OPEN SKIES AND THE BILATERAL AGREEMENT

C O N F I D E N T I A L BOGOTA 008907

SIPDIS

E.O. 12958: DECL: 09/01/2014
TAGS: EAIR CO
SUBJECT: OPEN SKIES AND THE BILATERAL AGREEMENT

Classified By: CDA Milton K. Drucker for reasons 1.4 (c) and
(d).


1. (U) Summary. On 25 August 2004 DCM Milton Drucker and
Econoff met with Aeronautica Civil (CAA) Director Juan Carlos
Velez to discuss Open Skies. Velez requested another one
year extension of the 2000 agreement because he said Colombia
was not ready for Open Skies, specifically Open Skies for
passenger travel. End Summary.


2. (C) The 2000 bilateral civ air agreement, which was set
to expire on 31 December 2003, was extended an additional
year based on CAA's willingness to conduct feasibility
studies on Open Skies in 2004. However, at the meeting Velez
admitted that no feasibility studies were completed nor were
any planned in the near future. The primary reason is
Avianca's current status under Chapter 11. If Avianca were
to exit Chapter 11 by the end of the year, CAA is confident
it would not be able to compete with U.S. carriers under an
Open Skies Agreement. Velez mentioned that Avianca's
restructuring plan, if accepted, would take months to enact.
Velez requested the 2000 agreement, specifically paragraphs
one and three, be extended until 31 December 2005. Velez
said Colombia is interested in liberalizing the air cargo
market and, if possible, in negotiating an Open Skies
Agreement for air cargo only. He said Tampa Airlines is
doing well and would like fifth freedom rights from the U.S.
to Asia, (TAMPA is currently under investigation for
corruption and narcotics trafficking). On the margins, Velez
informed DCM that Venezuelan carriers are selling airplane
tickets to the U.S. for USD 150, while providing fuel
subsidies to Venezuelan carriers and charging U.S. carriers
international fuel prices, which is taking some market share
away from Colombia.


3. (U) DCM told Velez Open Skies should not be viewed in a
negative light. DCM noted the success Chilean carriers have
encountered with Open Skies and that Open Skies will promote
more business in Colombia and offer the possibility that
Colombia could become a major business hub between the U.S.
and South America. Finally, DCM noted that regardless of
what happens to Avianca, a foreign company will own it.
Colombia's interest is in promoting the lowest cost of air
transport for its businesses and citizens.
DRUCKER