiated between Iran and the European Commission, which would bring the 25 air services agreements that Iran has with member states fully in line with EU law,” she added.

This horizontal agreement is also seen as a first step to strengthen the civil aviation ties with a country that could rival to Dubai or Abu Dhabi as a strategic hub, various sources told Euractiv.

An EU official noted that an important element underlying the talks between the European authorities and Iran during the visit was the role that the country could play in offering an alternative route to the Gulf countries.

This appetite to look for options came as some European airlines and member states have accused the oil-rich nations of subsidising their national carriers and therefore helping them to expand in Europe.

Although the EU was expected to start negotiating a comprehensive agreement with Qatar and the United Arab Emirates by March, the member states would not give a mandate to the Commission before the summer break.

EU makes slow progress on aviation deals with Gulf countries

EU member states have not even started discussing the mandate for the European Commission to negotiate agreements with fast-growing aviation countries in the Persian Gulf, despite a push from Brussels to get the green light by early spring.

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In light of these difficulties, and the interest in finding options to reduce the dependency from Qatar and the UAE, the EU official added that a horizontal agreement with Iran could be an “important element” toward reaching a more comprehensive agreement with the country in the medium term.

Iran’s opportunities are also highlighted by other players. An industry source, who declined to be named, commented that Iran wants and could become an important regional power in the aviation sector.

But its possibilities will very much depend on how much the country expands their fleet, in particular its flag carrier airline Iran Air.

According to some estimates, Iran would need around 400 new planes over the next decade.

Other industry sources were more sceptical, as they noted that the three main air carriers from the Gulf (Etihad, Qatar Airways and Emirates) would not allow anybody taking their share of the cake.

Transport Commissioner starts long battle against Gulf aviation subsidies

Transport Commissioner Violeta Bulc is seeking to level the playing field between European aviation companies and their rivals from the Gulf states, where heavy subsidies have given these big airlines a clear advantage.

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“The enthusiasm is great, but I really don’t see this [Iran becoming a regional power] happening so fast,” a source close to the air carriers industry said.

New planes

The Iranian government agreed to purchase 118 aircraft from Airbus, including some of its newest models, for $27 billion.

Meanwhile, Boeing visited the country few days before the arrival of the EU delegation to discuss the sale of models including the 737, 787 and 777 aircraft.

The purchase of the new aircraft will be crucial for removing Iran Air from the EU’s blacklist of banned companies to operate in the EU.

The company was blacklisted in 2010 due to safety concerns with its planes, said Commission spokesman Jakub Adamowicz on 18 April. The poor state of its 26-year-old fleet, and the impossibility of obtaining spare parts from Boeing and Airbus due to the sanctions, barred the airline from European skies, except for 12 of its newest airplanes.

Meanwhile, the privately owned Mahan Air, flies without restrictions to several European cities given the better condition of its fleet.

But the new planes will not solve Iran’s problems in the short-term, as the first Airbus models are not expected to arrive before autumn this year. The number will be also be limited. No more than half a dozen, a person familiar with the deal told EurActiv.

In the meantime, the European Commission wants to help the country to enhance its safety by assisting with technical expertise.

Commissioner Bulc offered the support of the European Air Safety Agency to assist the Iranian authorities.

The European Commission plans to send aviation security experts to Iran in May to explore whether Iran Air has taken sufficient steps to be removed from the list.

Although EU officials admitted that it would be too early to accomplish real progress in such a short period of time, the acceptance of the EASA’s involvement would be a first positive signal.

The visit of the Commissioners came against the backdrop of the re-establishment of the connections between EU airlines and Iran.

The first Air France flight between Paris and Tehran landed on Sunday (17 April), after eight years of suspension due to the international sanctions imposed because of the nuclear programme.

Commission embarks on business trip to Tehran, despite renewed sanctions

Eight European Commissioners will make a landmark visit to Iran on 16 April, an announcement which comes on the same week that member states extended a raft of targeted sanctions against the country for its poor human rights record.

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Positions

Commissioner for Transport, Violeta Bulc, said: "Following my visit to Iran last weekend (16 April), I firmly believe transport is an area where the European Union and Iran can cooperate to mutual benefit, specifically in aviation. My objective is to enhance the safety of Iran Air, like all carriers and states that feature on the EU Air Safety List. A technical assessment will be conducted by EU safety experts next month. This assessment is purely technical, and is not a political process, and the outcome will depend solely on the safety performance of Iran Air."

Background

The EU aviation sector directly employs between 1.4 million and 2 million people and overall supports between 4.8 million and to 5.5 million jobs. The direct contribution of aviation to EU GDP is €110 billion, while the overall impact, including tourism, is as large as €510 billion.

The EU aviation strategy presented by the European Commission in December 2015, includes three key priorities:

  • Tapping into growth markets, by improving services, market access and investment oportunitites with third countries, whilst guaranteeing a level playing field;
  • Tackling limits to growth in the air and on the ground, by reducing capacity constrains and improving efficiency and connectivity;
  • Maintaining high EU safety and security standards, by shifting to a risk and performance based mindset.

In regards to Iran, the Commission prioritises the modernisation of the Iranian fleet given the accidents occurred over the last six years, notably due to the ageing state of the planes.

Iran is revamping its aviation safety oversight regime. In this context, the Commission points out that the country can benefit from Europe's and EASA expertise.

Meanwhile, the Commission points out that the institution will not consider any removal from the 'black list' “until we have all the necessary guarantees that safety requirements are met.”

 

Timeline

  • May 2016: Commission experts will visit Iran to explore whether Iran Air has taken sufficient steps to be removed from the list.