Will Boeing Compete with Airbus in Iran?

In recent years, Boeing has been losing customers in competition with Airbus. The American company's lag behind Airbus in the competitive aircraft market in Iran seems to echo the global rivalry between Boeing and Airbus. It is predicted that Iran will need at least 600 new aircraft to renew its air fleet, of which Airbus has already secured about 20% by selling 118 aircraft. These planes will be sold to Iran over eight years on a leasing basis. According to the Ministry of Roads and Urban Development, Iran Air will initially pay only 15% of the price of each Airbus to the company, with the remaining amount gradually transferred by Iran Air to the European company. Such advantageous sales to the Iranian side and Airbus's lead in the Iranian market have made things very difficult for Boeing. While it has been established that Iran Air has been in direct negotiations with Airbus for about 18 months to examine the best product for the Iranian market, the U.S. government has recently granted Boeing permission to negotiate directly with Iranian companies. It was expected that this permission would be granted to Boeing much earlier, especially since the company had acted sooner than Airbus after the initial nuclear agreement and received permission to cooperate with Iran Air for supplying aircraft parts and assisting in the major repairs of Boeing aircraft. After the initial cooperation between Iran Air and Boeing for the first time since the revolution during the initial nuclear agreement, Boeing had stated that it sees a suitable market for selling aircraft to Iran, which, according to a report by the British firm Ascend Flightglobal, has an average aircraft fleet age of 23 years. Farhad Parvaresh, the CEO of Iran Air, had also told Reuters after the start of this cooperation, "Iran prefers to prioritize suppliers who cooperated with the country during the easing of sanctions in 2014." However, after the nuclear agreement and the lifting of air sanctions, delays in granting permission for negotiations with Iran caused this company to fall behind its competitor. Although it is still not entirely clear whether Iran Air and Boeing had initial discussions about future aircraft and preliminary needs during their initial cooperation, Reuters reported, citing Iranian officials, that "multiple exchanges with Western airlines have taken place to explore future deals in several European cities, with around 100 aircraft expected to be purchased from Boeing." Nevertheless, at the 2016 aviation summit in Iran, several senior managers from Boeing were supposed to attend, but according to Ahmad Reza Bayati, the deputy planning director of the airports company, this trip was not possible due to visa issues. In recent years, Boeing has significantly lagged behind its main competitor, Airbus. In 2015, Airbus had an advantage over Boeing. Last year, Airbus managed to sell about 1,022 aircraft, while Boeing sold 743 aircraft. Despite this, two of Boeing's aircraft, the 737 MAX and 777, still outperform their competitors at Airbus. The two modern aircraft from both companies, the Boeing 787 and Airbus 350, are also in tight competition. On the other hand, although the Airbus 380 is the largest aircraft in the world, the Boeing 747-800, with about 200 fewer passengers and the ability to service more of Iran's main airports, may have an advantage over the Airbus 380. However, one model from Airbus, the A330, remains the best option for Iran's airlines for medium-haul wide-body aircraft due to technical and economic issues, and Boeing's aircraft cannot compete with this model. Regarding Iran Air's potential purchase from Boeing, Bloomberg has reported interest in acquiring two models, the 737 MAX and 777. Mohammad Reza Khoshnavisan, a board member of Iran Air, has mentioned four models: 737, 777, 787, and 747-800 as potential options under consideration for Iran Air's purchase from Boeing. He stated, "The most suitable option for American aircraft in the Iranian fleet is the Boeing 737." According to some analyses, the best option to meet Iran's needs for aircraft with a capacity between 100 to 200 seats is the Boeing 737, which is referred to as the safest passenger jet in the world. This aircraft has a capacity ranging from 120 to 240 passengers in various configurations. The 737 alone can meet 60% of Iran's fleet needs. One of the biggest advantages of this model is its low fuel consumption and low maintenance costs. Due to the suitable range this model covers in terms of passengers, by acquiring a large number of them, Iran can significantly reduce maintenance costs. According to Boeing, the 737 MAX has up to 8% lower operating costs per seat compared to its main competitor, the Airbus A320neo. Another potential purchase for Iran Air from Boeing is the 777 model. This aircraft is the longest-range aircraft in the world and has the highest safety standards. Most of the world's airlines use the Boeing 777 for their long-haul aircraft. The Boeing 777 has a range of up to 17,000 kilometers. The diameter of a 777's engine is the same as that of a Boeing 737. This aircraft's engine is also considered one of the strongest passenger aircraft engines in the world. It has a capacity of 450 passengers in two classes and is priced at about $320 million. Alongside the 777, the other two models, the 787 and 747, have a lower likelihood of being purchased by Iran. One reason that currently reduces the likelihood of acquiring the 747-800 is the purchase of about 12 Airbus A380s, its competitor in global markets. The 747-800, priced at $357 million, has a range of 15,000 kilometers and can carry 600 passengers, while the Airbus A380, the largest passenger aircraft in the world, is priced at $428 million and has a capacity of 800 passengers with a range of 14,000 kilometers. However, Farhad Parvaresh, on the sidelines of the demonstration landing of the Airbus 350 at Mehrabad Airport, stated, "We are trying to ensure that the conditions at most of the country's airports are suitable for the entry of this aircraft, and if we cannot provide the conditions for the entry of these aircraft according to the contract with Airbus, it has been agreed that these Airbus 350s will be purchased instead." If such an event occurs, Iran Air will need a high-capacity aircraft for its routes to East Asia and for its pilgrimage, for which the 747-800 would be the best option. Another aircraft that could potentially enter Iran is the most advanced Boeing model, the 787. This aircraft is in tight competition with Airbus's most advanced model, the A350. Iran Air has so far ordered 16 Airbus A350s, which are expected to join the airline's fleet starting in 2021. If Boeing can deliver the 787 sooner, the chances of this aircraft entering Iran's aviation fleet will increase. The Airbus A350, a wide-body twin-engine passenger aircraft, like the 787, uses composite materials in its construction; this factor reduces fuel consumption and enhances the aircraft's maneuverability. Airbus claims that the fuel consumption and operational costs of this aircraft are significantly lower than those of the Boeing 787. Qatar Airways is one of the first buyers of this aircraft. This model comes in three series: 800, 900, and 1000, with capacities of 276, 315, and 387 passengers, respectively, and prices of $269, $304, and $351 million. Iran has ordered the A350 series 1000. The maximum speed of the A350 is about 0.89 Mach, while the maximum speed of the Boeing 787 is about 0.90 Mach. In terms of range, the A350 has a range of about 14,350 kilometers, while the Boeing 787 has a range of about 14,100 kilometers. Based on this technical evidence, Airbus has a longer range and carries more passengers, but Boeing offers greater speed and maneuverability. Besides these technical assessments, one factor that may increase Boeing's chances in Iran is the long-standing collaboration between Iran and this American company and satisfaction with the quality of its aircraft after 40 years of presence in Iran Air's fleet. Farhad Parvaresh, the CEO of Iran Air, regarding the possibility of purchasing from Boeing, stated, "Iran Air has had Boeing aircraft in its fleet since before the revolution and we are satisfied with these aircraft, and given the U.S. authorization for Boeing to sell aircraft to Iran, we are confident that Boeing is also looking for the Iranian market and will certainly negotiate with them once the permits are obtained.