US Treasury ends exemptions that let foreign firms service Iranian airlines

Flight cancellations spread across Georgia, Azerbaijan, Iraq, Turkey, Oman

Foreign companies that provide refueling, landing services, or tickets to Iranian carriers now risk US secondary sanctions under the new push. “If they land, you cannot provide them with fuel, you cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system,” US Treasury Secretary Scott Bessent told CNBC on Monday.

The U.S. alleges that Iranian commercial flights have played a role in transporting weapons and fighters. The new restrictions are designed to complement steps by the U.S. Navy to shut down seaborne traffic through Iranian ports through its blockade, disrupting Tehran’s cargo and energy shipments. Much of the cargo has been redirected to land routes, which are now suffering severe bottlenecks.

The aviation pressure is already producing flight cancellations across the region. All departures from Georgia for Iran were halted effective Monday, a spokesman for the Caucasus nation’s aviation authority said. On Tuesday, there were cancellations by Iran Air, the country’s national carrier, in Azerbaijan, and by Sepehran Airlines, a recently sanctioned Iranian airline, in Iraq, according to official airport updates. Last week, Mahan Air told customers it would suspend flights to Turkey and Oman at those countries’ request — a severe blow for the airline, which had continued adding new routes despite being sanctioned in 2011 for transporting personnel and weapons for Iran’s military. Commercial jets widely require US components, complicating fleet maintenance.

“Iranian airlines will ultimately become primarily domestic airlines if service providers around the world are unable to continue providing them the services necessary to keep flying,” said Matthew Levitt, who served as deputy assistant secretary for intelligence and analysis at the Treasury in the 2000s and is now a senior fellow at the Washington Institute for Near East Policy. “This in a way is really getting serious about the sanctions on Iranian airlines that have existed for a long time,” he said.

The latest Treasury action sits alongside earlier measures targeting Iran’s aviation sector, including the blacklisting of agents working for Mahan Air — Iran’s biggest private airline, which has long served as a key conduit for Iran’s Islamic Revolutionary Guard Corps — and the designation of 27 smaller Iranian carriers.

The flight cancellations add to mounting economic pressure on Iran’s 90 million people, already beset by high inflation and the rapid depreciation of the country’s rial currency. Iranian airlines had played a critical role in bringing in vital goods such as medicines and automotive spare parts, and in allowing people to leave the country.

Iran’s authorities say all international flights operated by Iranian airlines are operating as normal. Some Iranian airline flights to other international destinations, including to Dubai, still appeared to be scheduled as of Tuesday afternoon. The United Arab Emirates Foreign Ministry did not respond to a request for comment.

China and Russia are emerging as holdouts in the US campaign. Late Tuesday, Mahan aircraft were in the air flying to Moscow and to Guangzhou, an industrial hub in southern China, according to the aircraft-tracking website Flightradar24. China’s Foreign Ministry said it would not enforce sanctions on Mahan and other Iranian airlines, calling “friendly exchanges and cooperation between China and Iran, based on mutual respect and mutual benefit, are legitimate and lawful.”

“There is an effort led by China and Russia and Iran to do what can be done to undermine the international sanctions regime and US unilateral sanctions in particular,” Levitt said.

Turkey, which has long been reluctant to implement US economic sanctions, is enforcing restrictions on Iranian banks. Last week, financial regulators in Ankara canceled the license of Bank Melli Iran’s branch in Istanbul and took control of Golden Global Investment Bank, an Istanbul bank also sanctioned earlier this month for violating Iran-focused sanctions.