13 Jan 2013

Two airlines suspend Iran flights as sanctions bite

10:39 am on 13 January 2013

Two European airlines are halting services to Iran, a sign of the falling purchasing power of Iranians as their economy buckles under the weight of Western sanctions.

Austrian Airlines, a unit of Germany's Deutsche Lufthansa, is cancelling its services to Iran from this week, due to a lack of demand.

Air France-KLM will suspend its Amsterdam-Tehran service from April. It currently flies to Iran four times a week.

The Iranian rial has lost about two thirds of its value against the US dollar in the last year, following US sanctions on its central bank and a European Union embargo of Iranian oil, levied over Iran's disputed nuclear programme, Reuters reports.

That depreciation has made imported goods and foreign plane tickets far more expensive for Iranians.

A spokesman for Lufthansa said the German carrier was continuing to fly to Tehran five times a week. Italian airline Alitalia also flies to Iran, according to its website.

The US and its European allies fear Iran is trying to build a bomb under the cover of a civilian nuclear programme. Iran says its programme is purely peaceful.

The sanctions against Iran's energy and banking sectors have made it more difficult for the Iranian government to earn foreign currency, raising concern that the central bank will not be able to defend the rial and depressing its value.

Airlines already had to think twice over whether to maintain services to the country since Iran said in 2011 it had stopped providing fuel to European aircraft in retaliation for their refusal to fuel Iranian planes.

Austrian Airlines suspended its service to Tehran for more than two months last summer because it could not be sure of getting its planes refuelled there.