US embassy cable - 05BOGOTA5569

UNCLAS SECTION 01 OF 02 BOGOTA 005569 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR, CO 
SUBJECT: SUMMARY OF MAY 24-25 MEETING WITH COLOMBIA'S CIVIL 
AERONAUTICS SPECIAL ADMINISTRATIVE UNIT 
 
1.  Summary.  On May 24-25, officials from the Departments 
of State and Transportation (DOT) met with representatives 
from Colombia's Civil Aeronautics Special Administrative 
Unit and the Ministry of Foreign Affairs in Bogota.  The 
U.S. team raised travel agent commissions, internet fares, 
safety and security articles, and a cargo open skies 
protocol.  Colombian officials raised Avianca's request for 
a waiver of the ownership and control provision under our 
bilateral air services agreement (ASA).  End Summary. 
 
2.  The U.S. delegation consisted of Edward T. Smith, 
Director of the Office of Aviation Negotiations of the 
Department of State; Carolyn Coldren and Brian Hedberg from 
the Office of International Aviation of the US Department of 
Transportation, and; Brian Winans, Civair Officer at Embassy 
Bogota.  The Colombian side was led by Civil Aviation 
Authority Director General Fernando Sanclemente; his Deputy, 
Col. Montealegre; Chief of the Air Transport Office Juan 
Carlos Salazar, and; four other officials from the Civil 
Aviation Authority and the Foreign Ministry.  DG Sanclemente 
opened the meetings, but departed quickly and left Salazar 
in the chair for the GOC. 
 
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Travel Agent Commissions 
------------------------ 
 
3.  Colombian regulations require that airlines pay 
Colombian travel agents an 8% commission for any tickets 
sold through them.  The U.S. delegation explained that, 
although not prohibited under our ASA, these mandated 
commission levels represent an unwise intrusion of 
government regulation into the marketplace, increasing costs 
for airlines, and reducing their ability to run their 
businesses the way they see fit.  In addition, the 
commissions represent a mandated transfer of resources from 
one sector to another.  The U.S. delegation noted that while 
the aviation and travel sectors in the rest of the world are 
moving towards deregulation, Colombia is going in the 
opposite direction. 
 
4.  In response, Salazar said the Civil Aviation Authority 
(CAA), the body that regulates travel agency commissions, 
was in a very difficult position.  The issue of commissions 
was well beyond the technical level and had become very 
politicized.  The CAA said it had tried to offer solutions 
in the recent past to offset the effects of high 
commissions, but "radical" positions of one side or the 
other had blocked these attempts.  The GOC's principal 
objective is to keep the legislature from mandating a 
specific commission rate.  The CAA emphasized that the 
travel agent lobby was extremely well-organized, while the 
traveling public was relatively small and affluent and was 
generally perceived as able to afford the additional cost of 
higher commissions.  Thus, Salazar noted, the issue of high 
travel agent commissions would have little public resonance. 
 
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Internet Fares 
-------------- 
 
5.  The U.S. delegation also questioned the GOC's policy on 
carriers offering lower fares through the internet. 
According to the CAA, Colombian law does not prohibit lower 
fares to be offered through the internet, but it does 
require that travel agents be given access to the tickets 
for the same price (while still receiving their 8% 
commission). 
 
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Safety and Security Articles 
---------------------------- 
 
6.  The delegations discussed a USG proposal to add a 
security article to the ASA and to modernize the safety 
article.  The CAA indicated that, to the extent that the 
articles followed language contained in the International 
Civil Aviation Organization Model Air Services Agreement 
(MASA), the GOC would be more likely to accept them.  While 
acknowledging a state's right to suspend, revoke, or 
restrict a carrier's operating authority, the GOC indicated 
a desire to make the commercial effects of an adverse action 
under the safety or security articles "reciprocal".  The 
U.S. delegation said that it would not entertain introducing 
commercial or market "equity" considerations into the safety 
or security articles.  The CAA intends to provide a 
counterproposal for both safety and security articles by the 
end of June. 
 
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Open Skies Cargo Protocol 
------------------------- 
 
7.  The two delegations also reviewed in some detail the 
text of a U.S. draft protocol to the ASA that would 
establish an Open Skies regime for cargo services. 
According to the CAA, some Colombian carriers wish to 
protect certain specific regional markets.  The CAA did not 
name the carriers and the regions, but noted that the 
carriers in question were not interested in serving the U.S. 
market.  The U.S. delegation urged the CAA to examine the 
draft protocol, but noted that cargo Open Skies was a 
package and not a menu of options.  The U.S. delegation 
undertook to provide a Spanish language draft protocol, as 
well as an annotated agreement showing how the bilateral 
agreement would be modified by the protocol. 
 
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Avianca Waiver 
-------------- 
 
8. The CAA asked about the status of Avianca's application 
for a waiver of the ownership and control provisions of the 
ASA.  The U.S. delegation responded that the application was 
under consideration by DOT, that several parties had raised 
objections to a waiver, and that the USG could not comment 
on the ultimate decision at this point.  The CAA explained 
Colombian law obligated the GOC to treat Avianca, despite 
its ownership by non-Colombians, as a Colombian carrier. 
While acknowledging the USG's right to decide the case, the 
CAA said the GOC would be politically and legally obligated 
to terminate the ASA if the DOT were to deny the waiver 
application. 
 
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Next Steps 
---------- 
 
9. The USG side undertook to provide a Spanish language 
translation of the draft cargo Open Skies Protocol, as well 
as an annotated version (English only) of the changes that 
would be made to the ASA by the proposed cargo Open Skies 
Protocol.  The Colombian side undertook to provide the USG 
within one month draft proposed texts for safety and 
security articles for the current bilateral.  The GOC side 
also noted their intent to propose bilateral negotiations in 
the near future for the purpose of liberalizing cargo 
services. 
 
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Comment 
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10.  These technical discussions were useful in several 
respects.  The USG made clear to the GOC the extent of 
industry and USG displeasure with the GOC's onerous mandated 
travel agent commission regime.  Likewise, we clarified for 
the GOC side a number of issues surrounding the essential 
elements of cargo Open Skies, while making clear that Open 
Skies is a coherent package, and not a menu of options from 
which a bilateral partner can choose partial liberalization. 
On the USG proposal to add modern safety and security 
articles to the ASA, we made clear that we would not 
entertain the idea of introducing commercial or economic 
"equity" considerations into safety and security provisions. 
The CAA's positions and reactions to these informal 
consultations revealed that protectionism retains a hold 
over GOC policy, though Colombia appears interested in at 
least some degree of liberalization on the cargo side. 
 
11.  USDEL has cleared this message.