[Published at Financial Tribune Daily (@FinTribune)]
The new chief at the helm of Iran Air might not be the first woman to become the executive captain of a national flag carrier in the Middle East, but she is taking charge at a crucial moment as the airline is renovating its fleet and reinventing its mission.
Challenges and opportunities go hand in hand or wing to wing for Farzaneh Sharafbafi.
There is little doubt that she is eminently qualified. Her training and background as well as work experience have prepared her well. She is the first Iranian woman to have earned a doctoral degree in aerospace engineering from the esteemed Sharif University of Technology. She has been an instructor, a researcher and a manager.
Sharafbafi has been exposed to the business side of events in aviation and has witnessed firsthand the evolution of Iran’s aviation industry. She embodies the emphasis on self-sufficiency and self-reliance at a time of partnering with the world’s premier aircraft manufacturers. Ironically, her challenges are not as technology oriented as one might think. Some are organizational and some are rooted in Iran’s economy.
Sharafbafi is inheriting not one of the world’s busiest airlines, but one with the most crowded offices. A structural reform with an emphasis on productivity and employment levels has long been overdue in Iran Air.
Based on the latest statistics from Iran Civil Aviation Organization, Iran Air has a workforce of 11,118 with a fleet of 53 airplanes, compared to Mahan Airlines’ team of 4,363 employees with a fleet of 64 airplanes.
There is no way for discounting the fact that in order to be competitive and productive, the new CEO must address the issue of Iran Air labor force. Any reform in this sphere will be time consuming, exhausting and frustrating, and yet it is absolutely necessary, if the new leadership team wants to have a globally competitive airline.
Long Way to Regain Market Share
Iran Air’s market position has potential for growth, but the opportunity for growth is slipping away. The increase in global demand for air travel to Iran has attracted more passengers to regional carriers such as Emirates, Turkish Airlines and Qatar Airways.
Iran has opened its airports to foreign carriers and new routes have been established between Iranian cities and international hubs. This means Iran Air has an uphill battle at home to preserve its market share and capitalize the opportunity to grow.
Regionally, Iran Air has not been challenging any of the region’s dominant airlines and for the time being it won’t. Sharafbafi’s first task will be to prioritize Iran Air’s consolidation of its market position. The challenges do not end here.
Need for Modernized Strategy
Iran Air is in many ways an airline flying in the climate of the 1970s. Its culture remains loyal to the golden days of commercial aviation as well as its pricing strategy.
Marketing, pricing strategies, revenue management and many other modern concepts are still new for the staff at Iran Air offices in Tehran’s Mehrabad International Airport. The well-trained professionals know them all in theory, but they have never developed applications based on these concepts.
As Iran Air renovates its fleet to sustain its growth, it has to address the pricing issue in order to generate revenue. Its new airplanes, whose pictures have filled Iran’s social media, have been purchased using new financing arrangements. They require Iran Air to operate them efficiently to produce optimal revenues to pay for them. These optimal revenues will not be realized, if Iran Air’s business model does not evolve to one suitable for the 21st century.
With challenges come opportunities. To grab these opportunities, Sharafbafi is aided by a culture of excellence and her colleagues’ desire to return to their days of glory, when they ruled the skies of the Middle East as the only transcontinental airline in the region.
She also benefits from a market shift. Consumers’ expectations have adapted to the realities of commercial aviation during the sanctions. Many understand the limits airlines face in fulfilling their mission.
As Iranian customers are embracing the new market players, the demand for foreign air travel to Iran is increasing. Iran Air can use this opportunity to materialize a sustainable growth. A combination of pricing strategies and partnerships can make this a reality.
The net outcome of these efforts will determine if Sharafbafi succeeds as the new CEO of Iran Air. We have every reason to believe she can and wish her good luck.