VENEZUELA CIVAIR UPDATE

UNCLAS SECTION 01 OF 02 CARACAS 000723 SIPDIS SIPDIS STATE PLS PASS TO DEPT OF TRANSPORTATION E.O. 12958: N/A TAGS: EAIR VE SUBJECT: VENEZUELA CIVAIR UPDATE REF: A. STATE 38908 ¶B. CARACAS 00573 ¶C. STATE 32811 ¶D. STATE 30776 ¶E. POST/DEPT E-MAILS ¶F. BOWEN/DEPT E-MAIL 3/15 This message is sensitive but unclassified, please treat accordingly. -------------- SUMMARY -------------- ¶1. (SBU) On March 15, EconCouns met with INAC General Manager for Air Transport, who stood firm on the March 30 deadline to cancel U.S. carrier flights if the FAA hadn't sent an IASA team by then, despite an informal agreement with FAA for an April 17 visit. Blanco also pushed for a meeting between FAA Administrator Blakey and INAC Director Paz on the margins of the ICAO Montreal Conference March 21-23 in order to provide an opportunity for "open dialogue." Vice Foreign Minister Hernandez called the Ambassador later to voice her concern about possible reciprocal cancellation of Venezuelan-carrier flights, and indicated she wished to avoid confrontation. EconCouns informed INAC that FAA was considering the BRV's request to send an FAA team to begin an assessment before March 30, but that it was only a possibility at this point. Meanwhile, Delta Airlines is refunding tickets, and American Airlines is seeing a surge in ticket sales for its Miami route. As it stands, INAC is holding firm on the March 30 deadline, and plans proceed with cancellations unless the FAA visit takes place before that date. End Summary. -------------- MIXED SIGNALS FROM BRV -------------- ¶2. (SBU) On March 15, EconCouns and EconOff met with David Blanco, INAC's General Manager for Air Transport (Air Transport authorizes routes and frequencies as well as negotiates market access). Post had originally requested a meeting with INAC Chief Paz Fleitas, but he passed the meeting down to Blanco without notification (read: for clearly tactical reasons). EconCouns delivered talking points (Ref A),explaining IASA procedures (which seemed to encourage Blanco about the process) and requested clarification of INAC's position. Blanco replied that there was a "transcendental" opportunity at the March 21 Montreal ICAO Directors General of Civil Aviation Conference, and pressed for a side meeting for Paz with FAA Administrator Blakey in order to have an "open dialogue." ¶3. (SBU) Blanco said he could offer no clarification on where things stood beyond his guidance that they requested an FAA IASA inspection take place before March 30 or they would proceed with flight cancellations as announced. EconCouns told Blanco that the USG had gotten very mixed signals to date from the BRV and that it was not in either party's interest to create a crisis out of what was fundamentally a technical issue. EconCouns noted that Washington would consider the BRV's request to begin an assessment before March 30 (letter from INAC to Amb. Brownfield dated March 13, 2006),but that in any event, it would be impossible to conclude the assessment process and make a determination by March 30. (Comment: Despite the nature of the discussion, Blanco was very cordial, friendly, and optimistic that a solution would be reached, even echoing back our words that this was a matter that should be viewed purely from a technical standpoint and not a political one. End Comment.) ¶4. (SBU) Following EconOffs' INAC meeting, Ambassador Brownfield received a call from Vice Foreign Minister Mari Pili Hernandez asking for an update on the aviation issue. Ambassador noted there were options Washington was reviewing, including the possibility of offering at least an initial FAA visit before March 30, but that was a pending decision. He also gave her a readout of EconOffs' meeting earlier in the day with INAC. Hernandez was very pleased at the possibility CARACAS 00000723 002 OF 002 of a visit before March 30. The Ambassador told Hernandez that the USG needed to hear clearly and soon from the BRV what their position would be with regard to the suspension, because the clock was ticking. She said she wanted to avoid another confrontation, adding she thought the Ambassador's warning regarding reciprocal suspension was strong. Ambassador replied that it was better for everyone that we understood what could happen. ¶5. (SBU) On March 9, Regional Vice-President of American Airlines, Peter Dolara, met with Vice-President Rangel on the issue. Dolara told the Ambassador he sensed a harder position on the part of Rangel, who wanted INAC to be taken seriously. However, Rangel also said that a formal notification of the FAA visit would "make his life easier," since he was receiving pressure from Venezuelan carriers, implying very clearly that officially setting a date by the end of March would be sufficient to postpone any suspension. (Note: Though prior conversations between FAA and INAC had led to informal agreement on an April 17 inspection date, it is clear that INAC, and perhaps others in the BRV, have tried to game this politically. End Note.) -------------- CONSEQUENCES OF MARCH 30 -------------- ¶6. (SBU) Airlines and the general public are nervous about the March 30 deadline, given the BRV's adamant positions on flight cancellations if FAA doesn't inspect by that date. Some U.S. carriers, such as Delta Airlines, have begun refunding tickets for travel after March, while American Airlines has seen a surge of reservations on its Caracas-Miami flights (the only route that would remain unaffected by the cuts). If BRV and reciprocal USG route restrictions proceed, Venezuela-U.S. traffic would grind down to four daily Miami flights (3 American, 1 Aeropostal) and one weekly Dallas flight (American) -- a 70 percent reduction in bilateral air traffic. ¶7. (SBU) INAC is confident that Venezuela will reach Category 1 IASA classification, and has offered copies of the March 2005 ICAO audit report to Post and has repeatedly publicly stated that it should move up. Venezuelan airlines are enthusiastic about the possibility of expanding their services to the United States with their own aircraft -- airlines that don't presently have routes, such as Conviasa (the state-owned airline) or Aserca, have publicly stated they'll tap into the U.S. market. The head of ALAV, the Venezuelan Airline Association (which Aeropostal and Santa Barbara left in Jan 2006),told EconOff that economic constraints made the expansions wishful thinking. (Comment: the airlines most likely to expand, if at all, would be the two with existing U.S. routes, Aeropostal and Santa Barbara. End Comment). -------------- COMMENT -------------- ¶8. (SBU) The BRV has given mixed signals regarding the firmness of the March 30 deadline -- FAA/INAC agreeing to an April 17 date, but later insisting the IASA visit take place before March 30, or else it would suspend some U.S. flights on that same date. So far the BRV has played this matter through brinksmanship, creating a crisis and gaming the U.S. carriers to bring about an expedited FAA visit. From Post's perspective, a possible Blakey-Paz meeting could be helpful as a signal, and, again from our perspective, has no obvious downsides. The Bolivarians confrontational and maximalist negotiating style could end up with them snatching defeat from the jaws of victory. BROWNFIELD