Next time you board an airplane and immediately start grumbling over the lousy legroom or indifferent attitude of the (now probably pension-less) cabin crew, spare a thought for the poor Iranian air passenger. A quarter-century of more-or-less steadily escalating US sanctions prohibiting sales of aircraft and aircraft parts have taken their toll on commercial aviation there. Iran is now one of the most dangerous places in the world to fly – not in absolute terms but certainly compared to your chances in other countries. And of course we are not even considering here the, um, more direct actions the US has taken against Iranian commercial aviation. The comprehensive US embargo has taken its toll on the Iranian aviation industry.

This relatively risky is not surprisingly when you consider that even in the case of flag carrier IranAir, which probably has the most modern fleet in the country, the average airplane has nearly as many years on it as Wilford Brimley. Their fleet is a collection of ancient Airbuses (300, 310), bygone Boeings (727, early model 747) and fossilized Fokkers (100). But IranAir’s vintage, yet Western fleet is positively fresh compared to other Iranian carriers, many of which fly Russian aircraft. The Boeings flying for IranAir were delivered prior to the enactment of the US comprehensive embargo (others are thought to be parked due to a lack of spare parts) while the Airbus airplanes were largely acquired via third party sales. The US has managed to scuttle direct sales by the European consortium through the EAR’s ten percent de minimis US content threshold for Iran (i.e. the US asserts jurisdiction over even foreign-made airplanes if they are at least one tenth American, see last week's post for another example of this concept in action.)

Airbus itself promotes its heavy reliance on US suppliers, claiming to spend fully $5.5 billion (or forty percent of its procurement budget) in America (though this figure might also include Canada, it's not entirely clear). Airbus aircraft engines are particularly relevant when considering the de minimis rule. First, they are a key component. We’re not talking lavatory air freshener here. Second, modern aircraft engines are highly complex, very expensive, and only manufactured by a handful of companies so it is not as if they can be easily sourced from a domestic Iranian manufacturer or third country not troubled by the US embargo. When it comes to Airbus, two of their three engine manufacturers are US firms (GE and Pratt & Whitney) and the third is a British company, Rolls Royce, which, like Airbus itself, has substantial ties to US suppliers.

Iran does have something in the way of a domestic airframe manufacturing capacity, in the form of Iran Aircraft Manufacturing Industrial Company, which is also known by its Persian acronym HESA. HESA makes a version of the Antonov-140 (An-140) under license from the Ukrainian firm Antonov. Someone at HESA presumably snagged a promotion to vice president for dubbing the Iranian-made Antonov the, you guessed it, IRAN-140. The IRAN-140 effort has experienced its share of difficulties, including the crash of an An-140 carrying a number of senior Antonov engineers to Iran in 2002. Even if the program results in long-term success, the IRAN-140 is still a medium-range twin-engine turboprop and not the long-range Western jetliner coveted by Iran.

So it is not surprising that Iran, shut out by Airbus, is pursuing other strategies. Last month, Dow Jones Newswires (sorry, no live link) reported Iran’s roads and transportation minister as saying that Iran would attempt to buy 35 new aircraft. He did not say who would supply the planes. Even more intriguing is the possibility, reported elsewhere, that Iran might take the IRAN-140 route and license manufacturing technology from Rekkof Aircraft, successor to the bankrupt Dutch aircraft manufacturer Fokker, or even buy out Rekkof (read it backwards) entirely.

What does this all mean? It seems to say that US embargo on Iran is working, at least at a tactical level, by making Iran's commercial aircraft fleet too old, discouraging people who have a choice from flying on Iranian airlines, and inhibiting the prospect of a Dubai-style Middle East hub and its concomitant economic benefits. State Department and OFAC policymakers undoubtedly love the Airbus decision to not sell to Iran. On the surface at least this appears to be a rare embargo win-win situation – US foreign policy objective achieved without disadvantaging American exporters.

But is this a case of export controls succeeding in the short run but losing over the long haul? Countries with money (and Iran is reaping the benefits of high oil prices right now) can eventually develop indigenous manufacturing capability to nullify the impact of an embargo. Perhaps the US embargo forced Iran to move faster toward this objective. As a result of being targeted by an international arms embargo, apartheid-era South Africa eventually developed a highly competent domestic arms manufacturing capability.

And then there are the unanswered questions. Will new potential European suppliers complete the US de minimis calculations on the aircraft they sell or technology they license to Iran? Will US government enforcement personnel inform these potential suppliers of the US embargo issues in the transactions they are contemplating? Do the Iranians or the US government warn passengers on the old aircraft about possible safety risks? What would happen if one of the Iranian aircraft crashed and killed a bunch of people? Would the US relax its policy or celebrate?

Actually, given the number of Iranian plane crashes over just the past few years, we already know the answer to that last one. It appears to be neither a policy rethink nor the cracking open of champagne bottle, but, simply, nothing.

[This post was is adapted from a piece originally published in Black, Sengers & Associates' Aerospace Export Control Update.]

Comments

[Payam Bagheri]

Dear Sir, I have read your article with interest.

While US embargo on Iran may be working in short term, it will have negative effect in long term. Iran is not North Korea. Iran has a very educated youth force with a lot of cash and is working towards making air crafts in the country. They will have a few crashes every now and then but they will learn. I believe this policy towards iran is a failure just like other US policies against Iran.

Considering the effect of embargo on aviation in Iran, I believe they have managed pretty well to keep their national carrier still flying. If it were Americans under embargo, I am certain they would have more crashes!

regards
Payam Bagheri