NICARAGUA: CIVIL AVIATION UPDATE

UNCLAS MANAGUA 000711

SENSITIVE
SIPDIS

STATE FOR EEB/TRA
STATE PASS USDOT
HOMELAND SECURITY PASS TSA

E.O. 12958: N/A
TAGS: ECON EAIR ETRD NU
SUBJECT: NICARAGUA: CIVIL AVIATION UPDATE

REF: MANAGUA 1448


1. (SBU) Summary. Representatives of airlines that fly from
Nicaragua to the United States met at the Embassy on July 9
for the Deputy Chief of Mission's quarterly Civil Aviation
Roundtable. Continental, Delta, and TACA airlines attended,
and they described worsening relations with the Nicaraguan
airport authority in areas ranging from personnel to
security. The Government of Nicaragua has increasingly
consolidated airport services under its airport authority,
the Empresa Administradora de Aeropuertos Internacionales
(EAAI),which is run by Orlando Castillo, a loyalist of
President Daniel Ortega. Embassy access to the airport
remains restricted, and the airport administration recently
cancelled its contract with an independent ground handlers'
association, firing the managers and taking over airport
ground handling operations itself. The number of passengers
flying to Nicaragua has remained largely stable in 2009.
Northbound cargo shipments have declined, however, reflecting
decreasing exports from Nicaragua to North America. End
Summary.

AIRLINE AUTHORITIES LESS COOPERATIVE
--------------


2. (SBU) On July 9, representatives of Continental, Delta,
and TACA airlines told the DCM at his quarterly Civil
Aviation Roundtable that while the visible level of security
provided by civilian and military authorities at Managua's
Sandino International Airport remains consistent, the airport
administration is no longer cooperative or transparent in its
dealings with the airlines. The airline reps said that the
airport authority recently stopped providing the airlines
with the training records of newly hired employees as they
are required to do by contract. Continental's representative
added that the EAAI is hiring new people (to handle the
baggage x-ray machines, for example) who are insufficiently
trained and lack customer service skills. Issues with
baggage and cargo theft have subsided, but the airlines
reported that airport authorities have all but stopped
cooperating with them on theft investigations.


3. (SBU) The Government of Nicaragua has increasingly
consolidated airport administration and security under the
EAAI, which is run by Orlando Castillo, a loyalist of
President Daniel Ortega. The U.S. airlines have access to
Castillo, but they say that he rarely addresses their
complaints and as a result they effectively have no one to
complain to. One airline rep described his company's current
position in Nicaragua this way: "Were going to keep flying,"
he said, "but we're suffering."

EMBASSY ACCESS TO AIRPORT REMAINS RESTRICTED
--------------


4. (SBU) The airport authority has not relaxed its
restrictions on Embassy access to the airport, implemented in

2008. We are limited to day passes for diplomatic pouch runs
only, and only with 48-hour written advanced notice. The
Embassy, including the Regional Security Office, has no other
access to the airport. In the case of the arrival of a
high-level USG visitor, limited additional passes would only
be issued after receipt of a diplomatic note. The airport
authority has also attempted to restrict media access to the
airport. During the early days of the H1N1 swine flu
epidemic, the EAAI told the airlines to speak only to Channel
4, the quasi-official TV news outlet of the governing
Sandinista National Liberation Front (FSLN).

GROUND HANDLER CONTRACT ABRUPTLY TERMINATED
--------------


5. (SBU) On May 21, 2009, the Nicaraguan Civil Aviation
authority (INAC - Instituto Nacional de Aviation Civil)
abruptly expelled the airport's ground handlers' association,
Ground Handling Air Service Nicaragua S.A. (GHANSA),from
their airport offices and cancelled their contract. INAC's
decision to terminate GHANSA's contract and fire its managers
was met with strong resistance from the ground handlers, who
have waged a battle with the GON in the media and have asked
for Embassy support. GHANSA claims that the government's
actions were illegal under the terms of its 10-year contract,
and that the airport has kept some ground handling equipment
belonging to GHANSA.


6. (U) INAC revoked GHANSA's operation certificate for what
it called an "evident lack of operational security," basing
its decision on a series of incidents for which it faults
GHANSA. GHANSA admits to several incidents with ground
handling equipment that resulted in damage to aircraft, but
it attributes them to operator error. During a meeting with
Econoff, GHANSA pointed out that the operator of a sanitation
truck that collided with a parked American Airlines jet has
been retained by the airport authority while only GHANSA
managers were fired. GHANSA contends that International
Civil Aviation Organization (ICAO) regulations call for a
ground handler's organization that is independent of the
airport regulatory authority. In addition to illegally
cancelling its contract, GHANSA claims that the airport
authority is now using insufficiently trained personnel,
thereby putting the security of airport operations at risk.
The organization has complained in writing to the ICAO and
the Federal Aviation Administration, in addition to the
Embassy.


7. (U) Following GHANSA's dismissal, the airport authority
took over ground handling operations at the airport and
rehired up to 60% of GHANSA employees to operate the ground
handling equipment. Prior to the creation of GHANSA in 2004,
ground handling at Managua's international airport had been
handled by the airport authority. During the DCM's airline
roundtable, the representatives of the major U.S. airlines
said that ground handling operations at the airport had not
suffered significantly, primarily because most of the
experienced equipment operators were rehired by the airport.
Management of the ground handlers is getting worse, however,
because all of GHANSA's managers were fired and replaced with
new staff.

PASSENGER, CARGO TRAFFIC DOWN
--------------


8. (U) The number of passengers flying to and from Nicaragua
in 2009 is largely unchanged in comparison to 2008. From
2005 to 2008, however, passenger numbers averaged an annual
8% increase. The airlines report that they are seeing fewer
overbooked flights than last year, but are still able to fill
their planes. Through June, air cargo exports from Nicaragua
are down by 8% from the same period in 2008. The airlines
pointed to a decrease in northbound cargo shipments,
reflecting decreased exports of specific items from Nicaragua
to North America. Items typically exported to the U.S.
include articles from the maquila enterprises, as well as
foodstuffs such as fruits, vegetables, and lobster. Despite
volume decreases linked to the global economic crisis, the
airlines reported that their business in Nicaragua remains
profitable.

COMMENT
--------------


9. (SBU) While Post is concerned about the lack of access and
transparency in security operations at the airport, the
airlines are not at this time reporting specific concerns
over their operational security. Post's working relationship
with airport and civil aviation authorities is less
cooperative in 2009 than in 2008, but it is still functional.
Diplomatic notes are generally required where once faxes
would suffice. For the major U.S. airlines that fly to
Nicaragua, business continues, but with less confidence that
relationships are transparent and cooperative. We expect the
FSLN to continue to exert control over crucial sectors of the
economy such as aviation.
SANDERS