US embassy cable - 04BOGOTA8907

C O N F I D E N T I A L BOGOTA 008907 
 
SIPDIS 
 
E.O. 12958: DECL: 09/01/2014 
TAGS: EAIR, CO 
SUBJECT: OPEN SKIES AND THE BILATERAL AGREEMENT 
 
Classified By: CDA Milton K. Drucker for reasons 1.4 (c) and 
(d). 
 
1.  (U) Summary.  On 25 August 2004 DCM Milton Drucker and 
Econoff met with Aeronautica Civil (CAA) Director Juan Carlos 
Velez to discuss Open Skies.  Velez requested another one 
year extension of the 2000 agreement because he said Colombia 
was not ready for Open Skies, specifically Open Skies for 
passenger travel.  End Summary. 
 
2.  (C) The 2000 bilateral civ air agreement, which was set 
to expire on 31 December 2003, was extended an additional 
year based on CAA's willingness to conduct feasibility 
studies on Open Skies in 2004.  However, at the meeting Velez 
admitted that no feasibility studies were completed nor were 
any planned in the near future.  The primary reason is 
Avianca's current status under Chapter 11.  If Avianca were 
to exit Chapter 11 by the end of the year, CAA is confident 
it would not be able to compete with U.S. carriers under an 
Open Skies Agreement.  Velez mentioned that Avianca's 
restructuring plan, if accepted, would take months to enact. 
Velez requested the 2000 agreement, specifically paragraphs 
one and three, be extended until 31 December 2005.  Velez 
said Colombia is interested in liberalizing the air cargo 
market and, if possible, in negotiating an Open Skies 
Agreement for air cargo only.  He said Tampa Airlines is 
doing well and would like fifth freedom rights from the U.S. 
to Asia, (TAMPA is currently under investigation for 
corruption and narcotics trafficking).  On the margins, Velez 
informed DCM that Venezuelan carriers are selling airplane 
tickets to the U.S. for USD 150, while providing fuel 
subsidies to Venezuelan carriers and charging U.S. carriers 
international fuel prices, which is taking some market share 
away from Colombia. 
 
3.  (U) DCM told Velez Open Skies should not be viewed in a 
negative light.  DCM noted the success Chilean carriers have 
encountered with Open Skies and that Open Skies will promote 
more business in Colombia and offer the possibility that 
Colombia could become a major business hub between the U.S. 
and South America.  Finally, DCM noted that regardless of 
what happens to Avianca, a foreign company will own it. 
Colombia's interest is in promoting the lowest cost of air 
transport for its businesses and citizens. 
DRUCKER