JULIAN MOXON & ADRIAN GATTON / LONDON
Report claims 75% of industry sold without Coalition Provisional Authority approval
The bulk of Iraq's air transport industry, including Iraqi Airways, has been sold off in a private deal without approval from the Coalition Provisional Authority (CPA), says a new report from the Open Society Institute (OSI), a watchdog organisation funded by financier George Soros.
Officially, the US-brokered CPA, which is running the country until the planned elections in July, is working to re-establish Iraqi Airways as a going concern. However, according to the OSI's Iraq Revenue Watch project, 75% of the industry has already been sold to the powerful Khawwam al Abdul Abbas family. The report, entitled "Controlling Iraq's Skies", says the family, which reportedly had close ties with the former regime of Saddam Hussein, is establishing a new airline called al Iraqiyya Air.
An official at the CPA in Baghdad had no knowledge of the deal and says that, under UN Resolution 1483, the assets of Iraqi Airways are frozen and required to be transferred to the Development Fund for Iraq - managed by the CPA.
Attempts to revive Iraqi Airways have been hampered by disputes over debts arising from the distribution of its 17 aircraft into Iran, Tunisia and Jordan since the 1991 Gulf War. While the aircraft are believed to be in poor condition and are subject to debts arising from their storage and maintenance, the airline owns rights to potentially profitable international routes.
The OSI report says Iraqi Airways has complained to the CPA that it is being starved of cash it should have received as part of the reconstruction funding allocated to the ministry of transport. US aviation consulting company SH&E recommended the creation of a new Iraqi airline that would become part of a regional grouping including Royal Jordanian, Middle East Airlines and Syrianair. US carrier Delta Air Lines was mentioned as a likely international codeshare partner.
The report says the deal establishing al Iraqiyya Air was signed by the ministry of transport on 2 December 2003, with the director general of the civil aviation authority and three members of the Khawwam family. The OSI accuses the CPA of deliberately grounding Iraqi Airways and allowing lucrative transport contracts to go to other airlines.
"It is unrealistic to demand that Iraqi Airways be self-financing while denying it the business basis on which to achieve this," OSI says. The report calls for a full investigation into the procedures for awarding the al Iraqiyya Air deal to a single buyer without a competition.
Source: Flight International
