QATAR AIR "TO SUSPEND" OPERATIONS

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000016

SIPDIS

SIPDIS

STATE FOR EAP/MLS; EEB/TRA
MONTREAL FOR ICAO
PACOM FOR FPA
TREASURY FOR OASIA:SCHUN

E.O. 12958: DECL: 01/11/2018
TAGS: BM EAIR ECON PGOV PREL
SUBJECT: QATAR AIR "TO SUSPEND" OPERATIONS

REF: A. RANGOON 004


B. 07 RANGOON 1108

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Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4
(b and d)


1. (C) Summary. Although Qatar Airways will stop direct
flights between Doha and Rangoon on January 20 (Ref A),Qatar
Airways Area Director Shahab Attarzadeh emphasized that the
airline is not pulling out, but is only "suspending"
operations. Since September, Qatar Airways has seen a 70
percent drop in bookings, averaging sixty passengers per
flight, and has been losing an estimated $1 million per week
on the Rangoon flight. Attarzadeh stressed that Qatar
Airways did not stop flights because of U.S. sanctions, but
admitted that the political violence and subsequent downturn
in tourism played a role. Qatar Airways told the Minister of
Transport that if the GOB implements visa on arrival and
loosens restrictions on Burmese passports, it may resume the
Doha-Rangoon flight. End Summary.

Suspension of Service
--------------


2. (C) During a January 10 meeting with Qatar Airways,
Area Director Shahab Attarzadeh (the General Manager has
already departed Rangoon) repeatedly stressed that Qatar
Airways was not closing down its operations in Burma, but
instead was "suspending service." Qatar Airways will
maintain its ticketing and administrative offices, which
employ 19 people. When asked why Qatar halted flights,
Attarzadeh explained that since September, Qatar Airways has
seen a 70 percent drop in bookings compared to last year's
figures. In 2006, Qatar averaged 225 passengers per flight
on its Doha-Rangoon-Doha flights. In the last quarter of
2007, Qatar Airways averaged 60 passengers on its flights,
only 20 percent capacity. While Attarzadeh would not give us
the exact figures, he told us that Qatar Airways had lost
more than $100,000 per flight. With four roundtrip flights a
week, Qatar Airways has been losing close to $1 million a
week since October.


3. (C) Attarzadeh noted that the number of tourists
visiting Burma has dropped markedly since the September
violence. The majority of Qatar Airways' passengers were
European, he explained. After the violent regime crackdown
in September and the subsequent EU sanctions, the number of
European tourists traveling to Burma dropped by more than 80
percent. Attarzadeh understood that the Burmese Embassies in
Europe were not issuing as many tourist visas as in previous
years, and that Europeans were afraid to travel to "such a
restrictive country." Qatar Airways, like many international
airlines flying to Burma, relies on the profits made during
the high season (September-March) to cover the rest of the
year. With such low loads, it did not much much buiness
sense for Qatar Airways to maintain the flights, he explained.


4. (C) He also noted that the number of Burmese traveling to
Doha on Qatar Airways were few, totaling approximately 1,000
people in 2007. He estimated that there were less than
30,000 Burmese workers living in the Middle East. With the
government maintaining and enhancing tight controls on
passports, Burmese workers were unable to leave Burma, even
if they had a job in the Middle East. Attarzadeh did say
that some rich Burmese would take flights to Doha every few
months, but could not indicate the nature of their business
in the Middle East.

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Not Because of U.S. Sanctions
--------------


5. (C) Qatar Airways' decision to suspend flights was not
because of U.S. sanctions, Attarzadeh declared. Qatar
Airways management decided in mid-October (before the U.S.
tightened its sanctions on Burma) to suspend flights because
it foresaw the drop in tourism and the subsequent profit
loss. The only reason Qatar will fly until January 20 is
because it must fulfill its hajj obligations, he explained.

Possible Resumption in Flights
--------------


6. (C) The Minster of Transport met with Qatar Airways
General Manager on January 7 to see whether Qatar Airways
would reverse its decision. According to Attarzadeh, the
General Manager informed the Minister that several things
would need to change before Qatar would return to Burma,
including implementation of visa-on-arrival for European and
Middle Eastern travelers, as well making it easier for
Burmese citizens to obtain passports and travel. Attarzadeh
explained that a resumption of flights was possible in the
future, but opined it could be several years before the
Burmese Government made the necessary changes to attract
tourists.

Comment
--------------


7. (C) Qatar Airlines is just one company within the tourist
industry that is feeling the results of the Burmese
Government's violent crackdown on peaceful demonstrators (Ref
B). Hotels in Rangoon, Mandalay, and Bagan all report
significantly lower than normal occupancy. While the number
of tourists in December increased by 20 percent compared to
October levels, overall tourism remains far lower than last
year's figures. As a result, many small Burmese tourist
operations, which rely on income earned during high season,
have closed shop and laid off workers. The decline in
tourism in the wake of the September crackdown shows the
lingering affects spreading throughout the economy months
later.

VILLAROSA