PARAGUAY'S CIVIL AVIATION - SIGNS OF HOPE

UNCLAS ASUNCION 000408 SIPDIS STATE FOR WHA/BSC MDASCHBACH, COMMERCE FOR DOC/ITA LMARKOWITZ, FEDERAL AVIATION ADMINISTRATION FOR FAA/WHO ASABELLA E.O. 12958: N/A TAGS: EAIR ECON EINV ETRD PA SUBJECT: PARAGUAY'S CIVIL AVIATION - SIGNS OF HOPE REF: ASUNCION 0671 ¶1. (SBU) Ambassador Ayalde called on Paraguay's new National Aviation Secretariat (DINAC) President Ceferino Farias June 18 to discuss DINAC's plans to improve aviation safety and expand international carriers' service of Asuncion. Farias explained that DINAC is implementing an action plan based on recommendations from the ongoing audit of the International Civil Aviation Organization (ICAO). Farias highlighted that the most critical observation from ICAO was about irregularities in the flight operational certifications issued to local carriers Aero Regional Paraguay and Fly Paraguay (reftel). Farias observed that he immediately addressed ICAO's concerns by revoking the certifications. DINAC is now working with the local carriers to guarantee that they comply with security and safety standards. ¶2. (SBU) Farias asserted that DINAC will address the ICAO's recommendations and be ready within six months for a full International Aviation Safety Assessment (IASA) from the Federal Aviation Agency (FAA). Farias emphasized that one of his priorities is regaining Class 1 certification for Asuncion's international airport Silvio Pettirossi, and asked for Ambassador's support in moving this objective forward. Farias said that DINAC is receiving technical assistance from ICAO, and would be interested in FAA assistance to comply with all the safety and security requirements. Farias noted that DINAC's long-standing procurement of communications equipment, including a radar (outstanding since 2005) will soon come to fruition, as the Spanish company that won the bid for equipment valued at close to USD 16 million has agreed to adjust technical specifications to account for technological changes. Farias said he is putting the most competent people in key areas, trying to fix "political assignments" of non-technical people to critical positions. (NOTE: Farias comes from within DINAC: an insider with over 20 years in the institution, he is known for efficient and pragmatic management. END NOTE.) ¶3. (SBU) Farias shared his concern regarding the Paraguayan law that mandates a six percent commission to travel agents on all airline tickets (the tourism bill). He said the bill not only violates Paraguay's Open Sky agreements, but is one of the key deterrents keeping international carriers from operating in Paraguay. He explained that conditions are now more favorable to modify the bill, and said DINAC will take the lead in lobbing for a change. Farias remarked that he personally briefed President Lugo about the bill's implications for international carriers. Ambassador Ayalde emphasized that bringing U.S. carriers to Paraguay is one of our commercial priorities, and encouraged Farias' efforts in promoting a modification of the tourism bill. (NOTE American-Paraguayan Chamber of Commerce (AMCHAM) President Victor Gonzalez confirmed to Econoff June 28 that DINAC is engaging the private sector on modifying the tourism bill. END NOTE). When asked about the prospect of concessions, Farias was cautious, and said the DINAC is part of a multi-agency commission led by the Ministry of Public Works assessing the concessionary model. Farias explained that in other countries concessionaires have been given control of all airport operations, except for navigation, and DINAC is in a good position to be a regulator. ¶4. (SBU) COMMENT: DINAC has been undermined by operational inefficiencies due to a well-organized cadre of politically connected and unqualified civil servants. Paraguay's commercial air traffic is growing at an average of 12 percent a year, but Asuncion remains the only capital in South America without a direct flight to the U.S. Farias faces a difficult task in improving airport operations and safety, but his experience and knowledge could prove to be an useful asset in moving forward. END COMMENT. Please visit us at http://www.state.sgov.gov/p/wha/asuncion AYALDE