VENEZUELA ANNOUNCES CUTS TO U.S. AIR CARRIER

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 001266 SIPDIS HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR MMALLOY COMMERCE FOR 4431/MAC/WH/MCAMERON E.O. 12958: DECL: 01/01/2018 TAGS: EAIR ECON PGOV MARR VE ASEC SUBJECT: VENEZUELA ANNOUNCES CUTS TO U.S. AIR CARRIER FLIGHTS IN RETALIATION TO TSA PUBLIC NOTICE REF: CARACAS 1237 Classified By: Economic Counselor Darnall Steuart for reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: On September 10 Venezuela's civil aviation authority (INAC) informed the three U.S. carriers with operations in Venezuela that INAC would cut an undetermined number of their flights to and from the United States in retaliation for the September 8 Transportation Security Administration (TSA) Public Notice. In its letter INAC emphasized the overwhelming advantage U.S. carriers have in the Venezuelan market rather than the TSA request for security assessments. As of September 10, INAC had not responded to the Embassy's repeated requests to meet, and at the same time continued to claim it have never prevented TSA representatives from visiting Venezuelan airports. Late on September 10, the Ministry of Foreign Affairs called to request that the EconCouns come to a September 11 meeting. END SUMMARY. -------------- BACKGROUND -------------- ¶2. (C) The Department of Homeland Security approved the TSA Public Notice on September 5. The Public Notice states that TSA has been unable to assess whether Venezuelan airports meet International Civil Aviation Organization Standards (ICAO). DHS notified Congress of the Notice on September 8 and plans to brief staffers on the situation on September 15. TSA issued a press release officially launching the Notice late in the day on September 8 and reports that as of September 9, all airports had posted the Notice. -------------- BRV RESPONSE -------------- ¶3. (C) While the initial Bolivarian Republic of Venezuela (BRV) reaction was relatively muted with no high level commentary, INAC did issue a press release on September 9 criticizing TSA and arguing that ICAO alone has authority in Venezuelan international aviation matters. All this changed on September 10 when INAC sent a letter to Delta, Continental and American Airlines announcing its intention to cut an undetermined number of their frequencies if the Public Notice is not lifted by September 28. The Ministry of Foreign Affairs also called at the end of the day to request that the EconCouns attend a September 11 meeting. ¶4. (C) Continental Country Manager Andres Tinoco (strictly protect throughout) provided Econoff with a copy of the text (informal translation in Para. 6 below) which states INAC will supply more information about the cuts at a later date. Upon receiving the letter, Tinoco told Econoff that he called INAC Air Services Director and second in command Carmen Lanza who said she could not give Continental any details about which, and how many of their frequencies would be cut. She explained that the situation is now out of INAC's hands and is being handled at a much higher level (ref A). (NOTE: Sources have indicated to Econoffs for months that INAC never truly had decision making authority and that the Vice President was the one in charge. It is now likely that President Chavez is directly involved as well. END NOTE.) ¶5. (C) Tinoco also reported that he plans to recommend to his headquarters that "all flights be closed for sale" as the airline cannot continue to sell tickets under such uncertain circumstances. American Airlines Operations Manager Ramon Jimenz (strictly protect throughout) told Econoff September 10 that late September through early October is still the high season and flights will be at capacity when the frequency reductions hit. He stated he could not even speculate about how American Airlines would deal with thousands of potentially stranded passengers. ¶6. (SBU) BEGIN TEXT OF INFORMAL TRANSLATION OF INAC LETTER: Caracas, September 10, 2008 Citizen Andres Tinoco Director Continental Airlines CARACAS 00001266 002 OF 002 It is my pleasure to take this opportunity to greet you and at the same time inform you that this office has conducted a series of evaluations of the current commercial aviation market between the Bolivarian Republic of Venezuela and the United States of America. We have determined that there is an imbalance in favor of U.S. companies which currently have 80 percent of the passenger traffic, cargo and mail between the two countries which does not comply with the basic principles of the Air Services Agreement of 1953. (The agreement) states in items b and c of Section 4 that there shall be fair and equal opportunity for the airlines of the contracting parties, as well as the commitment not to unduly affect the services which the latter provides. Nevertheless, and in spite of the Bilateral Agreement in place between both countries, our airlines have confronted obstacles in establishing routes to your country which are inconsistent with the principles of equilibrium and reciprocity that should exist. Additionally, the Transportation Security Agency of the United States (TSA) insists on disparaging our international airports, in open violation of the bilateral treaty. Under these circumstances, the National Institute of Civil Aviation (INAC) has resolved to reduce the frequencies of flights operated by the company you represent; this measure shall be implemented starting September 28 of the current year. At the same time this letter establishes that the National Aviation Authority is obliged to provide a secure internal environment and, according to the terms established in the Bilateral Convention signed by the Republic (of Venezuela), the maintenance of a market balance and the public service of healthy and participative air transport. We will inform you which frequencies will be reduced (at a future date) so that you may take the actions necessary to avoid harming the users of the public service of air transport. We offer you our highest consideration and esteem. Sincerely, Lic. Jose Luis Martinez Bravo President of INAC -------------- COMMENT -------------- ¶7. (C) Although INAC's letter emphasizes the overwhelming dominance of U.S. carriers in the Venezuelan market rather than the TSA Public Notice, it is clear that they are reacting to the TSA notice. The government is acting against U.S. carriers in the hope that they will convince TSA to lift the notice. END COMMENT. CAULFIELD