CONTINENTAL STEPS CLOSER TO DIRECT LAGOS-

UNCLAS SECTION 01 OF 02 LAGOS 000089

SIPDIS

TRANSPORTATION FOR FAA; DAKAR PLEASE PASS TO FAA REP ED
JONES; ROME PLEASE PASS TO TSA REP JOHN HALINSKI; ACCRA
FOR DHS

SENSITIVE BUT UNCLASSIFIED

E.O. 12958: N/A
TAGS: EAIR EINV NI CVIS
SUBJECT: CONTINENTAL STEPS CLOSER TO DIRECT LAGOS-
NEWARK FLIGHT



1. (SBU) Introduction and summary. On December 2,
2004, the Nigerian Civil Aviation Authority (NCAA)
approved Continental Airlines' request to provide daily
service between Newark and Lagos, possibly as early as
this spring. That same day the NCAA informed
Continental that its initiation of flights nonetheless
hinges on Continental's passing a safety oversight
audit satisfying the requirements of an assessment
program approved by Nigeria's Minister of Aviation
(MOA). While the NCAA seems to be accommodating
Continental, we suspect that the NCAA will not have the
last word in the matter. We have reason to believe
that the MOA has not facilitated Continental's work; if
anything, the MOA has made it more difficult, most
probably in an effort to give Virgin Nigeria Airways
(VNA) a lead on Continental. We are monitoring
Continental's efforts closely, which represent a test
case of Nigeria's willingness to respect the Open Skies
agreement between Nigeria and the United States. End
introduction and summary.


2. (SBU) Houston-based Continental Airlines has been
laying the groundwork since October 2003 in Lagos for
direct flights to Newark, New Jersey. (Comment. Should
Continental begin operations before June 2005 as
planned, the airline will be one of the few providers
of direct flights between West Africa and the United
States. End comment.) During the week of January 10 -
17, two Continental representatives came to Lagos to
begin hiring managerial staff. These human resources
officials told Consulate Economic Officer that
Continental will have five or six permanent expatriate
employees in Lagos and 50 to 60 direct hire local
staff, as well as an additional 30 to 40 local
contractors. Continental is scheduled to hold a press
conference in Lagos on February 1 to publicly announce
its new Newark-Lagos flights.


3. (SBU) Chris Amenechi, Continental's permanent
representative in Nigeria, told Lagos consulate
officials on January 16 that Continental has had
difficulty acquiring office space at Murtala Muhammed
International Airport (MMIA). He believes the problem
lies with the Ministry of Aviation (MOA). Amenechi and
MMIA officials agreed on office space for Continental
on two occasions since September 2004, only to be told
later the "Ministry" (according to Amenechi meaning the
"MOA," airport officials being unwilling to name names)
had reserved the space for Nigeria's new national
carrier, Virgin Nigeria Airways. The most recent offer
of airport space to Continental meets its requirements,
but is not contiguous and covers 320 square meters
(almost 1000 square feet) in three different places
around MMIA.


3. (SBU) On January 12 in Abuja, Embassy Economic
Counselor, Economic Officer, and Economic Specialist
met Bismarck Rewane, the lead financial adviser to the
Government of Nigeria (GON) on Virgin Nigeria Airways.
Rewane confirmed the GON's determination to get VNA
airborne and U.S. landing rights despite the US-UK
aviation dispute over UK landing rights. Rewane also
addressed Continental Airlines' intention to begin
direct U.S.-Nigeria flights.


4. (SBU) Rewane said the GON had not given Continental
Airlines formal approval to begin Newark-Lagos flights
in 2005, despite Continental's receipt of written
approval signed by Nigerian Civil Aviation Authority
(NCAA) Director General, Peter Alawani. (Comment.
Rewane may be right. The NCAA is probably not be the
body that will ultimately decide the issue. We have
seen nothing from the Ministry of Aviation through the
Ministry of Foreign Affairs, the channel for the Open
Skies agreement that confirms formal approval of
Continental's request. End comment.) Continental
Airlines announced publicly on December 9, 2004 that
the GON had approved its new flights to Lagos. Rewane,
who may not be fully in the loop himself, had told us
January 12 that a "handwritten" GON document approving
Continental's flights to Nigeria was not sufficient.
He had added that despite Nigeria's temptation to link
its approval of Continental flights with U.S. approval
of landing rights for Virgin Nigeria, he didn't believe
the GON would "hold Continental to ransom."


5. (SBU) Continental is continuing to take steps to
initiate operations. The airline will have security
experts in Lagos the week of January 24 to assess
security threats. Continental is also arranging for
the NCAA to conduct the International Civil Aviation
Organization (ICAO)-required safety assessment of
Continental's Newark and Houston operations.
Continental expects the NCAA to conduct this assessment
in March.


6. (SBU) Comment: Although most Nigerians are
interested in shorter and more affordable flights to
the United States, which Continental will offer, the
MOA is engaging in footdragging, which is no surprise.
The Ministry, after all, has endorsed the VNA deal and
sees Continental as a threat and competitor. This
explains why the MOA has put up barriers along the way,
such as its denying office space to Continental at
MMIA. It is of course possible, as Amenechi has
opined, that MMIA officials are seeking payoffs from
Continental in exchange for office space. Either way,
both explanations highlight some of the problems U.S.
companies face doing business in Nigeria. End comment.

BROWNE