Iraqi Airways Flying High as Country Continues to Rebuild

This is part of the America's Future series airing on FOX News Channel, looking at the challenges facing the country in the 21st century.

There was a time when Iraqi Airways criss-crossed the globe, operating flights from Baghdad to cosmopolitan destinations including Tokyo, Rio de Janeiro, Paris, Bombay and a host of other cities.

But that was nearly three decades ago — before the economically ruinous Iran-Iraq war, two other wars involving the United States and its allies, a no-fly zone and crippling U.N. sanctions.

The long slide into decay was both painful and inevitable. By the time Saddam Hussein was toppled from power in 2003, numerous abandoned Iraqi Airways jets sat rusting on the tarmac in at least three regional airports, and the company was locked in a bitter legal dispute with the government of Kuwait over assets looted during the first Gulf War.

These days, things are starting to look better for the airline. A colossal $5.5 billion contract between Iraqi Airways and Boeing — among the largest the fledgling Iraqi government has funded to date — was recently signed to foster its expansion.

It was an important moment in the country's post-war development — and its significance was underscored by the presence of Iraqi Prime Minister Nouri al-Maliki and other dignitaries at the contract-signing ceremony last month. The multi-billion dollar order shows a confidence in growth that was not evident even a year ago.

That jewel in Iraqi Airways' crown will buy 50 new and second-hand jets from Boeing and Canadian aircraft manufacturer Bombardier, including 10 of Boeing's 787 Dreamliners.

The first Bombardier plane will be delivered to the airline in August, according to Iraqi Airways director general Capt. Kifah Hassan Jabar, and more will follow.

"Every two months, we will deliver another aircraft," he told FOX News. The whole fleet of planes will arrive by 2018 under the agreement between Boeing and the government of Iraq.

Click here to read David MacDougall's on-the-scene blog.

This new era of expansion for Iraq's national carrier has ruffled some feathers, however.

Boeing's main rival, the European consortium Airbus Industries, was not invited to bid for the Iraqi Airways contract, even though many other regional airlines operate its planes.

Kifah explained the exclusion of Airbus by detailing the legacy between Iraqi Airways and Boeing. The airline has a longstanding relationship with Boeing dating back to 1974, he said.

"The first 747 jumbo was operated by Iraqi Airways. All our pilots, our present pilots and engineers, were from Boeing," said Kifah. "We're looking forward to having the same with Boeing in the future."

And in that vein, Iraqi Airways is pushing forward.

Its new management team and new routes, freshly leased aircraft and passenger counts that would make other carriers jealous have helped boost business at the perennially down-at-the-heel state-owned enterprise.

While many airlines are cutting back services — or even going bankrupt — due to high fuel prices, lower passenger returns and rising operating costs, Iraqi Airways remains somewhat shielded by those market forces because it's part of a state-run organization.

The airline boasts some impressive numbers. Its most popular route, a daily service to Dubai, is 98 to 100 percent sold out.

But Iraqi Airways also has hurdles to overcome — for one, the company's late re-entry into an already crowded regional market.

Since the carrier last offered full-service flights, the Middle Eastern airline sector has grown to be much more lucrative and competitive.

Well-known brand name carriers like Emirates, Gulf Air and Royal Jordanian are long established.

More recent expansion by Ethihad and Qatar Airways give travelers (especially premium passengers) little reason to fly with Iraqi Airways — which is often jokingly called "Inshallah (God Willing) Airlines."

"Frankly speaking, we cannot compete with them for the next few years for many reasons," Kifah said. "They are well established and well supported by their governments."

For the time being, however, Iraqi Airways has something of a monopoly on operations by national flag-carriers at Baghdad International Airport.

Kifah doesn't think that Emirates, for example, will be competing on the high-yield Baghdad-Dubai route for some time to come. And demand for flights aboard the war-torn country's national airline is already particularly strong in Iraqi immigrant communities in Scandinavia, Germany, Britain and the United States.

"The Iraqis, for one reason or another, they are very keen to fly with Iraqi Airways," he told FOX News. "I cannot say why exactly, but I think they like their national carrier and try to support it in some way or another."

Click here to read more on America's Future.