US embassy cable - 04MADRID2554

UNCLAS SECTION 01 OF 02 MADRID 002554 
 
SIPDIS 
 
EB/TRA/OTP FOR MEGAN WALKLET 
EB/TRA/AN FOR JOE YOUNG 
 
E.O. 12958: N/A 
TAGS: EAIR, ECON, CVIS, SP 
SUBJECT: IBERIA PULLING "MINI-HUB" OUT OF MIAMI; SALVADORAN 
AIRLINE TACA TO BENEFIT 
 
1.  Summary:  Today, Iberia Airlines announced plans to fly 
directly to Guatemala and Panama, avoiding the Miami 
International Airport for "purely financial" reasons, 
beginning in October.  Nevertheless, an Iberia contact told 
us that increased layover time due to new security procedures 
in Miami played heavily in client requests that Iberia have a 
more direct means of traveling between Spain and Europe and 
Central America.  The same Iberia executive acknowledged that 
Florida officials have attempted to enable Iberia to maintain 
its "mini-hub" in Miami.  Although codeshare possibilities 
for traffic between Miami and Central America have been 
offered to a US carrier, Salvadoran carrier TACA might get 
this business (possibly due to antitrust concerns), as well 
as feeder flights from various Central American airports to 
Iberia,s Central American stopovers.  End Summary. 
 
2.  We met with Iberia Airlines International Relations 
Director Elvira Herrero Mateo on July 6 to discuss Iberia,s 
plans to fly directly to several Central America capitals, 
avoiding Miami International Airport.  Herrero said that it 
was "difficult financially to maintain the four aircraft" at 
its "mini-hub" in Miami which currently serves Central 
American capitals and offers at least ten flights on most 
days into Miami.  She also cited increased security 
procedures at the Miami airport as a reason why European and 
Central American transit customers requested an alternative 
to the Miami connection. 
 
3.  Along with the elimination of these connections from 
Miami to various cities in Central America, Iberia will cut 
one of its two daily round-trip flights between Madrid and 
Miami.  Herrero denied that AirMadrid,s new direct flights 
to several Central American cities had any impact on 
Iberia,s decision to serve Central America with direct 
flights.  (Comment:  Currently AirMadrid does not even accept 
passengers originating in Central America:  the trip must 
originate in Spain.  Surprisingly, Herrero did not seem to 
know about this peculiar requirement of AirMadrid.  End 
Comment.) 
 
PLANNED CIRCULAR ROUTE: MADRID TO GUATEMALA CITY TO PANAMA 
CITY TO MADRID. 
 
4.  Herrero described the new "direct" routing as a circular 
one, in which an aircraft will travel from Madrid to 
Guatemala to Panama to Madrid.  When asked why Guatemala City 
and Panama City were selected, Herrero explained that these 
destinations provide the most passengers to Iberia.  Herrero 
added that another airport is being considered as an 
additional stop on Iberia's route. 
 
SALVADORAN AIRLINE TACA WILL CONNECT OTHER MAJOR CENTRAL 
AMERICAN AIRPORTS TO THE IBERIA FLIGHT 
 
5.  It is likely that the Salvadoran airline TACA will 
provide service from other Central American airports to 
Guatemala City and Panama City for passengers to join the 
circular route.  Herrero noted that TACA has an extensive 
Central American network, and is well positioned to connect 
Central American clients to the new Iberia flight. 
 
SOME TRAFFIC STILL TO GO THROUGH MIAMI ON CODESHARE 
 
6.  Iberia still anticipates some Spanish traffic will route 
through Miami.  Passengers could fly from Spain to Miami on 
Iberia, and then board a codeshare flight to their final 
destinations (or vice versa).  Herrero said that Iberia 
approached American Airlines about codesharing American 
flights from Miami to various Central American cities, but 
speculated that antitrust concerns may be preventing American 
Airlines from viewing their proposal positively.  She cited a 
Department of Justice Notice of Action dated 30 April 1998 in 
which the DOJ stated that it will "defer on" its decisions 
regarding "codeshare services between Miami and points in 
Central America" as supporting this speculation. 
 
WILL SPAIN BECOME A TARGET FOR ILLEGAL IMMIGRATION FROM 
CENTRAL AMERICA? 
 
7.  Spain currently does not require tourist visas from most 
Central American countries.  Since Central American travelers 
to Europe typically needed to pass through Miami, US visa 
regulations have generally served as an effective barrier for 
the would-be Central American illegal immigrant to Spain. 
Iberia's new circular route will eliminate this disincentive, 
possibly making Spain a more accessible destination.  The GOS 
has imposed visa requirements for some South American 
countries whose nationals have abused Spain's visa-free 
travel provisions.  We anticipate that the GOS will closely 
monitor immigration patterns as this new route brings 
travelers to Spain from Central America. 
 
8.  Comment:  While one less flight to and from Spain each 
day might seem insignificant, the elimination of Iberia's 
mini-hub in Miami will result in less European and Central 
American traveler stopovers in Florida for tourism, shopping 
and business.  Additionally, for those who still prefer to go 
through Miami on their way to Spain and Europe, it is 
regrettable that a US carrier may be losing the opportunity 
to pick up Iberia,s traffic through a codeshare.  End 
Comment. 
MANZANARES