Falling Rial Stymies Iranian Travel Abroad

Falling Rial Stymies Iranian Travel Abroad

TEHRAN—Iran’s falling currency is causing many Iranians to cancel vacations, business trips, college studies and medical treatment abroad, a retreat in consumer spending that is weighing on the country’s troubled economy.

The Iranian rial has lost almost three-quarters of its value against the U.S. dollar since January to hit a low of about 140,000 to the dollar this month. That means goods and services priced in dollars are far more costly, including aviation fuel, making travel prohibitively expensive for many middle class Iranians.

Foroozan, a 46-year old Iranian mother of two, said the collapsing currency foiled plans to send her teenage daughter to the Canadian university where she had been enrolled. As a result, she said, her daughter was scrambling last minute to find a spot at a lower-quality college in Iran.

“We had a certain budget that doesn’t match the dollar-rate growth and ticket prices,” said Foroozan, who gave only her first name because she didn’t want to be identified publicly as complaining.

The travel woes are one more headache for an Iranian leadership struggling with a deepening economic crisis, which aside from the falling currency is also marked by double-digit unemployment and high inflation. Fitch Solutions Macro Research projects a more than 4% contraction in GDP next year.

The economy has worsened since the Trump administration in May withdrew from a multilateral pact that restrained Tehran’s nuclear activities in exchange for sanctions relief. The U.S. reimposed sanctions last month, including on Iran’s foreign currency trade. More U.S. penalties on Iran’s oil and banking sectors are set to start in November.

The troubles pose political risks to President Hassan Rouhani’s government following demonstrations that broke out across Iran in December. Those protests—the biggest since the so-called Green Movement protests of 2009—were sparked by discontent over the government’s economic management. A security crackdown snuffed them out, but sporadic protests, led by truck drivers, farmers and merchants in Tehran’s bazaar, have persisted.

Travel and tourism was expected to support over 1.5 million jobs this year and contribute about 7.3% of gross domestic product directly and indirectly, according to the World Travel and Tourism Council. The Council doesn’t have new projections yet, but Australia’s CAPA Centre for Aviation projects weekly international airline seat capacity falling to 200,000 in November from a high of above 350,000 in late March.

Travel agencies say bookings have all but dried up, forcing dozens of them to lay off staff or close.

As sanctions bite, major Western airlines are also canceling flights to Iran.

Air France

British Airways

the Greek carrier Aegean and the Dutch carrier KLM have all announced plans to stop flights to Tehran in recent weeks. Iranian airlines have also reduced flights. State carrier Iran Air on Sunday cut flights to Dubai, Hamburg and Sweden’s Gothenburg.

The changes are particularly felt by a class of more cosmopolitan Iranians who tend to be less hostile toward the West.

The fall of Iranian’s currency has prompted fewer visits to Turkey, a popular destination for Iranians. Above, Istanbul’s Sultanahmet tourist district.


Chris McGrath/Getty Images

Travel abroad for medical procedures—a practice not uncommon among middle-and-upper-class Iranians—has all but halted, said Vahid Alinejad, the manager of Tehran’s Saadat Seir Giti travel agency. His company used to get about 10 such passengers a week but he’s had none in the past three months.

While Iran doesn’t release current statistics on travel abroad, in Turkey, one of the most popular destinations for Iranians because they can get visas on arrival, Iranian visits fell 30% year-over-year in June. Iranian visitors to neighboring Georgia fell by almost 10% year-over-year in July.

“Don’t even get me started about prices,” said Shahram Chamanfar, an agricultural machinery importer and distributor, as he waited recently with his wife and two children at Tehran’s international airport for a flight to Georgia to enroll his son at a university there. He said he already canceled some business trips.

Many Iranians have taken to social media to air travel grievances. In one widely shared clip, a camera scans an airplane’s empty cabin, where social-media personality Shahin Samadpoor laments the cost of a ticket between Tehran and Tabriz, Iran, a one-hour flight.

“A plane with 300 seats has only 20 passengers,” Mr. Samadpoor said in the Instagram post. “That means people can’t even afford to travel by plane. It’s getting worse day by day.”

Social-media personality Shahin Samadpoor recently lamented the high cost of a domestic plane ticket between Tehran and Tabriz, above.

Social-media personality Shahin Samadpoor recently lamented the high cost of a domestic plane ticket between Tehran and Tabriz, above.


atta kenare/Agence France-Presse/Getty Images

The rial’s fall could have a silver lining for​Iran’s travel industry because it makes travel there cheaper from abroad.

Rochelle Turner, the director of research at the World Travel and Tourism Council, said Iran had already been a competitive destination before the currency’s decline, and most travelers to the country come from the Middle East—not from the U.S. or Europe, where sanctions and fear of arrest are more likely to scare them off.

Travel to Iran grew quickly after the 2015 nuclear deal eased sanctions. Estimates from the World Tourism Organization in August said tourist arrivals rose to 4.9 million in 2016 from 2.9 million in 2010. They are projected to fall slightly this year.

With the economy teetering, Mr. Rouhani’s administration created a secondary currency market for importers and exporters this summer to stem the rial’s fall. On Sunday it began allowing travelers to exchange rials for euros at slightly lower-than-market rates in a bid to ease the pain on travelers.

But there is little evidence that ​travel ​pain is subsiding.

Mr. Alinejad, the travel-agency manager, said he and his staff were overjoyed when the U.S. and five other world powers reached the nuclear deal in 2015. Now, Mr. Alinejad is contemplating the end of his business.

“I had 30 staffers,” Mr. Alinejad said. “Now I have kept eight of them and let the rest go.”

Write to Asa Fitch at asa.fitch@wsj.com

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