ERITREA'S NASAIR STRUGGLING TO TAKE FLIGHT

C O N F I D E N T I A L ASMARA 000139


DEPARTMENT FOR AF/EX AND AF/E

E.O. 12958: DECL: 04/29/2019
TAGS: EAIR ECON PGOV PREL ER
SUBJECT: ERITREA'S NASAIR STRUGGLING TO TAKE FLIGHT

Classified By: Ambassador Ronald K. McMullen for reason 1.4(d)


1. (C) SUMMARY: Nasair, a privately owned Eritrean airline,
is gamely attempting to succeed amid Eritrea's atrophying
economy. With no aviation fuel available in Asmara and
almost no tourist or business travelers, the deck appears
stacked against Nasair, which is putting the final touches on
a three-year lease-to-buy contract with Miami's ILFC for a
used Boeing 767. Nasair may manage to stay afloat via
nefarious air cargo charters in the region. END SUMMARY.


2. (C) THE UNFRIENDLY SKIES OF ERITREA
--------------

With Saudi Arabia Airlines halting fights to Eritrea last
year, Eritrean Airlines perhaps down for the count, and the
three remaining international carriers (Yemenia, Egypt Air,
and Lufthansa) all complaining loudly about regime
restrictions and growing mountains of unconvertible Nafka,
now seems an inauspicious time for any airline to be
expanding. Yet Nasair, a private company owned by an
Eritrean businessman resident in Dubai, is planning to expand
its flight network and fleet in the coming year. With almost
no business or tourist travelers, Asmara's main air traffic
seems to be people heading overseas for shopping or medical
care, lucky Diasporans visiting their poor relatives, or
folks illegally emigrating from Eritrea. The Yemenia manager
tells us, "We sell a lot of round-trip tickets that only get
half used."


3. (C) BOEING 767 AND NEW ROUTES TO EUROPE
--------------

Nasair Manager Berhane Mehre told emboff April 27 that the
airline plans to expand into Europe in 2009, adding London's
Gatwick (via Cairo) and Milan (via Rome) to current
destinations of Jeddah, Khartoum, Dubai, and Nairobi. These
new routes are contingent on Nasair's acquisition of a
refurbished Boeing 767 owned by Miami-based ILFC. According
to Berhane, Nasair plans to dry lease (with an option to buy)
a former Air Seychelles Boeing 767 that has seen 12 years of
service. The aircraft is currently being repainted in
Nasair's colors. Once (if) it passes Eritrean civil aviation
inspection, the 767 will join Nasair's aging 737-200 as the
passenger portion of the company's fleet. The 737-200 is
maintained out of Sharjah, according to Berhane, but Nasair
keeps four Ukrainian and Kazakh mechanics on hand in Asmara.
Several foreign aviation experts judge cut-rate Nasair to be
unsafe. "What's more important, your money or your life?"
one foreign airline manager mused.


4. (C) ERITREAN AIRLINES MORTALLY ILL?
--------------

Berhane claims Eritrean Airlines, the country's national
airline, does not have the hard currency to pay for the major
overhaul needed to keep its sole 767 operational. Eritrean
Airlines, like all others serving Asmara, is required to sell
tickets to Eritreans for unconvertible Nakfa. Since very few
non-Eritreans fly Eritrean Airlines, it has almost no foreign
currency. The aircraft has been flown to Israel, Berhane
says, where it was scheduled to undergo a thorough
refurbishment, but apparently the government of Eritrea will
not release scarce foreign currency to allow the airline to
pay the Israeli repair firm. In lieu of payment the Israeli
company may seize and resell the aircraft, Berhane opined,
thereby reducing competition among airlines serving Asmara.


5. (C) SHADOWY CARGO CHARTERS
--------------

Nasair also has two other aircraft, an IL-76 cargo plane
currently in Thailand, Berhane said, that is regularly
chartered for air freight "in the Gulf and elsewhere in the
region." Post does not know whether or not Nasair's IL-76 is
the aircraft of the same model that has been reported to have
run contraband into Somalia. The third aircraft in the
Nasair fleet is of unknown type and is "leased to a group in
Chad," Berhane, suddenly vague, stated.


6. (C) COMMENT: With Lufthansa attempting to fend off a
nasty attack by the government of Eritrea on its station
manager and both Egypt Air and Yemenia drowning in nearly
worthless Nakfa, Nasair is oddly optimistic. Its chairman is
a close friend of President Isaias, who sometimes uses the
Nasair 737 for presidential trips when he can't wrangle a
Qatari Airlines plane from the Amir of Qatar. Clearly,
something other than straightforward economics is involved
with Nasair's calculations. END COMMENT.

MCMULLEN