US embassy cable - 05CARACAS1974

C O N F I D E N T I A L  CARACAS 001974 
 
SIPDIS 
 
 
STATE PASS TO DEPARTMENT OF TRANSPORTATION 
NSC FOR BARTON 
 
E.O. 12958: DECL: 06/29/2015 
TAGS: EAIR, PREL, VE 
SUBJECT: LIMIT ON AMERICAN AIRLINES' FLIGHTS ROLLED BACK, 
FOR NOW 
 
REF: CARACAS 1833 
 
Classified By: Economic Counselor Richard M. Sanders.  Reason:  1.4(b) 
and (d). 
 
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Summary 
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1.  (C)   The decision by civil aviation authorities to 
reduce American Airlines' (AA) flights on the Miami-Caracas 
route has been suspended at least through the summer.  This 
follows vigorous representations by the Ambassador on AA's 
behalf (including with the office of GOV Executive Vice 
President Jose Vicente Rangel), as well as AA's lobbying 
effort.  We would not be surprised, however, if the issue 
arises again.  End summary. 
 
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GOV Move Leads to Embassy Effort 
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2.  (C)  As reported reftel, on June 13 AA received a letter 
from the National Civil Aviation Institute (INAC) 
unilaterally reducing the number of flights on its 
Caracas-Miami route from four to three per day and directing 
it to advise INAC of what flights it would retain.  (Note: 
the 1953 civil aviation agreement does not impose any 
quantitative restrictions on flights, but merely establishes 
routes.  End note.) 
 
3.  (C)   After being briefed by AA local manager Omar 
Nottaro on the issue, the Ambassador raised it with three 
senior GOV officials:  Rene Arreaza, chief of staff to 
Executive Vice President Jose Vicente Rangel, GOV Ambassador 
in Washington Bernardo Alvarez_ (by telephone), and Jose 
Gregorio Vielma Mora, head of SENIAT, the Venezuelan tax and 
customs authority.  To all three he stressed that the embassy 
was prepared to engage in dialogue regarding the operation of 
the civil aviation agreement if the GOV thought it useful, 
but that he would not recommend to the USG that it allow any 
Venezuelan carrier to add frequencies on the Caracas-Miami 
route to take advantage of the one taken away from AA.  He 
also made it clear that he thought it would be difficult to 
recommend that the FAA engage in any expedited review of 
Venezuela's effort to regain "Category 1 status" in terms of 
its civil aviation safety regime, while this issue was 
unresolved. 
 
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Decision Rolled Back for Now 
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4.  (C)  AA undertook its own efforts, including making 
written submissions and meeting twice with Rangel chief of 
staff Arreaza and with other officials.  On June 22, AA's 
Senior Vice President for Latin America Peter Dolara was told 
by Arreaza and INAC head Col. Giuseppe Yoffreda that there 
would be no changes to flight schedules at least until 
September, the end of the busy season.  However, they made it 
clear that the GOV would continue to study the matter.  And 
in a June 27 meeting with the Ambassador SENIAT head Vielma 
Mora also said that the AA route issue was resolved for the 
time being.  Vielma added that after talking earlier with the 
Ambassador, he had raised it with Rangel, stressing the 
inadvisability of taking this step as the summer season 
begins, and, also, immediately before the GOV's much 
ballyhooed trade event ("macro-rueda") with U.S. exporters 
and importers in Caracas, scheduled for June 30. 
 
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Further Fall-Out 
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5.  (C)  In his conversation with the Ambassador, Vielma 
predicted that INAC chief Yoffreda would lose his position 
over this un-coordinated action.  Later that day, an AA 
executive confirmed to econcouns that Yoffreda had indeed 
left, and was being replaced by his deputy Air Force Colonel 
Francisco Paz Fleitas.  The executive also advised that the 
GOV had asked AA to purchase a stand (for USD 10,000) at the 
trade "macro-rueda" as a sign of good will.  AA had declined 
to pay, but did agree to sell heavily discounted tickets for 
participants in the trade event, which seemed to satisfy the 
GOV. 
 
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Comment 
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6.  (C)  AA is the preferred carrier on the Caracas-Miami 
route with more flights, as well as better connections and 
service.  Local carriers, which do compete on price, still 
have trouble filling their planes.  Thus we can expect that 
they will try again to get the GOV to use regulatory power to 
favor them.  We suspect that they will learn from their 
mistake of relying on mid-level officials, and will lobby at 
higher levels next time unless some kind of amicable 
arrangement to grow the market, rather than to try to 
restrict it, can be found (which we doubt). 
 
7.  (C)  This aviation mini-crisis also provides an 
interesting look at the GOV decision-making process.  For 
this kind of decision, to reverse the ruling of an 
over-reaching bureaucrat, Executive Vice President Rangel 
remains the one man (other than Chavez himself) with real 
power.  Customs and tax chief Vielma Mora's engagement was 
also noteworthy.  A rising star in the Chavista firmament, he 
was confident enough in himself to play outside of his own 
lane.  We do not want to attribute the either Rangel or 
Vielma's roles to any great sympathy for U.S. interests.  The 
fact that the decision to go after AA was made without 
political level clearance (and was so poorly timed) made it 
ripe for reversal, following ours and AA's lobbying. 
Brownfield 
 
 
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      2005CARACA01974 - CONFIDENTIAL