Making waves

Since its humble beginnings as a small domestic airline, Mahan Air has certainly travelled a long way. As the first private airline in Iran in 1992, its operational launch in 1993 consisted of what the airline terms a modest fleet of two Tupolove 154 aircraft, staff team of 99 and a route network from Tehran to only two domestic destinations.

It was in 1999 that the real turning point for the airline came about, through the acquisition of an Airbus A300 wide-body aircraft to the fleet, followed shortly in 2001 by an A310-300. This newly acquired aircraft meant that the airline was now able to reach beyond regional destinations, and its network route has now expanded to an impressive 21 destinations in 10 countries. With a modern fleet of 11 Airbus aircraft and 1400 employees, Mahan Air has not looked back since.

Quizzed about the secret of Mahan Air's considerable success, Hossein Hosseini, the airline's director of international affairs and route development, believes its location has been key. "Iran is a country with massive population of more than 70 million, with a large [Iranian] expat community," he elaborates. "Each North American and European expatriates visits Iran once or twice yearly, and so that's one area on which we intend to focus."

As well as the expatriates market, the airline has benefited from sixth freedom traffic, which refers to the right to carry passengers or cargo from a second country via the home country (in this case, Tehran), to a third country. "We see growth from the Indian labour market, although there are [frequency and route] limitations there. We fly five times weekly to Delhi and four times weekly to Cochin, but we would like daily flights. We are also trying to introduce double and triple dailies on all internal flights, but because fares are regulated, it is difficult to make money on domestic routes," explains Hosseini.

Infact, sixth freedom traffic is where Mahan Air believes most of its real growth will originate. Hosseini is confident, stating figures to support his view. "The number of passengers who transit through Tehran is 30% at present, but by the end of 2007, it will be 60%," he says.

With plans to introduce several new routes this year, including Stockholm in Sweden, Almaty in Kazakhstan, Manila in the Philippines and Bishkek in Krygyzstan, the Mahan Air growth plan is certainly confidently ambitious. "We feel that in the next year or so, we will be the key player in this market, not just in terms of flights, but in terms of the service we provide. We are currently recruiting 350 additional cabin crew," says Hosseini.

Enjoying a 23% annual growth in terms of passenger numbers over the past five years, the airline is expecting this success to continue due to strong demands in the domestic, regional and international sectors. As Hosseini pointed out, expats from Iran as well as the Indian subcontinent have led to full flights to and from countries such as the UK. The Manchester [via Tehran] to Bangkok has also proved to be very popular as there are few airlines offering links between the two cities, particularly at what Hosseini believes are Mahan Air's such competitive prices. "We also have many business travellers flying from Düsseldorf to the destinations we offer, particularly Bangkok. Infact Bangkok is one of our busiest routes and we plan to increase the number of flights (from Tehran to Bangkok) from daily to 10 times weekly by the summer," he says.

The airline has also introduced online booking in January, to encourage more sales through the internet rather than via agents. "We expect the major uptake to be in Europe where everyone books online; more than 20% of sales in Germany are online already. In Iran, we expect a penetration on 10%. We will launch a big marketing campaign in Europe from February." He is quick to point out however that Mahan Air "sincerely think that travel agents are a big help to us and we don't have the budget to drive all the sales direct to us."

Are there any competitors on the horizon for this forward thinking airline? Hosseini laughs, "We always welcome competition and we encourage the civil aviation industry to open up the market." One potential rival for the airline is Abu-Dhabi based Etihad Airways, which recently started services to Tehran in December last year. "As long as Etihad doesn't use predatory fares and products, we will be fine. We are confident we will keep our market," Hosseini shrugs off, nonchalantly.

With the future looking so bright for the airlines, things haven't always been smooth flying for Mahan Air. The after affects of 9/11 and fear of terrorism have played their part in hindering the development of the airline. "In June and July in 2001, the big hotels in Tehran were very busy, mostly with European guests. But after 9/11, overnight around 80-90% of business was lost, even though Iran had nothing to do with it. The smallest things that are said by Iran are repeated again and again and people judge us by what they hear and see on TV. This prejudice hampers growth," Hosseini sighs. "We have 70 million people here with a huge GDP, and the Iraqi experience has shown the international nations that you cannot really do such a thing to a country,"

Other obstacles for the airline came in the familiar form of government red tape. "To establish new routes and more frequencies, we have to provide the government with evidence that it will be successful," he explains. "The government is very keen to see us invest in new infrastructure, employ more people and buy new planes, and we are doing everything possible, but there is a lot of red tape."

Fortunately for the airline, its inspiring rise continues to witness increased demand for its services. Last year, for instance, Mahan Air increased its frequency to and from Dubai, UAE with a second daily flight, bringing the total flights to the region from Tehran to 14 per week. This has provided convenient connections from Dubai to European destinations such as Manchester, Birmingham and Dusseldorf. The airline also launched the first non-stop service between Iran and Lahore in northern Pakistan last year.

So the future promise for the airline looks endless. "If the political situation allows and if there is good management for developing this young industry, then it will have a good future," says Hosseini. "In Iran, anything is possible. We have not invested a great deal in inbound tourism because we want to have a sure thing. Although we are proud to have a strong flag carrier in Iran (Iran Air), at the same time, we have a major part to play in Iran's aviation industry."

The sales pitch Airline: Mahan Air Established: A privately owned airline founded by a charity organisation in 1991

Location: Headquartered in Tehran

Fleet: 25 Airbus aircraft (A300, A310, A320)

Current destinations: 27 in 13 countries, including Bangkok, Birmingham, Cochin, Damascus, Dammam, Delhi, Dubai, Düsseldorf, Erbil, Jeddah, Lahore, Manama, Manchester, Sharjah, and several internal destinations (accounting for 55% of routes)

Planned destinations for 2007: Stockholm in Sweden, Almaty in Kazakhstan, Manila in the Philippines and Bishkek in Krygyzstan. Within the GCC, Mahan Air is considering Kuwait

Wishlist: Several destinations in China, Kuala Lumpur, London Heathrow, and more flights to destinations across India

New products in the pipeline: Wireless headphones, digital in-flight TV systems, catering enhancements and service improvements

Middle East sales offices: In Bahrain, Dubai, Iran, Saudi Arabia, and Syria

Related businesses: Mahan Air recently opened an office dedicated to leisure, which is located in Deira, Dubai. Mahan Destinations offers holiday packages to several destinations served by Mahan Air’s network, as well as inbound tourism to Iran

Vital statistics • Five million passengers travelled on international flights from Iran in 2005;

• Mahan Air has a 13% share of international flights;

• Iranian carriers operate 63% of international flights out of Iran;

• Twenty-three international airlines fly to Iran. Emirates Airline is the top international carrier into Iran, with 400,000 passengers in 2005;

• Ten domestic airlines operate in Iran and in 2005 10.5 million passengers were carried on domestic routes, representing year-on-year growth of 12%;

• 80% of domestic flights are to 10 Iranian airports, including Tehran, Shiraz and Isfehan;

• Mahan Air commands an 8% share of the domestic market.

“We feel that in the next year or so, we will be the key player in this market, not just in terms of flights, but in terms of the service we provide”
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