Airline companies from around the world are attending a major conference in Tehran, scoping out what many believe is set to be a promising market.
The two-day CAPA Iran Aviation Finance Summit opened at Novotel Imam Khomeini International Airport on Sunday with the participation of business leaders and representatives of 150 aviation companies such as Airbus, Bombardier and Embraer.
Airlines, aircraft manufacturers, lessors, banks, export credit agencies, regulators and law firms are meeting with airport operators and investors, and infrastructure developers to explore financing solutions for transactions related to aircraft acquisition, leasing and infrastructure development.
Iran has put orders with Airbus and Boeing for about 200 passenger aircraft worth more than $50 billion but the country has found it difficult to arrange financing because major banks are reluctant to process the transactions for fear of possible US penalties.
Minister of Transportation Abbas Akhoundi summed up the hurdles which crippled Iran's aviation industry for years, saying there is no more impediment to the expansion of the sector.
"All necessary institutions for global competition in the aviation sector are taking shape in the country one after the other," he told the audience which included CAPA - Center of Aviation Executive Chairman Peter Harbison.
The event is a follow-up to the CAPA Iran Aviation Summit on January 24-25 which was held after the lifting of sanctions, becoming the first major international airline summit to be held in the country in almost 40 years.
Organizers say the gathering received unprecedented global interest amid growing excitement about the modernization and expansion drive in Iran.
Iran is one of the 20 largest economies in the world on a purchasing power parity basis, with a young and highly-educated population of over 80 million.
This is a market with immense potential and huge pent-up demand for aircraft, equipment, technology, skills and capital, as well as airport and airspace infrastructure.
There are also significant route development opportunities for foreign airlines, airports and national tourism authorities. And given the wealth of historical, cultural and natural attractions in Iran an expected surge in inbound tourism will drive investment in hotels and services.
Novotel, where the Sunday event kicked off, was opened along with Ibis in Iran in October by French leisure group Accor amid a global rush to capitalize on the country’s tourism boom.
Iran is trying to establish itself as a new tourist destination in the world, thanks to its treasure trove of many attractions.
Persepolis, the ancient capital of the largest empire that the world has ever seen, the cities of Isfahan and Shiraz with their glorious Islamic and pre-Islamic landmarks and ski resorts in Tehran are just some of them.
There are challenges, however, with “primary” US sanctions still in place, which make international firms get cold feet about moving in whole-heartedly.
For example, Airbus and Boeing reached provisional deals with Iran earlier this year after bans on selling aircraft to the Islamic Republic were lifted as part of last year’s nuclear deal but they face significant obstacles for its implementation.
US lawmakers have passed legislation which blocks prospective Boeing and Airbus sales to Iran. Such measures have prompted Iran to broaden its search for aircraft, approaching Canada’s Bombardier, Brazil’s Embraer and Japan’s Mitsubishi.
Earlier this month, a senior Iranian official said the US was terrorizing the Europeans into shunning business with Iran despite the lifting of sanctions.
With large banks holding back, Iran has been forging ties with smaller financial institutions, many of which do little or no business in the US. However, smaller banks cannot provide financing for big deals such as those for Iran’s purchase of aircraft.