NIGERIA: DELTA AIRLINES FACES UPHILL BATTLE ON ABUJA-ATLANTA

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 000204

SIPDIS

DEPT PASS TO USTR- AGAMA, USTDA - FITS/MARIN, EXIM - JRICHTER
DOT FOR FAA MEL CINTRON

E.O. 12958: DECL: 02/01/2019
TAGS: EAIR ECON EINV EAID ASEC ERTD PGOV NI
SUBJECT: NIGERIA: DELTA AIRLINES FACES UPHILL BATTLE ON ABUJA-ATLANTA
ROUTE

REF: A. 08 ABUJA 2313

B. 08 ABUJA 2207

Classified By: Economic Counselor Robert Tansey for reasons 1.4. (b &
d).


1. (C) SUMMARY: The Ambassador and a Delta Airlines delegation
headed by Senior Vice President Bob Cortelyou met on January 27, 2009
to discuss problems Delta is experiencing with the Nigerian
government (GON) in receiving approval for two new routes between
Nigeria and the U.S. The Ambassador offered to assist Delta in
seeking approval for the Abuja-Atlanta and Lagos-New York routes; but
cautioned that it is unlikely that the GON would approve the
Lagos-New York route despite their obligation to do so under the Open
Skies Agreement. She said that Nigerian operators, as well as,
members of the GON feel strongly that they will not agree to this
until at least one Nigerian carrier has landing rights in the U.S.
The Ambassador suggested that Delta should expand their network of
political supporters, but added she would immediately do due
diligence with the Aviation Minister for said permission. Delta
officials expressed reservations and contended that rule of law
should prevail via the language in the Bilateral Open Skies Agreement
signed between the U.S. and Nigeria in 2000. Nigerian aviation
officials are unlikely to be swayed by arguments based on the Open
Skies Agreement. END SUMMARY.


2. (C) On January 27, 2009 Delta Airline's Senior Corporate Vice
President for Network Planning Bob Cortelyou, Commercial Manager for
East and West Africa Bobby Bryan, and Country Manager Olufemi Adefope
told the Ambassador that Delta is experiencing delays in GON approval
of Delta's request to the Ministry of Aviation for an Abuja-Atlanta
and Lagos-New York routes. Cortelyou is responsible for all route
planning and execution. Cortelyou explained that Delta needs GON
approval prior to the peak summer season (June) or winter
(November-January) season. Delta lamented that it appears that the
Ministry will not approve the route until Nigeria receives its
Category 1 rating from the U.S. Federal Aviation Authority.
(COMMENT: The Ambassador has spent considerable effort explaining to
GON interlocutors and private sector stakeholders that Category 1
certification is not a political tool and separate from their
obligation on Open Skies. END COMMENT.)


3. (SBU) Delta added that these two new routes are part of a broader
Delta strategy to launch 15 new international routes to be
operational by summer 2009, including expanding its base in West
Africa. Cortelyou said Delta has been successful in Africa and the
high growth rate warrants additional flights and routes. Seven of
the eight new Africa flights will take off from Atlanta, including
the first-ever nonstop from Atlanta to Johannesburg, South Africa.
The others make one stop in Dakar, Senegal, or Sal Island, Cape
Verde. The new routes from Atlanta would include service to Abuja,
Nigeria; Monrovia, Liberia; Luanda, Angola; and Malabo, Equatorial
Guinea via Sal Island.

Way Forward
--------------


4. (C) The Ambassador cautioned Cortelyou that time is short and it
is not likely the Ministry will make a decision by April, and that a
decision by September regarding the holiday season is also not
realistic. The Ambassador said she would initiate strong advocacy
with the Ministry on the subject as well as speak to a few airline
contacts. The Ambassador told Delta that the airline might receive
approval for the Abuja-Atlanta route with a little more political
support, but the Lagos-New York route would be hard to sell. The
Ambassador asked Delta to send a letter to the new Minister of
Aviation requesting approval for both routes and then she could
follow-up with advocacy with the Minister. (NOTE: The letter was
sent to the Ministry on January 30, 2009. END NOTE.) The Ambassador
also suggested that Delta meet with members of the National Assembly
oversight committees for aviation to expand their political
supporter. Delta expressed reluctance to do this and noted that the
Open Skies Agreement between the U.S. and Nigeria grants traffic
rights for carriers from both countries to fly into one another's
territory. The Ambassador said she understood this, but that it
would not hurt Delta to get more GON elements on their side. (NOTE:
During the Aviation Safety and Security Civil Aviation Workshop in
November 2008, the Ambassador discussed in both her opening and
closing ceremony remarks the importance of Category 1 to Nigeria, the
eight requirements that must be met, and that it must be earned only
by attaining and maintaining a passing grade for the eight
requirements. END NOTE).

ABUJA 00000204 002 OF 002



Open Skies Agreement and New Routes
--------------


5. (U) In 2000 President Clinton traveled to Nigeria to sign the
Multilateral Open Skies agreement. Open Skies agreement permits
unrestricted service by the airlines of each side to, from and beyond
the other's territory, without restrictions on where carriers fly,
the number of flights they operate, and the prices they charge. The
agreement offers three important benefits:
-- Provides a competition-enhancing model for future agreements;
-- Expands carrier access to equity financing;
-- Streamlines international aviation relations.

Comment
- - - -


6. (C) Delta's merger with Northwest in 2008 makes them one of the
largest airlines; however that prestige does not play well with
Nigeria. The aviation sector is highly political and has been making
noise for the past few years that the Open Skies Agreement is skewed
to the American carriers at the expense of the Nigerian carriers.
The argument is that Nigeria does not yet have a Category 1
certification, so they have to wet lease airplanes to fly into the
U.S. and this expense causes them not to be competitive. At least
three Nigerian carriers have issued plans to fly routes as far as
Texas in the U.S.; however none have launched due to the wet lease
expense. The nature of politics in Nigeria plays into the idea that
Delta's desire for expansion can be leveraged to side-step what the
GON needs to do to meet Category 1 certification. The long time
Director of Air Transport Management, Dr. Imoro Kubor, was recently
promoted to Permanent Secretary of the new Ministry of Aviation. He
is an influential person, and perhaps a supporter, of the idea that
Category 1 can be used for leverage in favor of Nigerian carriers.
His advice can be expected to be well received by the new Minister.
The Ambassador will continue to advocate for Delta; however arguing
the merits of the Open Skies Agreement will not be enough to get the
routes approved.


7. (U) This cable was coordinated with Consulate Lagos.

SANDERS