TURBULENT RELATIONS BETWEEN NICARAGUAN GOVERNMENT AND

C O N F I D E N T I A L MANAGUA 001073 SIPDIS E.O. 12958: DECL: 2019/11/06 TAGS: EAIR EINV ETRD PGOV NU SUBJECT: TURBULENT RELATIONS BETWEEN NICARAGUAN GOVERNMENT AND AIRLINES REF: MANAGUA 1034; MANAGUA 711; 08 MANAGUA 1448 CLASSIFIED BY: Robert J. Callahan, Ambassador, Department of State; REASON: 1.4(B),(D) SUMMARY -------------- ¶1. (C) Relations between commercial air carriers that serve U.S./Nicaragua routes and the GON's airport authority are worsening. On November 3 a representative of Continental Airlines told econoff that the situation at Managua's Augusto C. Sandino International Airport is becoming "unbearable." We heard similar comments from American, Spirit, UPS and TACA airlines during October's Civil Aviation Roundtable, hosted by the Economic Section. According to these airlines, the GON has increasingly consolidated airport services under its aviation authority (EAAI), now firmly in the hands of Sandinista National Liberation Front (FSLN) loyalists close to President Daniel Ortega. Post access to the airport remains highly restricted since 2008 (Ref C). Airline representatives also described how the EAAI has refused to allow them to conduct audits of ground services, which could result in negative safety and security implications. The upcoming Transportation Security Administration (TSA) inspection of the Augusto C. Sandino Airport, scheduled for December, will provide the airlines an opportunity to air their grievances. Despite these ongoing difficulties, airlines report full flights, with especially large numbers of missionary groups and surfers. GON'S AIRPORT AUTHORITY MISMANAGED, INEPT, AND POLITICIZED -------------- -------------- ¶2. (C) On November 3, Ivan Cortes, Regional Manager for Continental Airlines, told econoff that managing the relationship with EAAI (the Nicaraguan airport authority) is making his job "unbearable," and he believes the relationship will continue to worsen. In October, representatives of Continental, American, UPS, Spirit and TACA airlines told emboffs during the quarterly Civil Aviation Roundtable that EAAI is no longer cooperative--or transparent--in its relations with them. They reported that the GON has increasingly consolidated management of the airport administration and security under EAAI, directed by Orlando Castillo, an FSLN loyalist of President Daniel Ortega. (Comment: Orlando Castillo's father, Orlando Castillo Sr., serves as the Executive Director of Nicaragua's telecommunications regulator, TELCOR, which recently awarded new telecommunications bandwidth to a Russian-Nicaraguan joint venture on dubious grounds. See Ref A. End comment.) According to airline representatives, EAAI is now fully-staffed by FSLN loyalists who possess little or no knowledge of airport management. Moreover, according to the participants at the roundtable, the EAAI is intent on exercising its power in an increasingly autocratic manner. ¶3. (C) Airline representatives told emboffs that keeping their planes on schedule as they negotiate logistical issues with the EAAI is a daily challenge. The American Airlines representative described how it often requires six attempts to elicit a response from EAAI, if one is received at all. Participants also said that EAAI is not investing in needed upgrades for airport operations. The American Airlines representative, for example, described how her firm had recently imported two specialized cargo loading vehicles, 15 dollies, and four small tractors as a result of EAAI's inability to provide sufficient ground-handling equipment. AUDITS REFUSED -------------- ¶4. (C) On May 21, 2009, the Nicaraguan civil aviation authority (INAC) abruptly expelled the airport's ground-handling contractor (GHANSA) from its offices (Ref B). Following GHANSA's dismissal, EAAI directly assumed management of ground-handling operations. Airline representatives told emboffs that since then, their requests to audit ground services have not been authorized by EAAI, including security, baggage services, aircraft fueling, and aircraft cleaning services. The inability of the airlines to audit these services negatively affects their safety record and competitiveness. Ivan Cortes of Continental told econoff that these audits are the industry standard; without them, the airlines are unable to ascertain whether or not they are receiving the services for which they are paying. UPS said they conducted a successful audit in April of 2009, but since then, EAAI management has prevented them from assessing ground/ramp related services. More troubling, EAAI has stopped providing airlines with access to training certificates (for example, x-ray training) that airport security personnel should have on file. Airline representatives also expressed concern over long shifts worked by Nicaraguan Army soldiers who provide airport security, in some cases more than 20 hours. EMBASSY AIRPORT ACCESS REMAINS RESTRICTED -------------- ¶5. (C) EAAI has not relaxed its restrictions on Post's access to the airport, implemented in 2008 (Ref C). We are now limited to day-passes exclusively for classified diplomatic pouch runs, and only with 48-hour written advanced notice. Recently, in October 2009, EAAI denied Post access to the tarmac to deliver the classified diplomatic pouch directly to the airplane. Post has yet to receive its first bill for this service, now provided by EAAI. PASSENGER NUMBERS STEADY -------------- ¶6. (C) Despite the aforementioned problems, airlines that serve routes between the United States and Nicaragua continue to report full flights, with especially large numbers of missionary groups and surfers continuing to visit. Airline representatives said that they have increased ticket sales by lowering prices. They are using smaller planes to keep their operations profitable. In August 2008, approximately 44,000 passengers entered Nicaragua through Augusto Sandino International Airport. In comparison, 42,000 entered in August 2009. In August 2008, approximately 52,000 passengers departed Nicaragua. In comparison, 49,000 departed in August 2009. While the 2009 figures represent a slight decrease, they fall within the historic range over the previous four years. COMMENT -------------- ¶7. (C) The deterioration in the relationship between the airlines and EAAI reflects an ongoing phenomenon, that is, government agencies staffed with FSLN loyalists who have little or no expertise related to their new responsibilities. The upcoming December 9-16 Transportation Security Administration (TSA) inspection of Sandino Airport thus comes at an ideal time to assess EAAI's ability to maintain security. The team's access, however, may be limited as our relationship with EAAI devolves into a pattern of interaction similar to that with the respective airport authorities in Venezuela and Bolivia. SANDERS