Air France cuts back on Iran flights, blames weak demand

May 3, 2018

Air France (AIRF.PA) is cutting its Joon subsidiary’s service between Paris and Tehran to the summer season only, blaming a poor economic performance over two years in operation.

“Air France has decided to adapt its program to better match demand,” a spokeswoman said by email, adding that the decision would take effect from October 28.

Air France’s move comes amid international uncertainty over whether U.S. President Donald Trump will pull out of a nuclear deal with Iran, although the spokeswoman said the decision was not linked to the political climate with Iran.

Under that 2015 deal, Tehran agreed to curb its nuclear program to satisfy world powers that it would not be used to develop weapons. In exchange, Iran received relief from sanctions, most of which were lifted in January 2016.

“This just shows how the uncertainty on the Iran deal is beginning to have an impact on the business sentiment towards Iran,” said a European diplomat.

Bankers and others involved in business with Iran say they have been reluctant to travel to the country to close deals or negotiate the financing of existing ones because of uncertainty over the status of underlying U.S. sanctions, even before the latest standoff between Trump and Iran.

French President Emmanuel Macron visited Washington last week in the hope of persuading Trump not to re-impose sanctions on Iran by a May 12 deadline and imperil the 2015 deal.

Qatar Airways, however, said demand for travel to Iran remained strong.

FILE PHOTO: Logos of Air France group airlines companies are projected on a screen during a news conference for the launching of Joon, the new lower-cost airline subsidiary of Air France in Paris, France, September 25, 2017. REUTERS/Charles Platiau/File Photo

“We fly to Iran with a lot of frequencies. We go to three destinations in Iran,” Chief Executive Akbar Al Baker told Reuters at an event in Wales.

Asked whether Qatar - which has maintained aviation links with Iran during a separate political dispute between Qatar and its neighbors on the Arab side of the Gulf - had seen business suffer due to uncertainty over the nuclear pact, Al Baker said:

“Not at all. Iran is a big market...of more than 90 million people: educated, very aggressive travelers and we are serving that market very successfully. We don’t get involved in politics. We are an airline.”

Flight schedule data from database firm OAG suggests that airlines flying to Iran from Britain, France, Germany and Turkey believe that demand on Iranian routes peaked last year.

According to the data, there were 6,281 scheduled one-way flights to Iran from those countries in summer 2017, compared to 5,594 planned for summer 2018.

That is nonetheless higher than 4,666 in the summer of 2015, about six months before the nuclear pact came into effect.

In January, Air France said it was shifting Tehran services from its main network to its recently launched Joon subsidiary as part of a wider restructuring and rebranding.

Joon offers some business-class seats although it is mainly aimed at younger travelers with money to spend rather than at traditional business travelers.

Air France said it would handle the re-booking of flights for customers affected by the change.

Air France’s decision follows a similar one in December by Etihad Airways, which had also said it would scrap flights to Iran and Uganda.

reuters