C O N F I D E N T I A L SECTION 01 OF 02 ROME 001067

SIPDIS

TRANSPORTATION FOR INTERNATIONAL AVIATION,
ALSO PLS PASS USTR, BRUSSELS FOR USEU, FAA

E.O. 12958: DECL: 02/26/2012
TAGS: EAIR IT ITEAIR AVIATION FAA
SUBJECT: AMBASSADOR AND TRANSPORT MINISTER ON MALPENSA,
ALITALIA, AND AVIATION SAFETY/SECURITY


CLASSIFIED BY: AMBASSADOR MEL SEMBLER FOR REASONS 1.5 (B) AND (D)

CONFIDENTIAL

PAGE 02 ROME 01067 01 OF 02 281627Z

1. (C) SUMMARY: THE AMBASSADOR CALLED ON TRANSPORT MINISTER
LUNARDI FEBRUARY 26 FOR A DISCUSSION CENTERED ON BILATERAL
AVIATION ISSUES. THE AMBASSADOR PRESSED LUNARDI TO IMPROVE
THE SITUATION OF U.S. CARRIERS AT MALPENSA AIRPORT, WHERE
THEY ARE COMPETITIVELY DISADVANTAGED VIS A VIS EU CARRIERS AT
THE MORE CONVENIENT LINATE. LUNARDI WAS AWARE THAT SOME U.S.
CARRIERS HAD PULLED OUT OF MALPENSA, BUT BLAMED THE SITUATION
ON EU RULES AND THE GENERAL ECONOMIC CRISIS FACING AIRLINES.
LUNARDI WENT ON TO DESCRIBE THE SERIOUS FINANCIAL PROBLEMS OF
ALITALIA, WHICH HE DESCRIBED AS "ON THE EDGE OF BANKRUPTCY".
THE AMBASSADOR PRAISED ENAC/ECAC PRESIDENT ROMA FOR HIS
OUTSTANDING COOPERATION WITH THE U.S. IN ICAO AND IN AVIATION
SECURITY AND SAFETY MATTERS. END SUMMARY.


2. (C)THE AMBASSADOR MET WITH TRANSPORT MINISTER LUNARDI ON
FEBRUARY 26. LUNARDI IS RESPONSIBLE FOR INFRASTRUCTURE AND
PUBLIC WORKS, AS WELL AS FOR TRANSPORT. THE AMBASSADOR NOTED
THAT THE GOI'S PLANS FOR RENEWED INFRASTRUCTURE INVESTMENT
WOULD ELICIT U.S. BIDDERS, AND THAT FAIR AND TRANSPARENT
TENDERS WERE ESSENTIAL. THE MINISTER EXPLAINED THAT THE GOI
WAS WORKING ON THE BASIS OF INTEGRATED SYSTEMS, SUCH AS THE
ITALIAN AIRPORT SYSTEM -- INTEGRATED WITH THE EU AIRPORT
SYSTEM AND INCLUDING TWO HUBS -- MALPENSA IN MILAN AND
FIUMICINO IN ROME.

MALPENSA
--------------


3. (C) THE AMBASSADOR TOLD LUNARDI THAT U.S. CARRIERS FACED
SERIOUS COMPETITIVE DISADVANTAGE IN MILAN. TRANSATLANTIC
CARRIERS ARE RESTRICTED TO FAR AWAY MALPENSA, WHILE EU
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PAGE 03 ROME 01067 01 OF 02 281627Z
CARRIERS MAY USE THE FAR MORE CONVENIENT LINATE. LUNARDI
BLAMED THE PROBLEM ON EU RULES, WHICH LIMITED LINATE (AS A
CITY AIRPORT) TO EU TRAFFIC. SLOTS ARE LIMITED, AND
ENVIRONMENTAL RESTRICTIONS WERE FAR STRICTER AT LINATE, HE

EXPLAINED. THE AMBASSADOR RESPONDED THAT U.S. CARRIERS --
INCLUDING TWA AND AMERICAN -- HAD BEEN FORCED TO STOP FLIGHTS
FROM MALPENSA. HE ASKED THAT THE MINISTER MAKE A SERIOUS
EFFORT TO IMPROVE THE SITUATION AT MALPENSA. INFRASTRUCURE
IMPROVEMENT (A THIRD RUNWAY AND A ROAD LINK TO TURIN, FOR
EXAMPLE), IMPROVEMENT IN SEA BAGGAGE HANDLING SERVICES AND
FEWER FLIGHT DELAYS WOULD MAKE MALPENSA MORE ATTRACTIVE TO
MILAN PASSENGERS.

ALITALIA
--------------


4. (C) THE MINISTER TOLD THE AMBASSADOR THAT ITALY HAS
SEEN A 40 PERCENT DROP IN PASSENGER AIR TRAFFIC SINCE
SEPTEMBER 11. THE ITALIAN AIRLINE ALITALIA, ALREADY IN
FINANCIAL TROUBLE BEFORE THAT TIME, IS "ON THE VERGE OF
BANKRUPTCY." THE GOI IS GOING TO RESTRUCTURE THE AIRLINE IN
HOPES OF RESTORING IT TO PROFITABILITY, BUT THIS IS THE "LAST
CHANCE". ALITALIA IS IN AN ALLIANCE WITH AIR FRANCE AND
DELTA. THE MINISTER NOTED THAT, IF ALITALIA'S SITUATION
CONTINUES TO DETERIORATE, THE AIRLINE COULD WITHDRAW FROM
TRANSATLANTIC ROUTES, AND BECOME SOLELY AN EU CARRIER,
FEEDING TRAFFIC TO ITS PARTNERS' TRANSATLANTIC ROUTES.


5. (C) THE AMBASSADOR ASKED IF THE GOI WAS CONSIDERING FULL
PRIVATIZATION OF ALITALIA. THE MINISTER SAID THAT FULL
PRIVATIZATION WAS NOT UNDER CONSIDERATION. THE GOI MIGHT
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PAGE 04 ROME 01067 01 OF 02 281627Z
SELL PART OF ITS REMAINING 51 PERCENT OF THE AIRLINE, BUT
WOULD NOT RELINQUISH ITS "GOLDEN SHARE".

NAPLES AIRPORT
--------------


6. (C) THE AMBASSADOR TOLD THE MINISTER THAT HE HAD BEEN
TOLD, DURING HIS RECENT VISIT TO NAPLES, THAT A NEW AIRPORT
WAS TO BE BUILT ON THE SITE OF AN OLD MILITARY BASE JUST
OUTSIDE THE CITY. THE NEAPOLITANS WERE ENTHUSIASTIC ABOUT
PROSPECTS OF USING EU STRUCTURAL FUNDS FOR THE CONSTRUCTION.
THEY HAD TOLD THE AMBASSADOR OF THEIR HOPES FOR FUTURE
NAPLES/NEW YORK FLIGHTS OUT OF THE EXISTING AIRPORT AT
CAPODICHINO OR FROM A NEW AIRPORT. DID THE MINISTER
BELIEVE THE NEW AIRPORT PROJECT WAS REALISTIC?


7. (C) LUNARDI WAS AWARE OF THIS PROPOSED PROJECT. HE
DECLARED HIMSELF OPEN TO EXAMINING THE PROPOSAL AND
SUPPORTING DATA, BUT INSISTED THAT SUCH A NEW PROJECT WOULD
HAVE TO FIT INTO THE NATIONAL AIRPORT SYSTEM. THUS, THOSE
PROPOSING THE NEW AIRPORT WOULD HAVE TO JUSTIFY A THIRD
INTERNATIONAL HUB. THIS MIGHT BE DIFFICULT, GIVEN THE
DECLINE IN TRAFFIC AT MALPENSA AND FIUMICINO. THERE WAS,

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CONFIDENTIAL PTQ2270

PAGE 01 ROME 01067 02 OF 02 281628Z
ACTION EB-00

INFO LOG-00 AMAD-00 A-00 ACQ-00 CIAE-00 COME-00 DODE-00
DOTE-00 SRPP-00 DS-00 EUR-00 E-00 FAAE-00 TEDE-00
INR-00 LAB-01 L-00 M-00 NSAE-00 PC-01 SSO-00
SS-00 STR-00 SNIS-00 NISC-00 DSCC-00 DRL-02 SAS-00
/004W
-------------- 6D5CD5 281628Z /38
R 281556Z FEB 02
FM AMEMBASSY ROME
TO SECSTATE WASHDC 2506
INFO AMEMBASSY BRUSSELS
AMCONSUL MILAN
AMCONSUL FLORENCE
AMCONSUL NAPLES
DEPT OF TRANSPORTATION WASHDC

C O N F I D E N T I A L SECTION 02 OF 02 ROME 001067

SIPDIS

TRANSPORTATION FOR INTERNATIONAL AVIATION,
ALSO PLS PASS USTR, BRUSSELS FOR USEU, FAA

E.O. 12958: DECL: 02/26/2012
TAGS: EAIR IT ITEAIR AVIATION FAA
SUBJECT: AMBASSADOR AND TRANSPORT MINISTER ON MALPENSA,
ALITALIA, AND AVIATION SAFETY/SECURITY

HOWEVER, NO CHANCE OF EU FUNDING FOR CONSTRUCTING A NEW
AIRPORT IN NAPLES. EU FUNDS COULD NOT BE USED FOR AIRPORTS.
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PAGE 02 ROME 01067 02 OF 02 281628Z

ENAC'S HELP ON SAFETY AND SECURITY ISSUES
-------------- --------------

8. (SBU) THE AMBASSADOR TOLD THE MINISTER THAT THE U.S. IS
GRATEFUL FOR THE OUTSTANDING SUPPORT WE HAVE RECEIVED FROM
ALFREDO ROMA, PRESIDENT OF ENAC (ITALY'S CIVIL AVIATION
AUTHORITY) AND OF ECAC (THE EUROPEAN CIVIL AVIATION
AUTHORITY). ROMA HAS NOT ONLY GIVEN THE U.S. SOLID SUPPORT
ON BILATERAL SECURITY AND SAFETY ISSUES, HE HAS ALSO BEEN A
STRONG VOICE IN ICAO IN SUPPORT OF ENHANCED INTERNATIONAL
AVIATION SECURITY.

COMMENT
--------------


9. (C) THE MINISTER IS RELATIVELY NEW TO AVIATION ISSUES, BUT
DISPLAYED BOTH KNOWLEDGE AND INTEREST. OUR RELATIONS WITH
THE CIVIL AVIATION AUTHORITIES, SUCH AS ENAC'S ROMA, HAVE
LONG BEEN EXCELLENT, BOTH ON BILATERAL ISSUES AND IN
MULTILATERAL FORA. MALPENSA REMAINS A PROBLEM. WE HAVE BEEN
WORKING FOR INFRASTRUCTURE AND SERVICE ENHANCEMENTS AT THE
AIRPORT FOR SEVERAL YEARS. ALTHOUGH WE HAVE SEEN SOME SMALL
IMPROVEMENTS, WE INTEND TO PRESS HARDER FOR THE GOI TO
UPGRADE MALPENSA, AND TO MAKE IT A VIABLE INTERNATIONAL HUB.

SEMBLER

CONFIDENTIAL

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2002ROME01067 - Classification: CONFIDENTIAL