Western Europe-Iran: opportunity in under-developed market, but Turkish Airlines already has a niche

Iran accounts for just 5% of Western Europe-Middle East seats, yet it accounts for 24% of the Middle East population. Air travel between Western Europe and Iran fell annually until 2013, since when growth has returned. Nevertheless, it remains under-developed and the thawing of relations with Iran should provide a significant opportunity.

Preliminary 2016 data from OAG indicate that Iran Air's 36% of seats in this market will keep it above Lufthansa's 27%. However, growth by Lufthansa and Austrian, together with the entry of Eurowings, will rank the Lufthansa group ahead with 46%. The other Iranian airline in this market, Mahan Air, is also set to grow rapidly in summer 2016. From the Western European side, the only other operators are Alitalia and Germania.

The potential for the Western Europeans is clear, although it will take time for demand to evolve to levels that are more consistent with the size of Iran's population (second only to Egypt in the Middle East). Moreover, Turkish Airlines has a widespread presence both in Iran and Western Europe and already offers strong competition in the form of one stop services through Istanbul.