INDONESIA - CIVIL AVIATION UPDATE

UNCLAS SECTION 01 OF 03 JAKARTA 000931 SIPDIS SIPDIS DEPT ALSO PASS NTSB FOR MACINTIRE/BENZON/ENGLISH DEPT FOR EAP/MTS AND EB/TRA/AN SINGAPORE FOR FAA-WALSH E.O. 12958: N/A TAGS: EAIR ECON ETRD ID SUBJECT: INDONESIA - CIVIL AVIATION UPDATE REF: JAKARTA 12825 ¶1. (U) Summary. On March 22, the Directorate General for Civil Aviation (DGCA) unveiled a new, three-tier rating system for Indonesian Airlines that places the majority of domestic carriers in the middle, or "not fully compliant" category, including state-owned Garuda. Despite complaints about the ranking system's methodology, the newly installed Director General for Civil Aviation, Budhi Suyitno, told us on March 23 that the DGCA is committed to imposing sanctions on airlines that could not meet safety standards. Suyitno added that state-owned transportation insurer Jasa Rahardja may pay for the recovery of wreckage of Adam Air KI-574, possibly speeding up the stalled recovery process. The Inspector General at the Ministry of Transportation and former Director General (DG) for Civil Aviation told us the same day that he has recalled all 100 principle maintenance and operation inspectors from the field in order to reduce conflicts of interest in the airline inspection process. A new Ministry of Transportation "roadmap" for improving aviation, sea, road, and rail safety is short on detail, but includes proposals to more accurately reflect safety costs in the airline tariff structure, impose stricter sanctions on non-performing airlines, and improve regulation governing airports and airport management. Australia is developing an Aus$ 10 million aviation safety assistance program that may feature multiple workshops with Indonesian and Australian aviation safety officials, the development of a joint action plan on safety solutions, and training. End Summary. Airline Rankings - Questions about Methodology -------------- - ¶2. (U) Indonesia's civil aviation authorities are under intense pressure to improve aviation safety after three serious air accidents in as many months. In response, the DGCA unveiled a three-tier rating system for domestic airlines on March 22, ranking more than 40 large and small domestic passenger, charter, and cargo carriers. The DGCA system describes the three categories as follows: --Category 1: Airline has met all the requirements of civil aviation safety regulations. --Category 2: Airline has met very minimal requirements of civil aviation safety regulations, but some requirements have not been implemented. --Category 3: Airline has met minimal requirements of civil aviation safety regulations, but some requirements have not been implemented, which may reduce safety levels. ¶3. (U) No Indonesian airline qualified in the top category. Ten passenger airlines, including national carrier Garuda, met Category 2 requirements. The DGCA placed two significant carriers in Category 3: Adam Air, which has had both a fatal crash and hard landing so far in 2007, and Batavia. According to a DGCA media release, Category 3 carriers will face administrative sanctions and will be given a total of nine months, in three month increments, to improve safety standards. If the airline has not demonstrated sufficient improvement after the final three-month period, the DGCA may revoke the airline's operating license. ¶4. (SBU) Indonesian carriers, independent aviation observers, and the media have criticized the ranking system, mostly on the grounds that the DGCA has not demonstrated clearly how the safety systems of carriers in one category differ from those in other categories. Air carriers have called the assessment criteria "dubious" and "inconsistent" in recent media reports. Some carriers have publicly challenged their ratings, and the Indonesian Consumer Foundation (YLKI) has called on the DGCA to clarify ratings criteria for consumers. The DGCA also faces skepticism about its ability to actually revoke the operating licenses of air carriers, a step it has yet to take for a functioning airline. DGCA officials tell us revoking airline operating licenses is extremely difficult under current regulations and will entail a lengthy legal battle with politically well connected airlines. The New Team at DGCA -------------- ¶5. (U) We paid a March 23 courtesy call on newly appointed DG Budhi Suyitno, with Mary Walsh, the Federal Aviation Administration's (FAA) Regional Representative for South East Asia, to discuss the DGCA's airline rankings and other aviation issues. Suyitno said the DGCA had based its airline rankings on ICAO criteria, but did not elaborate further on the rating criteria or the form administrative JAKARTA 00000931 002 OF 003 sanctions would take. He said the DGCA also plans to evaluate 27 international airports by the "middle of 2007." Suyitno inquired about the possibility of FAA training programs available to DGCA. Walsh replied the FAA is willing to help Indonesia improve transportation safety, but the FAA would first need to conduct a top down technical review with Indonesia before offering aid or training. ¶6. (SBU) Suyitno also commented that state owned transportation insurer, Jasa Rahardja, may provide funds for recovery of the wreckage of Adam Air KI-574, which crashed into the Sulawesi Sea on January 1, 2007. Suyitno said estimates for deep water recovery top $1 million USD per week with a 2-3 week expected recovery operation, and ROV and recovery ship platforms are in short supply and booked months in advance. Our sources at the National Transportation Safety Commission tell us negotiations for recovery are currently stalled due to calls by Adam Air for deeper discount and a contractual guarantee of recovery. Former DG says no "Quick Fixes" -------------- ¶7. (SBU) In a separate meeting, the Ministry of Transportation's Inspector General (and former DG for Air Communications),Moh. Iksan Tatang, agreed there are no "quick fixes" to Indonesia's civil aviation safety problems and solutions will require deep engagement at all levels of civil aviation. Tatang repeated themes he emphasized during his tenure as DG, including the need for greater discipline among air carriers as well as the importance of reducing conflicts of interests in the airline inspection process. He noted Indonesia's civil aviation sector grew 600% from 1999 to 2006, with no appreciable increase in inspectors or inspection authority, and that domestic carriers often employ as pilots the same DGCA pilot inspectors charged with inspecting them. Due to the lack of DGCA simulator facilities and training planes, pilots must fly with domestic carriers in order to remain up to date with the required training. Further moonlighting is encouraged by the acute shortage of qualified pilots in the domestic market. ¶8. (SBU) Other parts of the inspection process face serious conflicts of interest, Tatang continued. Currently 100 principle airline operation and maintenance inspectors are spread throughout the archipelago, each of whom works 2.5 days a week in each of two assigned airlines with little supervisory oversight. Inspectors are stretched thin and receive an approximate salary of $100 USD per month. Tatang candidly admitted that inspectors also receive up to $1000 USD per month in "incentives" from each airline they cover, a serious conflict of interest that leaves inspectors with very little loyalty to DGCA and aviation safety. He added that inspectors are often willing to overlook minor problems and give airlines one to two months to fix major problems rather than ground unsafe planes. In response to the system's problems , Tatang said he had pulled back all 100 inspectors to DGCA headquarters in order to redeploy them on short rotations among a number of domestic carriers. Tatang acknowledged carriers are understandably not pleased at the loss of their close relationship with their previously dedicated, in house inspectors, and confided he believes this is the reason he was pushed out of his position as Director General. Roadmap for Transportation Safety -------------- ¶9. (U) Suyitno also gave us a copy of a recently published Ministry of Transportation "National Transportation Safety Improvement Roadmap". The roadmap is based on recommendations of a presidential team on transportation safety and security. Although short on detail, the roadmap very broadly identifies some of the major problems in the civil aviation sector. Among other issues, it calls for: --Impose minimum tariff levels reflecting pricing of safety costs, including maintenance and training costs. (Note: It is not yet clear whether DGCA will acquire the necessary enforcement authority to ensure airlines will spend additional safety funds on safety. End Note) --Revisions to regulations on the age of planes entering service in Indonesia's aviation market. (Note: Although the roadmap does not specify a maximum age/number of cycles for aircraft entering (leased or owned) the Indonesian civil aviation market, there have been recent calls for a 10 year maximum. This proposal is not feasible as it would eliminate approximately 80% of Indonesia's approximately 210 large passenger aircraft. End Note) --Separate Air Traffic control from Airport Authority JAKARTA 00000931 003 OF 003 --Increase infrastructure investments to upgrade radar systems, instrument landing systems, and construction and improvement of runway, taxiways, and aprons Australian Engagement -------------- ¶10. (SBU) We also met with David Ramsey and David Barron, from the Australian Department of Transportation, to learn about Australia's plans for engagement in the civil aviation sector. Ramsey told us Australia has offered Indonesian Transportation minister Hatta Rajasa an Aus$ 10 million assistance package which will likely include multiple workshops with Indonesian and Australian officials to gauge the scope of Indonesia's civil aviation safety problems, the development of a joint action plan on safety solutions, and assistance with projects and training. Ramsey told us Australia is not willing to provide one-off grants or donations of equipment in the package because they believe a solution will require deeper structural reforms. ¶11. (SBU) Comment: Indonesia's recent wave of fatal crashes and hard landings has shocked the GOI, the flying public, and the civil aviation establishment. For the first time, the majority of our interlocutors in the DGCA, as well as independent observers, agree that meaningful reform of Indonesia's troubled civil aviation safety system will require a number of tough decisions by the GOI. The key challenges will be increasing the authority, professionalism, and remuneration levels at the DGCA, and instilling a culture of safety in Indonesia's air carriers and airport operators. Related to this will be reducing the exercise of political influence, and opportunities for informal payments, in the regulatory process. Another problem will be strengthening DGCA oversight over state-owned airport operators Angkasa Pura I and II, both of which are mandated to maximize profits and report directly to the State Ministry of State-Owned Enterprises. The GOI will also need to grapple with a number of infrastructure issues: Despite rapidly increasing revenues from passenger service charges, AP has failed to make necessary investments in runways, airport facilities, or equipment, a dangerous state of affairs in a country with majority short haul flights and 50% of accidents occurring on landing. Although the Ministry of Transportation's roadmap touches on many of these issues, it will likely take some time, and assistance from the U.S. and other countries, for Indonesia to come up with a realistic plan for putting its civil aviation sector on a more solid safety footing. Heffern