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After the recent US sanctions against Iran, some major European airlines (Air France / KLM, British Airways) have stopped their scheduled flights to Iran.

However, other major airlines (Lufthansa, Turkish Airlines) have not.

Do some airlines fear retaliation from the US more than others?

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I think that Turkish Airlines can be excluded since Erdogan said he will defy US sanctions on Iran and Turkish Energy Minister Fatih Donmez said that Turkey has a waiver on US sanctions due to energy dependence:

Washington says it will temporarily allow eight “jurisdictions” to keep importing Iranian oil when the sanctions come back into force on Monday.

“Just a while ago ministry officials brought the news that the U.S. Secretary of State made a statement on limiting or lifting of sanctions for eight countries including Turkey,” Donmez told reporters.

NATO member Turkey depends heavily on imports to meet its energy needs and neighboring Iran has been one of its main sources of oil because of its proximity, the quality of its crude and favorable price differentials.

For Lufthansa and its subsidiary Austrian airlines, this article argues about German companies being prepared to continue doing business in Iran despite US sanctions:

The US ambassador to Germany called on companies to leave Iran immediately. But German companies, which have a long history in the country, have been preparing for this moment for months, effectively cutting the US out of any Iran-related business.

“For some time now, companies doing business in Iran have been trying to find substitutes for any US-related aspects of their supply chains.” For example, European companies in Iran do not work with dollars at all; they prefer euros or perhaps dirhams. “Any US staff members are excluded from Iran-related business,” Mr. Tockuss noted. “There have been a wide variety of preparations and many companies have been building a fence around their Iran business.”

Also it might be related to the investments performed in order to increase the traffic following the raise of sanctions which would result in net loss if all flights are cancelled:

German airliner Lufthansa and its subsidiary Austrian airlines will offer new flights to Iran amid a growing demand as a result of the business and tourist boom in that country, according to the German aviation website aerotelegraph.

Lufthansa will now fly also from Munich to Tehran and switch to larger planes for its Iran flights from Frankfurt to Tehran effective summer 2016.

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Besides the political attitute of Germany and Turkey, it is very related to the aviation industry. Both Lufthansa and Turkish Airlines have codeshare agreements with IranAir.

IranAir's codeshare partners:

  • Aeroflot
  • Austrian Airlines (subsidiary of Lufthansa)
  • Azerbaijan Airlines
  • Lufthansa
  • Turkish Airlines

Lufthansa signed the codeshare agreement in 2017, however Austrian Airlines[1] and Turkish Airlines[2] were already partners with IranAir even before the sanctions lifted (2015). So there is no reason for Austrian Airlines and Turkish Airlines to stop their operations in Iran due to the sanctions.

[1] Furthermore, both executives highlighted IranAir’s successful partnership with Austrian Airlines, a Lufthansa Group subsidiary, based on a code share agreement in place for over a decade.

[2] Iran Air has launched codeshare service with Turkish Airlines, which Iran Air is displaying “IR” code on all Turkish Airlines’ service between Turkey and Iran. The codeshare service was launched on 23JUL12.

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Scheduling and canceling flights by airlines is very much a economically driven activity. If, for whatever reason, an airline thinks that there will be substantially less paying passengers, it seems a perfectly good reason to cancel flights.

But when some airlines do cancel flights, it can actually increase the likelihood that a competitors flights will be full enough to make a profit. So some airlines canceling and others not canceling seems quite reasonable to me.

The invisible hand of self-serving individual decisions isn't always obvious, but it a good theory on how supply and demand balance.

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