US embassy cable - 05BOGOTA3528

UNCLAS BOGOTA 003528 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR, CO 
SUBJECT: AVIANCA WANTS TO LOWER TRAVEL AGENT COMMISSION 
RATES, TOO 
 
REF: A. 05 STATE 54317 
 
     B. 05 BOGOTA 3076 
 
1.  Sensitive but unclassified.  Business proprietary 
information--please protect accordingly. 
 
2.  (U) Summary.  On April 5, econcouns and econoff met with 
Avianca's president, Fabio Villegas.  According to Villegas, 
Avianca's new management supports efforts to lower travel 
agent commission rates.  In addition, Avianca wishes to 
enhance security cooperation with USG agencies and is 
interested in possible open skies on cargo, but  believes 
that the passenger market is already competitive and local 
carriers would not survive an open skies arrangement.  End 
Summary. 
 
3.  (SBU) Fabio Villegas, the new president of Avianca, is 
optimistic about the airline's request for a foreign 
ownership waiver with the Department of Transportation. 
Villegas noted that Avianca's emergence from Chapter 11 is 
the first step of many on their road to success.  He 
highlighted Avianca's 2004 performance, USD 115 million in 
profits, as an indicator of moving forward.  He also asserted 
that Avianca is working hard on all security-related issues 
to combat narco-trafficking (its shareholders don't want to 
see Avianca back in court).  Villegas added that Avianca 
wished to strengthen current cooperation with USG agencies on 
security issues. 
 
3.  (U) Econcouns discussed Colombia's high travel agent 
commission rates with Villegas, noting that Colombia's 8 
percent rate is one of the highest in Latin America. 
Villegas concurred and claimed that Avianca shares the same 
view of the U.S. and they, too, would like to see the rates 
lowered.  He also commented that no relationship exists 
between Avianca and ANATO, Colombia's national travel agency 
association, regarding travel agent commission rates. 
 
4.  (SBU) When asked about Open Skies, Villegas asserted that 
there was already sufficient competition in the air-passenger 
industry in Colombia.  He added that Avianca prefers the 
status-quo. 
 
5.  (SBU) Villegas had no comments on CAA's new director 
Fernando Sanclemente, the former director of Ports and 
Transportation in the Ministry of Transportation.  Villegas 
did note that Sanclemente was involved as Ports director in 
Avianca's bankruptcy proceedings and had demonstrated 
in-depth knowledge of civil aviation issues.  Both American 
Airlines' and Continental's country representatives were 
positive in their assessment of Sanclemente, noting that 
Sanclemente is close to Manuel Leal, president of Colombia's 
Airline Association (ATAC), (which is against the high 
commission rates). 
 
6.  (SBU) Comment.  As previously reported, CAA does not see 
any linkage between Avianca's request for a foreign ownership 
waiver and American Airlines' request to block the waiver due 
to Colombia's high travel agent commission rates.  Moreover, 
the current management of Avianca agrees with the U.S. view 
on lowering the rates.  As the closest thing to a "national 
flag carrier" in Colombia, that may be a positive thing.  End 
Comment. 
WOOD