Ali Khezrian, an Iranian regime MP, recently revealed that one of the airlines has only one active airplane but pays salaries to 2,500 people. In one provincial office alone, 500 people clock in and out daily without doing any actual work. Khezrian described this situation as the result of factionalism and lobbying within Aseman Airlines.
Mahan Airlines was run under the supervision of Hossein Marashi, the cousin of the widow of former regime president Akbar Hashemi Rafsanjani. This airline later became a tool for transporting weapons and equipment for the Quds Force of the Islamic Revolutionary Guard Corps (IRGC).
In recent years, the uncontrolled establishment of new airlines in Iran has accelerated. The fleet is in poor condition both in terms of number and age, yet the number of Iranian airlines is several times higher than the global average.
For example, Iran’s population is one-fifteenth that of China, but the number of airlines in Iran is nearly five times higher than in China.
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Some of these airlines employ thousands of staff, yet have only one or two active airplanes. Why have so many airlines been established? What benefits does this bring for their founders and for the people?
Analysis and comparison of airline statistics
Reports vary on the number of active versus grounded airplanes, ranging from 70 to 140 active planes. The average age of these planes is reported to be 28 years, with some still flying after 30 to 40 years of service. By contrast, the global average fleet age is 15 years.
Iranian airlines on average operate between 2 to 5 planes, each around 28 years old. In comparison, Qatar Airways operates 201 planes with an average age of just 5 years, making it one of the youngest fleets in the world.
In China, the average airline fleet has 323 planes. Despite having a population of 1.4 billion, the country has only five passenger airlines. This means that China, with 15 times Iran’s population, has less than one-fifth the number of airlines Iran does.
India, with a population of 1.5 billion, has only four airlines—just 15% of the number in Iran. Turkish airlines have an average fleet of 148 planes, while UAE airlines average 162 planes. In developed countries such as…
Drivers behind the establishment of new airlines
Several key factors drive the establishment of new airlines in Iran. One of them is the rent-seeking and profits from fuel quotas. Jet fuel in Iran is heavily subsidized and therefore very cheap.
Airlines can sell part of their fuel quotas on the open market, generating huge profits, especially for newly established airlines that operate very few flights.
In March, the domestic fuel price rose from 6,000 rials to 113,000 rials per liter. However, the current price is still only 30% of its real value, with 70% of the cost still paid as subsidies.
The real purchase and refinery price of jet fuel is 300,000 rials per liter. This means airlines make a profit of 190,000 rials per liter when selling it. Currently, the price of one U.S. dollar in Iran’s market is 1.05 million rials.
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This heavy subsidy costs the government $1 billion annually. Such an amount creates a strong incentive for the establishment of airlines with minimal flights.
The second factor is increased revenue from the liberalization of ticket prices. With ticket prices freed while fuel subsidies remained in place, profit margins rose, attracting more people to establish airlines.
Maghsoud Asadi Samani, secretary of the Association of Iranian Airlines, has pointed to this increase. Before liberalization, ticket prices were government-controlled. Critics argue that if companies can sell tickets at free-market rates, they should also buy fuel at market prices. But in the end, the subsidies were not removed while ticket prices rose, dramatically increasing airlines’ profits.
The third factor in the mushrooming growth of airlines
The third factor is cheap banking facilities. Banks provide low-interest loans for establishing airlines. In a country with inflation above 40%, even loans at 25% interest are profitable for borrowers.
Examples of such special conditions include foreign currency loans with zero interest for purchasing airplanes and large loans with single-digit interest rates. Even resources from the National Development Fund have been used for a $2.5 billion loan to Iran Air.
The fourth factor is budget exploitation and fake employment. Paying salaries to 2,500 people for operating a single airplane is an example of rent-seeking and unnecessary hiring. Regime MPs and governors lobby to secure licenses for airlines.
Exploitation of sanctions in the expansion of airlines
Heavy sanctions have restricted direct access to aircraft manufacturers, making it impossible to procure spare parts or purchase new airplanes. This problem is especially critical given that the average fleet age is 28 years.
In such conditions, the demand for small and micro airlines increases, particularly those not yet directly sanctioned by the United States.
As a result, Iran’s regime has been eager to issue numerous licenses for establishing new airlines, often without considering proper standards.
According to Esmaeil Rabani, executive deputy of the Civil Aviation Organization, license issuance has been facilitated. Any application submitted in the licensing portal is accepted, with no scrutiny of the aviation background of board members.
Consequences of the proliferation of airlines
Newly established airlines often face shortages of airplanes and experienced staff. This leads to a decline in service quality, frequent delays, and increased flight risks. Issuing multiple licenses without expertise fuels rent-seeking and financial corruption, resulting in weak and substandard airlines. The waste of massive loans and heavy government subsidies adds to this financial burden.
In the long run, this situation undermines the aviation industry and flight safety. If continued, it could become a major challenge for the future of air transportation in Iran.
