Iran, one of the last untapped emerging markets, is beginning to open up to international trade and investment again after returning to the global economic stage following the lifting of sanctions.
The new dynamic has provided a catalyst for development projects across the country, nowhere more so than at Imam Khomeini International Airport (IKIA), where major expansion programmes are underway to upgrade the gateway and create Iran’s first airport city.
IKIA, and the new Imam Khomeini Airport City (IKAC), are located 45 kilometres southwest of capital Tehran.
Tehran’s main airport
Imam Khomeini International Airport (IKIA) is a relatively new gateway having only replaced Tehran’s old Mehrabad International Airport in 2004. It is Iran’s primary air gateway with international connections to Europe, Asia, the Middle East and Africa.
The old airport, which is closer to the city centre, maintains a key position for domestic flights while Imam Khomeini exclusively operates as an international gateway, although it will introduce domestic services in the future.
Recognising the importance of IKIA to the local and national economy, the Iranian government has decided to modernise and expand the airport to ensure that it is equipped to meet anticipated traffic growth.
It also wants to introduce more retail and F&B outlets to boost the airport’s commercial revenues and improve IKIA’s freight facilities to allow it to fulfil its huge potential to develop as a cargo hub.
With passenger traffic expected to soar to around 60mppa in the 2040s, there are plans to build a second runway, expand the existing terminal and add two additional terminals, one of which will be specifically designed to accommodate pilgrims on their journeys to Mecca and holy shrines in Iraq and Syria.
Market potential of Iran
A successful air transport system in Iran will connect people, open global markets, facilitate trade with foreign companies, and enable Iranian companies to connect and do business with global supply chains.
It therefore goes without saying that enhancing Iran’s air connectivity will have considerable economic impact.
Iran, a country of 80 million people, boasts a large, young, urbanised and highly educated population that will potentially drive the pool of travellers and ensure that the propensity to fly quadruples over the next 30 years.
Tehran’s Airport City
It is firmly believed that an airport city development at Imam Khomeini International Airport will capture and capitalise on the economic opportunities that the region offers.
The airport will offer the infrastructure, traffic and the business environment that is needed to set in motion the commercial, logistics, industrial and urban development of a 13,700-hectare site known as Imam Khomeini Airport City (IKAC).
Those behind the project cite four key reasons why IKAC will have global appeal – its location on one of the world’s oldest trade routes; Iran’s huge hinterland and growing consumer market; its facilities that will include an International Free Zone; and the quality of services it will be able to provide.
In terms of its trade route location in the commercial centre of Iran, it is envisaged that IKAC can become an important hub for transport and commerce on the New Silk Route, running from Eastern China to the Mediterranean Sea.
Engines of development
Given Iran’s predicted air traffic growth, geographic potential and the economics of its hinterland, arguably the biggest challenge faced by IKAC’s developers was deciding on which sectors and clusters to focus on to maximise its socio-economic impact.
In order for it to be successful, it was important to remember to focus on sectors that have long and not only short-term potential, and to create true industry clusters. Similarly, translating supply chains into value chains is also key.
Integrated marketing analysis was used to help make the big decisions and, as a result, five major engines that will drive IKAC’s development were identified:
- Aviation-oriented business activities
- Manufacturing industries
- Research and development (R&D)
- Modern business services
Without doubt, education and R&D are of vital importance to the sustained success of any airport city and its inhabitants, and IKAC is no exception.
It should also be noted that each of IKAC’s five sectors has benefits from, and dependencies upon, each other.
A study to quantify the contribution of IKIA and IKAC to the national economy shows that employment can grow from 18,400 jobs in 2015 to an estimated 112,900 jobs in 2046, and from a contribution of €315 million to GDP in 2015 to €1.9 billion in 2046.
IKAC’s master plan provides a flexible framework for the long-term planning of the airport and airport city. It optimises the airport as a multi-modal hub where commercial activities support and complement its primary function.
Tehran’s location at the crossroads of many modes of connectivity means that the region generates high interest from international manufacturing companies.
About 2,700 hectares at IKAC are reserved for manufacturing industries that can greatly benefit from the high level of education among Iranian citizens to deliver about 150,000 jobs.
The airport city is well positioned to become the Iranian core of production. To create incentives for international manufacturing companies to locate in Iran, the government has assigned a Free Zone and Special Economic Zones in the IKAC development area.
A second major sector, logistics, is planned on a 1,800 hectare site with 37,000 jobs related to it. Furthermore, 315 hectares are dedicated to an R&D campus and 287 hectares are reserved for mixed-use urban development and a Central Business District.
Landside connectivity is essential to allow IKAC to develop into a national logistics hub. Indeed, great hinterland connections are vital for businesses to bring their products to markets in both Iran and abroad and vice versa.
A well-structured framework of roads will allow for easy access to all areas within the airport city. Two metro lines will also give IKAC direct access to the capital.
The natural qualities of the airport city site have been embraced to maximise its potential to contribute to creating a high quality environment.
International standard residential areas are planned in the hills south of the airport city, with great views of IKAC and the airport, whilst leaving vast areas of flatlands dedicated to the logistics and manufacturing areas.
The arid, yet beautiful valley, which had been shaped by a river in the past, can aid in creating a sense of place through identifiable, high quality green areas.
A successful airport city development depends on a vision based on an integrated approach; one that focuses on creating economic value chains, whilst establishing a quality of life that has regional and international appeal.
Imam Khomeini International Airport and its airport city have the potential to become outstanding developments that showcase the best of Iran, boost economic growth and can compete against some of the region’s biggest cities.