Trump Storm May Hit Airlines’ Iran Plans
Air India Express, Jet, GoAir review flight plans as US weighs sanctions
Mumbai: Indian carriers are either reviewing or stalling their plans to start flights to Iran as the Donald Trump-led US government hardens its stance on the Islamic nation, ratcheting up diplomatic tensions.
Air India Express is now taking a second look at its plans to start flights to the capital city of Tehran initially slated for later this year, two people in the know said. The carrier has alternative plans ready — Delhi-Tashkent-Almaty or Delhi-Doha-Bahrain — if geopolitical conditions make it difficult to start operations to the country, one of them said, adding that the plans haven’t been dropped yet. Air India Express is the low fare international subsidiary of staterun Air India.
Low-fare carrier Go Air, which was planning Tehran as one of its initial overseas destinations, has stalled those plans for now, said a second person aware of the matter. The airline plans to start international flights later this year.
Jet Airways had last year made plans to fly to Tehran but put them on hold before some clarity emerged on who would lead the US government and which way it would move, said two people familiar with the matter. The plans
are now on the back burner, they said. The Trump government is said to be considering a renewal of sanctions — cutting trade and aid — on Iran after it recently tested a mid-range ballistic missile. The plans follow Trump’s far reaching decision of temporarily banning the citizens of Iran and six other Muslim countries from entering the US.
International sanctions on Iran were lifted in 2015 under the Barack Obama-led US government, after a nuclear pact under which Iran agreed to curb its nuclear programme. But Trump recently issued a warning to Iran saying “there’s a new president in town” who won’t “sit by” while the country pursues its military ambitions. On another occasion, he called Iran “No. 1 in terror”.
India, under the Narendra Modi government, has been trying to strengthen relations with Iran but any kind of ties with it may antagonise the US government, said experts.
There are tactical problems, too. Air India Express operates US plane-maker Boeing’s planes. The biggest chunk of Jet’s fleet is also Boeing-made. If sanctions were to be im- posed, any airline which owns Boeing planes financed by the US Exim bank, would have to seek letters of guarantee from the bank for flight operations. “Also, sanctions may make it difficult to repatriate revenue earned in local currency in Iran back to the home country,” said an Air India executive.
The geopolitical angle aside, the airlines’ review of plans also comes at a time when a slowdown in the Gulf sector — as a result of a fall in oil prices — have impacted yields for Indian carriers flying to the region. Jet Airways’ acting CEO Amit Agarwal, in a recent post-earnings conference call with analysts, spoke of yields taking a hit in the market. Jet is the biggest carrier out of India to the Gulf.
Yields for Air India Express’ — which ferries the largest chunk of India’s migrant labour traffic to and from the Gulf — are down 15% for the current financial year, said its CEO K Shyamsundar.
The airline’s average flight occupancies are down to 79% from 83% a year earlier. Its profit for the ongoing fiscal is estimated to be at .₹ 300 crore compared with .₹ 362 crore a year ago.