Bloomberg News

Iran Airlines May Raise Prices by 50% as Costs Soar, Mehr Says

October 16, 2012

Iranian airlines may raise the price of flights by as much as 50 percent by next month, a move backed by parliament as the national currency declines, the Mehr news agency reported.

“Domestic airlines must either be given access by the government to foreign currency at the official exchange rate or increase their prices,” said Mehrdad Lahouti, the spokesman for the parliament’s development commission, according to the state- run news agency. Airlines “have high costs that must be met,” Lahouti said, citing their need for imported parts.

Iran’s economy is suffering as a result of financial, trade and energy sanctions imposed by the U.S. and the European Union to discourage the country’s nuclear program. Iran’s rial has slumped as much as 40 percent against the dollar since August, leading to spiraling inflation.

The government has shielded some importers of essential goods including medicines and grains from the currency’s decline by granting them access to dollars at the central bank rate of 12,260 rials, while ordinary Iranians pay almost three times as much on the unofficial market.

The head of the Association of Iranian Airlines, Abdolreza Mousavi, announced last month that domestic airlines would no longer benefit from dollars at the cheaper rate.

To contact the reporter on this story: Ladane Nasseri in Dubai at lnasseri@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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