AMERICAN AIRLINES FORCED TO SUSPEND FLIGHTS

C O N F I D E N T I A L LA PAZ 002792 SIPDIS SIPDIS E.O. 12958: DECL: 10/17/2017 TAGS: BL CASC EAIR ECON PGOV PREL SUBJECT: AMERICAN AIRLINES FORCED TO SUSPEND FLIGHTS Classified By: EcoPol Chief Mike Hammer for reasons 1.4 (b) and (d). SUMMARY -------------- ¶1. (C) American Airlines was forced to cancel its flights into/out of Bolivia on October 16 and is scheduled to resume normal operations on October 19. A dispute over transfers of funds from the national office of airport services (AASANA) to the Santa Cruz office of AASANA led to AASANA Santa Cruz demanding direct payment from airlines. After the Bolivian Airline Association (ALA) held meetings with the Santa Cruz prefecture and the Santa Cruz Civic Committee, AASANA Santa Cruz agreed to allow airlines to take off and grant landing privileges through October 31 while they try to resolve the dispute with the central government. Airline officials decry the complete lack of empathy and engagement from the Bolivian government, particularly the Minister of Public Works and the Vice Minister of Transportation, to guarantee safe transit of passengers. BACKGROUND -------------- ¶2. (C) "Under the wing" airport services such as landings and take off in Bolivia are administered under the auspices of the national office of airport services AASANA under the Ministry of Public Works. Airlines using Bolivian airports deposit their payments for such services into a national account on a monthly basis. AASANA then distributes the monies among the airports accordingly. The national AASANA office is controlled by Evo Morales' MAS party while the AASANA Santa Cruz office is controlled by loyalists of the Santa Cruz Civic Committee. There has been political fighting between the two offices since Morales came to power. The MAS-controlled National Tax Agency opened up an audit of AASANA Santa Cruz a few months ago and at the beginning of October AASANA stopped the transfer of all funds to AASANA Santa Cruz. On October 15 AASANA Santa Cruz advised all airlines using the Santa Cruz Viru Viru airport that all services must be paid for directly to AASANA Santa Cruz and that failure to do so would result in denial of take off or landing privileges. In the meantime the national AASANA office advised airlines that Bolivian regulations required them to deposit the fees into a central account and that any payments made to AASANA Santa Cruz would not be credited. CENTRAL GOVERNMENT UNWILLING TO HELP -------------- 
¶3. (C) Given the threats by AASANA Santa Cruz the Bolivian Airline Association (ALA),along with American Airlines Country Director Drago Komadina and LAN Airlines Country Director Luis Quiroga, held meetings with Vice Minister of Transportation Severino Suna and Minister of Public Works Jose Kinn Franco. According to LAN, the airlines asked the Vice Minister of Transportation to offer guarantees of the safe transit for passengers and aircraft, to which he replied the GOB would offer no such guarantees and that the airlines could just cancel their flights. In their meeting with Min. of Public Works Jose Kinn Franco, American's Komadina complained they were being put in the middle of a political problem, to which the Minister replied that he was "washing his hands" of it. RUBBER HITS THE TARMAC - AND STAYS THERE -------------- ¶4. (C) On the morning of October 16 AASANA Santa Cruz made good on its threat and denied American Airlines and TAM Mercosur (Paraguay) take off permission, thus holding their passenger-filled aircraft at the Viru Viru airport. American Airlines immediately requested assistance from the Embassy. Emboffs arranged a meeting between AASANA Santa Cruz and the airline association at the prefect's office and another meeting with AASANA Santa Cruz and the Santa Cruz Civic Committee on the afternoon of the 16th. The meetings resulted in the temporary suspension of AASANA Santa Cruz' measures through October 31 while it negotiates with the central government. In the meantime, American, TAM Mercosur, and GOL (Brazil) canceled their Santa Cruz flights. American took the additional step of canceling all Bolivia service (all flights require refueling in Santa Cruz) for October 17 and 18. AeroSur (Bolivia),LAN Airlines (Chile/Peru),and Aerolineas Argentinas made direct payments to AASANA Santa Cruz to avoid flight disruptions. Based on the agreement American Airlines will resume scheduled service to Bolivia on October 19. The airline association plans to meet again with the various national government ministries to urge them to resolve the situation. CONSULAR HELP -------------- ¶5. (C) Approximately sixty Amcits were affected by the American Airlines flight cancellation on October 16. The Consular Section and local Santa Cruz Consular Agent was able to arrange discounted hotel rates, rebooking with other airlines, and airport assistance for the stranded passengers. The Santa Cruz Consular Agent performed a welfare check on a nine-year old child traveling with an escort. The Consular Section also issued a Warden Notice and posted it to the Embassy website. As of October 17 all passengers had either departed on other airlines or were rebooked with American. COMMENT -------------- ¶6. (C) That there are political and financial tensions between the MAS-controlled government and opposition-controlled Santa Cruz is public knowledge. Rarely though do such tensions impact private commerce in such a public manner. The refusal by national government officials to act to remedy the situation is either by design or reflects an utter lack of understanding of the impact of the problem. For example, we understand that American Airlines was telling its passengers in the U.S. that flights were cancelled due to "political instability in Bolivia." Ironically, Foreign Minister David Choquehuanca was scheduled to return to Bolivia from Europe on American Airlines' October 18 flight which has now been canceled. Perhaps personal inconvenience will be enough to spur the GOB to action. In the meantime, we will continue to advocate for American Airlines. End comment. GOLDBERG