This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 QUITO 002862 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR PGOV EC
SUBJECT:  ECUADOR - CIVAIR PROGRESS? 
 
SENSITIVE 
 
¶1. (U) Summary.  After lengthy delays, the GOE finally is 
making some progress on bilateral Civair issues.  Within the 
span of one week, Ecuador's civil aviation legislation moved 
closer to congressional vote and the Aviation Council 
approved the GOE's renewal of its Bilateral Civil Aviation 
Agreement with the US.  Renewal of the Bilateral Agreement, 
previously a simple annual process, had languished for five 
months with the Council.  Meanwhile, civil aviation 
legislation has spent almost two years in congress while 
being held up by numerous special interests intent on 
keeping it from passing.  If it makes it through a second 
reading of Ecuador's congress with key provisions intact, 
the civil aviation legislation will be a crucial first step 
toward allowing Ecuador to regain category one status. 
While the legislation addresses category one safety 
concerns, it also creates new opportunities for politically- 
connected economic interests in Ecuador.  End Summary. 
 
COUNCIL APPROVES RENEWAL OF BILATERAL AGREEMENT 
--------------------------------------------- -- 
 
¶2. (U) On December 8, Ecuador's Aviation Council voted to 
renew the Ecuador-US Bilateral Civil Aviation Agreement. 
Members of the Council informed Econoff that it is sending a 
note to the MFA indicating its approval of the renewal. 
Upon receipt of the note, the MFA formally will notify the 
Embassy, ending a five-month delay in the renewal process. 
 
CIVAIR LEGISLATION PROCEEDS TO FINAL DEBATE 
------------------------------------------- 
 
¶3. (U) After almost two years, revisions to Ecuador's Civil 
Aviation legislation were unanimously approved in committee 
on December 1 and are scheduled to head for a second debate 
in January 2006.  If Ecuador wants to regain category one 
certification of its safety oversight system, safety 
provisions acceptable to the Federal Aviation Authority 
(FAA) need to survive this second debate.  The unanimous 
nature of the committee's decision suggests that political 
and economic differences that could water down safety 
components of the legislation might be avoided in the second 
debate.  Ecuador lost category one status in 1994 and with 
it the right for Ecuadorian airlines to fly directly to the 
U.S. and to maintain code-sharing relationships with 
American carriers. 
 
¶4. (U) Congress's first debate on the Civair legislation 
took place in April 2004.  It scrapped key safety provisions 
from a text developed in conjunction with the FAA and was 
motivated by vested interests within the GOE. 
 
¶5. (U) The text of the current legislation, which underwent 
an FAA legal review November 29 - December 1, contains the 
previously-removed safety provisions critical for category 
one compliance.  Rather than creating a new law, it amends 
the two legal instruments governing civil aviation in 
Ecuador:  the Aeronautic Code and the Law of Civil Aviation. 
Most importantly, the provisions separate the functions of 
Ecuador's Civil Aviation Administration (DAC) and the 
Aviation Council.  Currently, the highly politicized 
Aviation Council maintains control over budgets, hiring, and 
safety oversight.  Under the new legislation reviewed by 
FAA, the DAC becomes an autonomous Civair entity that can 
create its own regulations, maintain its own budget, hire 
its own technical personnel, and delegate authority to 
staff. 
 
MUCH MORE NECESSARY FOR CATEGORY ONE 
------------------------------------ 
 
¶6. (U) A number of Civair authorities maintain the 
impression that Civair legislation is the final hurdle to 
obtaining category one status.  In order to quell this myth, 
both Econoff and the FAA legal reviewer, in meetings with 
representatives from the DAC and the Aviation Council, 
emphasized that passage of the Civair legislation will not 
trigger re-instatement of category one.  Still remaining are 
a review of the legislation ultimately passed by congress, 
an FAA technical visit, a review of safety improvements at 
Ecuador's Quito and Guayaquil airports, and a final audit. 
Although assessments by the FAA in 2004 indicate that there 
are no glaring concerns with respect to these safety reviews 
and audits, regaining category one is far from a done deal. 
 
ENTRENCHED INTERESTS STILL A POTENTIAL BARRIER 
--------------------------------------------- - 
¶7. (SBU) Perhaps the greatest obstacles to passage of robust 
Civair legislation are the economic interests that derailed 
the legislation during its first reading in 2004.  The most 
influential of these interests are aligned with the Social 
Christian Party (PSC).  These interests control flight 
frequencies to the US previously used by Ecuadorian 
airlines.  Without category one status, Ecuadorian airlines 
are unable to fly to the US, allowing these actors to "rent" 
the frequencies to companies such as LAN Chile for tens of 
millions of dollars annually.  Passage of the legislation -- 
and a return to category one -- destroys this cash flow. 
 
¶8. (SBU) Politically-appointed members of the Aviation 
Council also oppose FAA-approved Civair legislation.  Under 
the current legislation, the Council determines Civair 
regulations, allowing its members to sell their votes and 
signatures on Civair matters.  The new legislation, by 
creating an autonomous DAC, would limit the Council's 
control over regulations and the economic interests its 
members represent. 
¶9. (SBU) In contrast to the political and economic intrigue 
disrupting the passage of Civair legislation, economic 
interests do not appear to be behind the delay in renewing 
the Bilateral Civil Aviation Agreement.  In discussions with 
Econoff, Andres Cordova, President of the Aviation Council, 
and William Birkett, Director General of Civil Aviation, 
indicated that the delay in approving the renewal of the 
Bilateral Agreement was nothing more than laziness on the 
part of civil aviation authorities.  No evidence exists to 
suggest otherwise. 
 
NEW OPPORTUNITIES FOR ENTRENCHED INTERESTS 
------------------------------------------ 
 
¶10. (SBU) Other provisions, while not related to safety 
matters, create opportunities for others to benefit 
economically.  One such provision grants the DAC the 
authority to determine the commission percentage that 
international airlines would pay travel agencies.  American 
carriers have approached FCS for assistance in this matter, 
concerned that the DAC's involvement would distort the 
market.  While such commissions average 1% in Latin America, 
it is believed that some politically-connected travel 
agencies will be looking for up to 10% in commissions.  If 
the law passes, American carriers would consider stopping 
flights to Ecuador in protest. 
 
¶11. (SBU) Meanwhile, a more autonomous DAC, while reducing 
the influence of the Aviation Council, also would politicize 
the DAC.  Economic interests that gained influence through 
the Council are likely to target the DAC instead.  History 
suggests that a more autonomous DAC will find it difficult 
to elude this pressure, especially if its objective is not 
safety-related aspects of civil aviation. 
 
COMMENT 
------- 
 
¶12. (U) Delays associated with the civil aviation 
legislation and the renewal of the bilateral agreement are 
nothing new in Ecuador.  Both entrenched economic interests 
and institutional laziness can easily preclude action on 
matters that benefit Ecuador as a whole.  Even if 
influential actors bent on stopping the passage of FAA- 
acceptable Civair legislation are overcome, new avenues for 
political influence would surface with the new legislation. 
 
JEWELL