Iraq’s Strategic Pivot: Aviation Reforms and Infrastructure Overhaul

On Saturday, November 29, 2025, Iraq’s Ministry of Transport announced a series of critical milestones regarding the nation’s aviation sector and broader infrastructure development. The announcement marks a significant moment in Iraq’s ongoing efforts to reintegrate into the global economy and modernize its logistical capabilities. At the forefront of these developments is the confirmation that Iraqi Airways has completed approximately 78% of the International Air Transport Association (IATA) Operational Safety Audit (IOSA) requirements. This progress is a pivotal step toward lifting the long-standing European Union aviation ban, a restriction that has hindered the national carrier’s operations for a decade.

Beyond the aviation sector, the Ministry unveiled a comprehensive schedule for the inauguration of major transportation projects slated for late 2025 and early 2026. These initiatives are not isolated improvements but are integral components of the “Development Road” vision, a strategic framework designed to transform Iraq into a primary transit hub linking Asia and Europe. We observe that these simultaneous developments in aviation, maritime, and land transport signal a coordinated push by the Iraqi government to diversify its revenue streams beyond the oil sector.

The timing of these announcements is crucial as the country approaches the end of the fiscal year. With specific deadlines set for the completion of safety audits and the opening of strategic ports, the Ministry of Transport is establishing a clear roadmap for the coming months. This article analyzes the technical progress regarding the EU ban, the details of the upcoming infrastructure inaugurations, and the broader economic implications of these massive logistical undertakings.

Progress on Lifting the EU Aviation Ban

The European Union’s ban on Iraqi Airways, reinstated in 2015 due to safety concerns, has been a significant hurdle for Iraq’s international connectivity. The Ministry of Transport’s recent update indicates that substantial technical progress has been made to address the root causes of this restriction. By fulfilling 78% of the IOSA requirements, the national carrier is moving closer to international compliance. The Ministry has set a firm timeline, aiming to close all remaining IOSA files by December 31, 2025. This deadline underscores the urgency with which the government is treating the restoration of its aviation status.

Completing the IOSA audit is a prerequisite for the subsequent regulatory steps. Once the audit is finalized, Iraq intends to immediately proceed with the Third Country Operator (TCO) certification file. Obtaining TCO authorization from the European Union Aviation Safety Agency (EASA) is the final regulatory hurdle required to resume flights to European capitals. This two-step process, IOSA compliance followed by TCO certification, demonstrates that the Ministry is addressing the systemic deficiencies in safety oversight that originally led to the ban, rather than seeking temporary political solutions.

In parallel with these regulatory efforts, there is a concerted drive to modernize the physical assets of the national carrier. The Ministry confirmed the receipt of a third batch of modern aircraft, including models from Boeing and Airbus. Projections indicate that the national fleet will reach 31 modern aircraft by 2027. This fleet expansion is accompanied by a new administrative structure and updated operational manuals aligned with EASA and International Civil Aviation Organization (ICAO) standards. These measures suggest a holistic approach to reform, ensuring that once the ban is lifted, the airline has the capacity and operational standards to compete effectively.

“Significant progress has been achieved on complex issues… We are advancing toward completing IOSA requirements by the end of this year, a necessary step before moving to the TCO file, which would enable Iraqi Airways to return to European skies.”

— Maytham Al-Safi, Ministry of Transport Spokesperson.

Major Infrastructure Projects: The 2025-2026 Timeline

The Grand Faw Port and Maritime Expansion

A cornerstone of Iraq’s logistical strategy is the Grand Faw Port (Al-Faw Grand Port), which is poised to become one of the largest ports in the Middle East. The Ministry has confirmed that the first phase of this mega-project, which includes five operational berths, is set to be fully inaugurated by the end of 2025. Once fully operational, the port is designed to handle approximately 99 million tons annually. This capacity is not merely for domestic consumption but is intended to serve as the entry point for goods moving from Asia to Europe, bypassing traditional maritime choke points.

The significance of the Grand Faw Port extends beyond its maritime capabilities; it serves as the southern anchor of the “Development Road.” This project is critical for Iraq’s ambition to rival the Suez Canal for specific types of freight transit. By providing a high-capacity interface for global trade, Iraq aims to integrate itself deeply into international supply chains. The completion of the first phase represents a tangible shift from planning to operational reality, promising to alter regional trade dynamics significantly.

We also note that the port’s development is expected to generate substantial economic activity in the southern Basra province. The infrastructure required to support such a massive facility, including logistics parks, administrative centers, and housing, will likely drive local employment and investment. The Ministry’s adherence to the late 2025 inauguration schedule suggests that construction and technical preparations are proceeding according to the strategic plan.

Aviation and Land Transport Integration

While the Grand Faw Port anchors the maritime strategy, the Ministry is also advancing key aviation and land transport projects. The Nasiriyah International Airport is scheduled for inauguration at the end of 2025. This facility has been modernized to handle commercial operations, specifically aiming to support tourism in the Dhi Qar province, a region rich in archaeological history. Additionally, the Mosul International Airport is nearing a full operational launch following extensive rehabilitation works, signaling a recovery of infrastructure in northern Iraq.

Connecting these nodes is the “Development Road,” a 1,200 km dual-mode corridor comprising both railway and highway networks. Detailed designs for these components are reported to be nearly complete, with portions of the infrastructure set for inauguration in early 2026. This corridor links the Grand Faw Port in the south directly to the Turkish border in the north. The economic projections for this project are substantial, with estimates suggesting it could generate $4 billion annually and create 100,000 direct jobs. This network effectively turns the entire country into a land bridge, facilitating the rapid movement of goods across the continent.

Furthermore, plans are underway for a major expansion of the Baghdad International Airport. The objective is to increase the main terminal’s capacity from its current 8.5 million to 15 million passengers annually. This expansion is necessary to accommodate the anticipated increase in traffic resulting from the lifting of the EU ban and the general growth in regional travel. These projects collectively illustrate a synchronized effort to upgrade every mode of transport within the country.

Historical Context and Future Implications

To understand the magnitude of these developments, one must look at the historical context of the EU aviation ban. Iraqi Airways was first banned from EU airspace in 1991, following the invasion of Kuwait. Although the ban was temporarily lifted in 2009, it was reinstated in 2015 due to “serious safety concerns.” EASA cited the airline’s failure to meet international safety standards and the inability of the Iraqi Civil Aviation Authority (ICAA) to provide necessary safety documentation. The persistence of this ban for a decade has been a symbolic and economic blow to the nation.

The current efforts to lift the ban are therefore about more than just flight routes; they represent a restoration of national prestige and regulatory sovereignty. By adhering to strict IOSA and TCO standards, Iraq is demonstrating its capability to maintain modern safety oversight. If successful, the return of Iraqi Airways to European skies will likely open new markets for trade and tourism, reinforcing the economic benefits of the physical infrastructure projects currently nearing completion.

Looking ahead to 2026, the convergence of a modernized airline fleet, a massive new port, and a trans-national rail and road network positions Iraq to reclaim a central role in the Middle East’s economy. The transition from an oil-dependent economy to one driven by logistics and transit is a long-term goal, but the milestones set for the next 12 to 18 months will be the litmus test for the government’s ability to deliver on its promises.

FAQ

Question: When is the EU aviation ban on Iraqi Airways expected to be lifted?
Answer: While a specific date for lifting the ban has not been set, the Ministry of Transport aims to complete the necessary IOSA safety audit requirements by December 31, 2025. Following this, they will proceed with the Third Country Operator (TCO) certification, which is the final step required by European regulators.

Question: What is the Grand Faw Port?
Answer: The Grand Faw Port is a major maritime project in southern Iraq, set to become one of the largest in the Middle East. Its first phase is scheduled for inauguration at the end of 2025. It serves as the starting point for the “Development Road,” linking Asian trade routes to Europe via Iraq.

Question: What is the “Development Road”?
Answer: The Development Road is a strategic 1,200 km corridor consisting of railway and highway networks linking the Grand Faw Port in the south to the Turkish border in the north. It is designed to facilitate trade between Asia and Europe and is projected to generate significant annual revenue and employment.

Sources

• Iraqi News

India Targets Global Aviation Hub Status with Extended Tax Incentives

India is reportedly preparing to significantly enhance its fiscal appeal to the global Aviation finance sector. According to recent reports, the government plans to extend the tax holiday for Commercial-Aircraft leasing companies operating in the Gujarat International Finance Tec-City (GIFT City) from the current 10 years to 15 years. This strategic move is designed to position India as a formidable competitor to established leasing hubs like Ireland, which currently dominates the market.

The proposal, expected to be part of the Union Budget announcements in February 2026, aims to capture a larger share of the $187 billion global aircraft leasing market. By aligning tax incentives with the economic lifecycle of aviation assets, India seeks to encourage lessors to domicile their operations within the country long-term, rather than relying on offshore jurisdictions. This initiative represents a concerted effort to retain capital within the Indian economy and support the nation’s status as the world’s third-largest aviation market.

Currently, Indian carriers lease a vast majority of their fleets from entities based in Ireland or other tax-efficient locations. The proposed changes acknowledge that for India to become a self-reliant aviation hub, it must offer a fiscal and regulatory environment that rivals or exceeds global benchmarks. The extension of the tax holiday is seen as a critical step in addressing the specific profitability structures inherent to the aircraft leasing business model.

Aligning Fiscal Policy with Asset Lifecycles

The core rationale behind the proposed 15-year tax holiday lies in the unique financial structure of aircraft leasing. In the initial years of a lease, companies often incur high depreciation costs and interest expenses, which can result in lower taxable profits or even losses. Profitability typically peaks in the later years of an asset’s life, often between years 10 and 15, as depreciation charges decrease. Under the current regime, which offers a 100% exemption for 10 years within a 15-year block, lessors risk exhausting their tax benefits during low-profit years, leaving the highly profitable “tail” of the lease subject to taxation.

By extending the holiday to a flat 15 years, the government ensures that the most lucrative period of the lease remains tax-free. This adjustment is designed to make GIFT City a more attractive jurisdiction for high-value aviation assets compared to Ireland, which levies a standard corporate tax rate of 12.5%. For lessors, the difference between a 12.5% tax on peak profits and a 0% tax rate in India could be a deciding factor in where to domicile new special purpose vehicles (SPVs).

Industry experts suggest that this move corrects a structural mismatch in the previous policy. A source familiar with the matter noted that expanding the benefit covers the period when lessors typically realize the bulk of their profit, thereby incentivizing the migration of “sale-and-leaseback” transactions from Dublin to Gandhinagar.

“Expanding this benefit by five years will make GIFT City more attractive to lessors who typically make the bulk of the profit on an aircraft in the latter years when there’s little or no depreciation charge.”

Regulatory Reforms Strengthening Investor Confidence

Fiscal incentives are being supported by substantial legislative reforms aimed at reducing risk for international investors. In April 2025, the Indian Parliament passed the Protection of Interests in Aircraft Objects Bill, aligning national laws with the international Cape Town Convention. This legislation is pivotal as it ensures that lessors can swiftly repossess aircraft in the event of an Airlines default, addressing a long-standing concern regarding “country risk” in India.

Prior to this legislation, the difficulty of repossessing assets made foreign lessors hesitant to lease to Indian carriers without charging high risk premiums. The new legal framework is expected to reduce leasing costs for Indian airlines by approximately 8–10% by lowering these risk premiums. This legal safety net, combined with the proposed tax extensions, creates a comprehensive ecosystem that addresses the two primary barriers to entry: tax inefficiency and asset security.

Furthermore, the International Financial Services Centres Authority (IFSCA) amended its framework in February 2025 to allow GIFT City lessors to acquire assets from Indian Manufacturers and execute sale-and-leaseback (SLB) transactions with Indian residents. This regulatory change enables domestic giants like Air India and IndiGo to sell new aircraft to a GIFT City lessor and lease them back, keeping the entire financing ecosystem within India’s borders.

Competitive Landscape and Market Adoption

The global aircraft leasing market is currently heavily concentrated, with Ireland managing approximately 50-60% of the world’s leased aircraft. Ireland’s dominance is built on a stable legal regime, a vast network of Double Taxation Avoidance Agreements (DTAAs), and a deep pool of aviation finance expertise. India’s strategy relies on leveraging its massive domestic demand, the third largest in the world, to shift the center of gravity. By offering a 0% tax rate versus Ireland’s 12.5%, India presents a compelling financial case for lessors focused on the Indian market.

Early adoption indicates that the strategy is gaining traction. Major domestic carriers have already established leasing units in GIFT City, including Air India (via AI Fleet Services IFSC Ltd) and IndiGo (via InterGlobe Aviation Financial Services IFSC Pvt). Additionally, global players such as subsidiaries of Rolls-Royce and Willis Lease Finance have established a presence. New entrants like Akasa Air are also reportedly applying for approvals to set up leasing entities, signaling broad industry interest.

Despite these advancements, challenges remain in building a comparable ecosystem of professional services, including legal, technical, and accounting expertise, which Dublin has cultivated over decades. However, the combination of the Cape Town Convention alignment and the extended tax holiday signals a long-term commitment from the Indian government to overcome these hurdles and localize the economic benefits of its booming aviation sector.

Concluding Section

The proposal to extend the tax holiday to 15 years represents a mature understanding of the aviation finance business model. If passed in the February 2026 budget, it will likely serve as a catalyst for shifting significant leasing volume to India. By systematically removing barriers related to taxation and asset repossession, India is laying the groundwork to retain billions of dollars in financial services revenue that currently flows overseas.

Looking ahead, the success of GIFT City as a global leasing hub will depend on the consistent implementation of these policies and the continued growth of the domestic aviation market. As Indian carriers continue to place record-breaking aircraft Orders, the ability to finance and lease these assets domestically could fundamentally alter the economics of the Indian aviation industry.

FAQ

Question: What is the proposed change to the tax holiday for aircraft leasing in GIFT City?
Answer: The government plans to extend the tax holiday on profits earned by aircraft leasing firms from the current 10 years to 15 years. This is expected to be announced in the February 2026 Union Budget.

Question: Why is the 15-year timeframe significant for aircraft leasing?
Answer: Aircraft leasing profits often peak in the later years of a lease (years 10–15) as depreciation costs drop. A 15-year holiday ensures that these high-profit years are tax-exempt, whereas a 10-year holiday might expire before peak profitability is reached.

Question: How does India’s proposed tax rate compare to Ireland’s?
Answer: India offers a 100% tax exemption (0% tax rate) for the duration of the holiday in GIFT City. In contrast, Ireland, the current global hub for aircraft leasing, has a standard corporate tax rate of 12.5%.

Question: What recent legal reforms support this tax incentive?
Answer: In April 2025, India passed the Protection of Interests in Aircraft Objects Bill, aligning with the Cape Town Convention to ease aircraft repossession. Additionally, IFSCA reforms in February 2025 allowed for broader sale-and-leaseback transactions with Indian entities.

Sources

• Bloomberg

Aerolíneas Argentinas Announces Major Fleet Expansion and Shift to Financial Independence

Aerolíneas Argentinas has officially announced a historic fleet renewal plan that marks a significant turning point in the carrier’s operational and financial strategy. In a move that signals a departure from years of state dependency, the airline has secured agreements to add 18 new aircraft to its roster. This acquisition includes four Airbus A330-900neo widebodies and 14 Boeing 737 MAX narrowbodies. We observe that this development is not merely an upgrade of hardware but a strategic pivot aimed at positioning the state-owned carrier for potential privatization.

The most notable aspect of this announcement is the financing model. For the first time in over a decade, the airline describes this expansion as “self-financed.” According to company projections, the acquisition relies entirely on the airline’s operating surplus and creditworthiness, with no direct contributions anticipated from the Argentine National Treasury for the year 2025. This stands in stark contrast to the period between 2008 and 2023, during which the state provided an estimated $8 billion in subsidies to cover chronic deficits.

This strategic shift comes on the heels of a reported financial turnaround in 2024, where Aerolíneas Argentinas achieved an operating surplus of approximately $20.2 million. By leveraging this newfound stability, the carrier aims to modernize its fleet to improve efficiency and passenger experience while simultaneously reducing operating costs. The move is widely interpreted as a critical step by the current administration to demonstrate the airline’s viability to private investors.

Modernizing the Fleet: Technical Specifications and Efficiency

The core of this expansion plan focuses on optimizing both long-haul and short-haul operations through the introduction of highly efficient, modern aircraft. The agreement for four Airbus A330-900neo aircraft is designed to bolster the airline’s international long-haul capabilities. These units are set to complement and eventually replace the older A330-200 fleet. The A330neo is renowned for its efficiency, offering up to 25% lower fuel consumption per seat compared to previous-generation aircraft. This reduction in fuel burn is expected to significantly improve the economics of routes connecting Argentina to Europe and the United States.

On the domestic and regional front, the airline is aggressively expanding its single-aisle capacity with the Boeing 737 MAX family. The order for 14 aircraft is broken down into specific variants to maximize operational flexibility: two Boeing 737 MAX 8s, four Boeing 737 MAX 9s, and eight Boeing 737 MAX 10s. The inclusion of the MAX 10 is particularly strategic; as the largest variant in the family, it maximizes the number of passengers per flight, thereby lowering the Cost Per Available Seat Kilometer (CASK). This allows Aerolíneas Argentinas to compete more effectively against low-cost carriers on high-density trunk routes.

Beyond the airframes, the airline has committed to a substantial investment in the passenger experience. Approximately $65 million has been allocated for cabin upgrades and the installation of Wi-Fi connectivity across the entire fleet. This service enhancement is essential for maintaining competitiveness against regional rivals who have already adopted in-flight connectivity as a standard offering.

The shift to the A330neo and high-capacity 737 MAX variants represents a calculated effort to lower unit costs, a necessary move to compete with aggressive low-cost carriers in the region.

Financial Strategy and the Path to Privatization

The transition to a “self-financed” model represents a radical break from the airline’s recent history. The acquisition of these 18 aircraft is being executed through operating lease agreements rather than direct capital purchases. By utilizing leases, the airline avoids the massive upfront capital expenditures typically associated with fleet renewal. Instead, the costs are spread out as monthly rentals paid from generated cash flow. This structure signals to the market that international lessors now view Aerolíneas Argentinas as a creditworthy partner, willing to sign contracts without requiring a sovereign guarantee from the Argentine state.

This financial independence is inextricably linked to the broader political goals of the Javier Milei administration. Government officials have explicitly stated that balancing the airline’s books is a necessary precursor to its “inevitable privatization.” By demonstrating that the carrier can operate without state subsidies and generate a surplus, the government aims to make the asset attractive to private capital. The reduction in workforce, approximately 13-15% achieved through voluntary retirement programs, and other cost-cutting measures have been instrumental in achieving the surplus that underpins this new fleet plan.

However, we must note that challenges remain. While the operating surplus of $20.2 million in 2024 is a positive indicator, critics and unions have historically questioned the sustainability of such rapid turnarounds. The true test of this strategy will be the airline’s ability to service these new lease obligations solely from ticket revenue throughout 2025, especially in a volatile economic environment. The success of this plan relies heavily on maintaining operational continuity and managing relationships with powerful aviation unions.

Concluding Section

Aerolíneas Argentinas is attempting a complex transformation from a state-subsidized entity to a commercially viable, self-sustaining airline. The addition of 18 modern aircraft is the physical manifestation of a strategy designed to increase revenue potential while locking in lower operating costs. If successful, this fleet renewal will not only modernize the passenger experience but also validate the government’s push toward privatization.

As the first deliveries begin in 2025, the aviation industry will be closely watching to see if the carrier can maintain its financial discipline. The move to self-financing is a bold gamble; it places the burden of performance squarely on the airline’s management. Success could redefine the future of commercial aviation in Argentina, while failure could once again strain the company’s finances and its relationship with the state.

FAQ

Question: How many aircraft is Aerolíneas Argentinas acquiring?
Answer: The airline is acquiring a total of 18 new aircraft, consisting of four Airbus A330-900neo widebodies and 14 Boeing 737 MAX narrowbodies.

Question: What does “self-financed” mean in this context?
Answer: It means the airline intends to pay for these aircraft leases using its own operating surplus and revenue, without requesting funds from the Argentine National Treasury for the year 2025.

Question: Why is the airline choosing the Boeing 737 MAX 10?
Answer: The MAX 10 is the largest variant of the 737 family, allowing for more seats per plane. This reduces the cost per passenger (CASK), helping the airline compete more effectively with low-cost carriers.

Sources

• Aviacionline