Dutch group Rekkof and Russian airframer Tupolev are competing head-to-head for IranAir’s $600 million fleet renewal program. The companies anticipate that the Iranian government will place orders later this year, following its recent allocation–by presidential decree–of $600 million for purchase of an unspecified number of “medium-range passenger airliners.”

The Iranian flagcarrier badly needs renovation, with a requirement for 140 new mainline airliners in the next five years to replace the existing 70-strong fleet. With the country enjoying an 8-percent annual growth in GDP, its population of 70 million is increasing demand for air transport. With monthly utilization per operable aircraft averaging 300 to 400 flight hours and load factors on domestic flights between key cities running 80 to 90 percent, the existing fleet’s resources are stretched to the maximum.

Of Western contenders for the order, only Rekkof is realistically capable of challenging Tupolev, in view of Tehran’s political preferences and U.S. export restrictions on aircraft with U.S. content of more than 10 percent. Airbus has dropped out after failing to overcome political road blocks to supply IranAir with an earlier request for eight A321s, five A330-200 and three A340-300s.

Iran’s previous reformist government, and indeed IranAir itself, favored the acquisition of high-tech equipment from Europe. But in the face of mounting conflict with the West, the current administration seems more inclined to look east to Russia and would like any deal to cover industrial cooperation and local aircraft manufacturing in Iran. It has been seeking a comprehensive deal on the Tu-204 series that would see direct purchase of some 20 to 30 aircraft, local assembly of another few dozen and the setting up of well-equipped maintenance and repair stations in Iran. But the Kremlin is ready to approve only direct sales and is reluctant to permit transfer of high-level aviation technologies.