ROYAL JORDANIAN WAR CONTINGENCY PLAN

UNCLAS SECTION 01 OF 02 AMMAN 001251

SIPDIS

SENSITIVE

ROME FOR CASLO
TREASURY FOR OASIA -- WON CHANG
USDOC 4520/ITA/MAC/ONE/COBERG
CINCCENT FOR POLAD

E.O. 12958: N/A
TAGS: EAIR EFIN MOPS JO
SUBJECT: ROYAL JORDANIAN WAR CONTINGENCY PLAN

SENSITIVE BUT UNCLASSIFIED.


1. (sbu) Summary. Royal Jordanian Airlines plans to
shuttle passengers between Amman and a temporary
operating hub in Athens in the event civil air traffic to
Amman's Queen Alia airport is closed by a military
conflict and/or lack of affordable insurance coverage.
This scenario could have a major, potentially fatal,
financial impact on the airline, which until recently had
been fairly successful in putting its accounts back in
order after excesses in the 1980s. Post would appreciate
guidance on the CEO's questions about if there are ways
Fly America and participation in the U.S. Civil Reserve
Air Fleet could be used to make up for some of the
business the airline would lose in a war. End Summary.

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ATHENS-BASED TEMPORARY OPERATIONS
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2. (sbu) Royal Jordanian (RJ) CEO Samer Majali and
Civil Aviation Authority officials said RJ hopes to be
able to continue normal operations for as long as
possible in the lead-up to a possible military conflict.
But the airline has drafted a contingency plan -- the
outlines of which have been sketched in the local press
-- that assumes that at some point it will become
impossible to operate RJ's 15-plane fleet out of Amman
because of military airspace restrictions or because
insurers are no longer willing to cover the war risk.


3. (sbu) RJ has agreed with Athens airport that if
necessary, RJ's fleet and operations would be based in
Athens. Assuming that western Jordanian airspace remains
open (as it was in 1991) RJ's two self-owned A320's (the
remainder of the passenger fleet is leased) would be used
to shuttle passengers from Amman to the new Athens hub.
The airline and its owner, the government of Jordan,
would assume the insurance risk if no or only limited
affordable commercial cover is available. Otherwise,
flights would operate out of Athens as if from Amman,
including the new non-stop service to New York. Majali
and CAA also believe that they have reached agreement
with Israeli authorities that would permit continued RJ
overflights of Israel, although the routing might be
shifted further away from population centers.

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POTENTIALLY DEVASTATING FINANCIAL IMPACT
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4. (sbu) Majali said the financial impact on the
airline of such a scenario would be devastating. March
and April reservations are already down over 40% from
year ago levels. The cost would be even higher if planes
are caught on the ground in areas with closed airspace
(such as Kuwait or Baghdad). Majali was not optimistic
about the airline's prospects after a conflict, expecting
that European airlines would beat RJ to the punch in
starting Baghdad service. Thus, he expected that the
airline -- which has recently been established as a
supposedly self-sustaining company in hopes of
privatization -- would likely have to call on significant
government support in order to keep flying. (Comment:
RJ currently receives a low level of budget transfers
from the GOJ, as well as subsidized jet fuel, and
maintains a large debt to the refinery company.)

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LOOKING FOR USG BUSINESS
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5. (sbu) Majali noted the airline's experience in
operating throughout the region, including to all of
Iraq's major airports, and hoped that the U.S. government
would find ways to take advantage of this as well as RJ's
expected excess capacity during and after a conflict.
For instance, he said he continued to work hard to find a
U.S. codeshare partner that would allow RJ to carry USG
passengers, and asked if the U.S. had any flexibility on
Fly America provisions. Also noting that the Civil
Reserve Airline Fleet (CRAF) had recently been activated,
he asked if there were ways to use RJ capacity for
military purposes. He said that he had been in touch
with the UN about participating in possible relief
operations.
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COMMENT AND GUIDANCE REQUEST
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6. (sbu) We would appreciate Washington guidance on
Majali's questions about Fly America and participating in
CRAF support. Although the airline's financial situation
had been improving over the past year, a conflict would
undoubtedly be a serious blow to its viability. This
would require the government to decide how much it wants
to continue to pay to support its only national flag
carrier, or shut it down.
Gnehm