GOB EQUALIZES JET FUEL PRICES

UNCLAS LA PAZ 003289 SIPDIS SENSITIVE SIPDIS STATE FOR EB/TRA JHORWITZ AND WHA/AND LPETRONI STATE PASS TO DOT FOR CCOLDREN AND BHEDBERG STATE PASS TO FAA FOR CCAPESTANY AND KBERQUIST COMMERCE FOR EALFORD AND JANGLIN TREASURY FOR SGOOCH E.O. 12958: N/A TAGS: EAIR ECON EINV ETRD PGOV PREL BL SUBJECT: GOB EQUALIZES JET FUEL PRICES REF: LA PAZ 657 AND PREVIOUS ¶1. (U) In an unexpected move, the GOB issued a Supreme Decree November 20 equalizing jet fuel prices for foreign and domestic air carriers operating international routes. Fuel taxes remain, but domestic carriers servicing international routes no longer enjoy access to reduced-price fuel, as they did after December 2004, when the GOB began taxing fuel uplifted by foreign carriers. ¶2. (U) American Airlines' Country Manager Drago Komadina told Econoff December 5 that the company is pleased with the elimination of domestic carriers' price advantage but would like to see the GOB lower or abolish fuel taxes, which the company claims are higher than those in neighboring countries. ¶3. (SBU) Comment: While the GOB's decision to equalize jet fuel prices may be good news for American Airlines, it may not resolve a long-standing bilateral dispute arising from the GOB's imposition of taxes on fuel uplifted by U.S. carriers (reftels). In the absence of reciprocal tax exemptions, the USG must by law proceed with steps to remove Bolivian air carriers' current exemptions from U.S. fuel taxes. End comment. URS