VZCZCXRO1753
RR RUEHLN RUEHVK RUEHYG
DE RUEHDBU #1573/01 2281155
ZNR UUUUU ZZH
R 161155Z AUG 06
FM AMEMBASSY DUSHANBE
TO RUEHC/SECSTATE WASHDC 8378
INFO RUCNCIS/CIS COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 1764
RUEHIL/AMEMBASSY ISLAMABAD 1756
RUEHBUL/AMEMBASSY KABUL 1715
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RUEPGDA/USEUCOM JIC VAIHINGEN GE
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RUEKJCS/JCS NMCC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASH DC
RUEHNE/AMEMBASSY NEW DELHI 1722
RUEHBJ/AMEMBASSY BEIJING 1766
RUEHDBU/AMEMBASSY DUSHANBE 9749

UNCLAS SECTION 01 OF 02 DUSHANBE 001573 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE. NOT FOR INTERNET DISTRIBUTION. 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EAIR EAID TI
SUBJECT: TAJIK AIR STILL NOT SOARING 
 
REF: A) DUSHANBE 1314  B) DUSHANBE 626 
 
DUSHANBE 00001573  001.2 OF 002 
 
 
¶1.  (U) SUMMARY:  On the surface, two recent developments in the 
airline sector appeared to signal forward progress.  However, 
despite opening the long-completed air terminal at Khujand and 
coming closer to leasing two Airbus aircraft, Tajik Air remains 
a protectionist, Soviet-style state-run entity, flying in the 
wrong direction.  Without the modernization and significant 
restructuring donors have long recommended, Tajik Air will 
continue to frustrate Western passengers while lining the 
pockets of a handful in power. END SUMMARY. 
 
BETTER AIRCRAFT INCOMING? 
¶2.  (U)  An August 2 press release announced that state-owned 
Tajikistan State Air (TSA) signed a Memorandum of Understanding 
to lease two Airbus 320 aircraft from the India-based Sister 
Trading Company, according to a representative of the trading 
company.  Under the preliminary agreement, Sister Trading will 
"wet lease" the aircraft, pilots and technical support crew for 
a one-year period, costing Tajik Air $2,500 per hour.  The 150 
passenger aircraft will serve international routes 30 hours per 
month.  Representatives of TSA declined to comment until the 
agreement was signed.  However, according to the Air Code, the 
legislation that regulates Tajikistan's airspace, only citizens 
of Tajikistan are allowed to be a member of crew.  It is unclear 
how an international crew under "wet-lease" would be able to 
operate an aircraft. 
¶3.  (SBU) Tajik Air has long toyed with the idea of leasing 
either Boeings or Airbuses to upgrade their aging fleet of 
Soviet-era Tupelovs and Yaks.  President Rahmonov is rumored to 
want new Western planes flying under a Tajik flag at any cost, 
particularly before Tajikistan's 15th anniversary of 
independence September 9.  Despite much talk about leasing 
Boeings, and several fruitless discussions between the 
government and Boeing's representative in Moscow, TSA 
representatives have not disclosed any concrete plan to lease 
any particular aircraft (Reftel A).  The Sister Trading Company, 
previously reported to be located in Dubai, has undisclosed 
backers, possibly a Tajik businessman looking to capitalize on 
personal connections to Tajik Air. 
 
¶4.  (SBU) The current structure of Tajik Air may be designed to 
serve President Rahmonov's needs first, and the customer base 
second.  At present, Tajik Air has one Tupelov-154M for 
President Rahmonov's trips.  He travels once or twice per month 
on average, costing Tajik Air hundreds of thousands of dollars 
per year.  Were Tajik Air to privatize, as donors and advisors 
have long recommended, President Rahomonov would need to pay out 
of the budget or from the "President's account" for his trips. 
The current organization of Tajik Air makes it possible for 
President to travel for "free" as Tajik Air fully covers the 
President's expenses. 
 
¶5.  (SBU) The European Bank for Reconstruction and Development 
(EBRD) offered Tajikistan a $5 million commercial credit to 
modernize its operations months ago, but TSA has yet to meet the 
audit requirements and fully take advantage of the assistance. 
The EBRD project includes a component for training pilots for 
western carriers, but does not support the wet lease approach to 
upgrading the fleet, due to the high costs.  The EBRD credit 
could also help Tajik Air operate profitably with leased jets. 
However, at an estimated $200-$300 thousand per month each, 
according to the Dushanbe EBRD representative, Tajik Air would 
need to reform business practices and reduce costs by over 50% 
in order to become profitable. 
 KHUJAND AIR TERMINAL OPEN FOR BUSINESS - TWO YEARS AFTER 
COMPLETION 
¶6.  (U) On August 5, Authorities officially opened a new 
international terminal in the northern city of Khujand.  The 
terminal was completed in 2004, but sat dormant due to 
bureaucratic wrangling and political jealously, possibly 
involving the President's family demanding a significant share 
in the company (Reftel B).  Nurullo Usmonov, chairman of 
"Noorafshon", the company that constructed the terminal, said in 
his inaugural remarks that the terminal would provide jobs for 
300 people and hoped to host transit flights with Indian and 
British air companies.  The new international terminal includes 
a zone for duty-free trade, business-center with computers 
connected to Internet, and a mosque. 
 
DUSHANBE 00001573  002.2 OF 002 
 
 
 
¶7.  (SBU) COMMENT:  The opening of the Khujand international air 
terminal and the announcement about leasing Airbuses from a 
little-known trading company do not represent real progress in 
Tajikistan's airline sector, but instead suggest that things 
only happen after the right palm has been greased.  Leasing 
planes under a hurry-up wet lease agreement will ultimately 
hemorrhage money and instead of demonstrating that Tajik Air is 
modernizing, will show the world just how little TSA has managed 
to reform.  END COMMENT. 
HUSHEK