Iran’s 50 percent discount on a multi-billion dollar deal with Boeing appears to fall under standard operating procedure for any large customer.
Iran’s Deputy Transport Minister Asghar Fakhrieh-Kashan reportedly bragged about the discount to Iranian media Sunday, prompting numerous headlines portraying the discount as a special event. Iranian President Hassan Rouhani is under domestic pressure to show the Iranian people that the 2015 nuclear deal is economically beneficial for Iran, a country plagued with sanctions.
The Boeing deal is meant to update IranAir’s aircraft fleet which has not been modernized since the Iranian revolution in 1979. The agreement is causing significant consternation in the U.S. given the Iranian government’s use of IranAir to deliver weapons to terrorist organizations. The U.S. Department of the Treasury stated in 2011 that “commercial Iran Air flights have been used to transport missile or rocket components to Syria.”
“Volume customers — that is, anyone who needs more than a dozen jets — get 50% off Airbus and Boeing list prices if they ask politely and wear a tie,” an aviation analyst told TheStreet in the wake of the Iranian ministers comments. “It is well known that large orders come with large discounts, whether from Airbus, Boeing, Bombardier or Embraer,” another analyst elaborated.
He continued that U.S. airlines like United or American Airlines would likely get even more of a discount from the airplane manufacturer. A 2012 Wall Street Journal investigation found that large airplane purchasers normally receive a 45 percent discount.
Boeing’s deal with Iran comes after economic sanctions on Iran were lifted under the terms of the 2015 nuclear deal. The deal is meant to incentivize economic interaction between Iran and the West, in return for Iran’s pledge not to pursue nuclear weapons production.
The deal itself my be in jeopardy if President-elect Donald Trump’s incoming administration withdraws the U.S. from the nuclear deal. Vice President-elect Mike Pence vowed during the campaign that President Obama’s signature foreign policy accomplishment with Iran will be “ripped up” upon consultation with U.S. allies.
Europe-based company Airbus also confirmed it had signed a multi-year and multi-million dollar contract to provide planes to Iran. These commercial arrangements are only possible under the terms of sanctions relief. If the U.S. withdraw’s from the Obama nuclear pact it would effectively cancel both Boeing and Airbus plans in Iran, and possibly renew U.S. sanctioning of Iranian banks.
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