BRAZIL: U.S. CARRIERS EXPLORE NEW ENTRY POINTS DESPITE

UNCLAS SECTION 01 OF 02 BRASILIA 000157

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAIR CVIS CMGT BR
SUBJECT: BRAZIL: U.S. CARRIERS EXPLORE NEW ENTRY POINTS DESPITE
FREQUENCY LIMITATIONS


1. (U) This cable contains business-proprietary information. It has
been coordinated with AmConsulate General Sao Paulo.


2. (SBU) Summary. During a recent trip to Sao Paulo, Charge met
with local United and American Airlines representatives to gauge
their interest in offering air connections to the U.S. to the
currently neglected North and Northeast regions of Brazil. (At
present, the vast majority of flights to/from the U.S.
originate/terminate in either Sao Paulo or Rio de Janeiro, with only
the Brazilian carrier TAM providing once-weekly service between the
Northeastern city of Recife and the U.S.) Officials from both
United and American told us that they were considering adding
flights to serve underrepresented cities such as Salvador,
Fortaleza, Recife and Brasilia, but a key factor in their decision
making would be the ability of the USG to provide non-immigrant visa
services in the North and Northeast, thereby expanding the pool of
potential travelers. With respect to the Brazilian government's
visa policy, our American Airlines (AA) contact stated that both the
Minister of Tourism and tourism officials were pushing a bill in the
Brazilian Congress which would lift visa requirements on U.S.
citizens visiting Brazil. Meanwhile, it appears that the Brazilian
government has quietly ceased photographing/fingerprinting Americans
arriving via air in Brazil. End Summary.


2. (SBU) In a January 17 conversation with Charge, Sao Paulo CG, FCS
Chief and EconCouns, AA Brazil Director Erli Rodrigues told us that
his airline was currently debating whether to initiate regularly
scheduled service from Salvador, Recife and/or Fortaleza to the U.S.
The two principal factors critical to the decision were: 1) the
availability of the appropriate 757 aircraft, and 2) the ability of
the USG to provide additional non-immigrant visa services in the
Northeast (thereby expanding the potential pool of travelers).
Currently, Brazilian visa seekers from the North and Northeast must
travel a considerable distance and incur substantial expense to
appear for the requisite interview. Rodrigues stated that even
though U.S. carriers had exhausted all their frequencies under the
Brazil-U.S. civair bilateral, he felt confident that given its
desire to promote the development of the North and Northeast, the
GOB would approve a waiver to allow these flights. Such a precedent
already exists, he observed, as civair authorities had approved a
similar waiver to permit TAP to fly from Northeast Brazil to
Portugal. In view of the poor financial health at Varig and the
resultant market uncertainties for Brazilian carriers, Rodrigues was
not sanguine about the prospect of the GOB seeking to liberalize the
current bilateral anytime soon.


3. (SBU) The next day, Charge, accompanied by the same roster of
Embassy/Consulate officials, met with United Airlines Brazil Chief
Josue Meza and his Sao Paulo sales chief Luiz Henrique Camillo. The
United pair noted that their airline was looking at initiating a
daily Rio-Brasilia-Washington flight. The key question to be
resolved, Meza said was whether there will be sufficient Brasilia
traffic to sustain the route. United could consider as well adding
a Sao Paulo - Manaus - Miami flight, but whether this would be
profitable would depend upon the availability of adequate NIV
services in the Northeast, the degree to which the route would
attract business travelers, and the willingness of the GOB to
facilitate visas to Amcits traveling to Brazil. Meza noted that it
would be helpful if the GOB were to expand its visa processing
capacity, lower its visa fees or do away with the visa requirement
altogether. (AA's Rodrigues made a similar investigation).


4. (SBU) Charge pointed out that there was currently a bill
circulating in the Brazilian Congress which, if passed, would
eliminate visa requirements for Americans. It would be helpful, he
continued, if concerned tourist industry officials could work with
the bill's legislative sponsor, the Minister of Tourism, and the
Embassy to push this measure forward. The Brazilian Foreign
Ministry, everyone felt, might be the bill's most forceful opponent,
given its traditional insistence on strict reciprocity. Meanwhile,
our interlocutors told us it appears that three months ago the GOB
quietly dropped its requirement that American visitors arriving in
Sao Paulo be fingerprinted and photographed. This requirement had
already been lifted in Rio, at the behest of the tourist industry.
Consul General noted that the USG was doing its part to facilitate
two-way travel as waiting times for visa interviews in Sao Paulo had
dropped under 50 days, with the Consular Section interviewing 1000
people a day.


5. (SBU) Finally, our United contacts stated that should its
Brazilian codeshare partner Varig go bust, the Minister of Tourism
had already stated that U.S. airlines will be temporarily allowed to
increase their frequencies to fill the void created by the demise of
Brazil's principal international carrier. (Whether United would

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have sufficient aircraft available to take advantage of this
opportunity was another story, Meza admitted, noting that the
company's current focus was its highly profitable Pacific routes.)
Once TAM was ready to assume Varig's transcontinental routes and
Gol, Varig's South American routes, then frequency numbers would
revert to normal (except for any approved exceptions). However,
Meza stated that his gut feeling was that Varig would eventually
survive, though perhaps owned or managed by TAP as that seemed to be
the GOB's preferred solution. Comment. With the recent sale of
Varig's cargo and logistical arms to outside investors and the
payment of leasing company creditors with the proceeds from these
transactions, Varig has gained at least a few more months of life.
End Comment.

CHICOLA