VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #1802 2291822
ZNY CCCCC ZZH
R 171822Z AUG 06 ZDK
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 7278
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC

C O N F I D E N T I A L MANAGUA 001802 
 
SIPDIS 
 
SIPDIS 
 
FOR WHA/CEN AND EB/TRA 
STATE PASS TO DEPT OF TRANSPORTATION FOR FAA OFFICE OF 
INTERNATIONAL PROGRAM AND POLICY - MEL CINTRON, FAA MIAMI 
IAO FOR MAYTE ASHBY, FAA NICARAGUA DESK OFFICER ANNA SABELLA 
 
E.O. 12958: DECL: 08/16/2011 
TAGS: EAIR ECON NU
SUBJECT: NICARAGUAN CIVIL AVIATION BILL TAKES OFF 
 
REF: A. MANAGUA 01344 
     ¶B. MANAGUA 0937 
 
Classified By: Ambassador P. Trivelli for reasons 1.4 b&d. 
 
¶1. (C) Summary:  On August 3, the Nicaraguan National 
Assembly passed a Civil Aviation bill, pending since 2004. 
The new law establishes an independent civil aviation 
authority, named the Nicaraguan Civil Aviation Institute 
(INCA), which will be governed by a board of directors.  In 
the final drafting of the bill, the Army was given the seat 
originally designated for the Ministry of Defense (MOD).  A 
key benefit to INCA's formation and the updating of civil 
aviation regulations is that it paves the way for Managua 
International Airport to achieve FAA's Category I status. 
Although the law contains new regulations affecting airlines 
operating in Nicaragua, local country managers are pleased 
with the final overall results.  End Summary. 
 
--------------------------------- 
A new, modern Civil Aviation Code 
--------------------------------- 

¶2. (U) On August 3, the Nicaraguan National Assembly passed 
the Civil Aviation bill which had been pending since 2004 
(reftels A and B).  The new law establishes the independent 
Nicaraguan Civil Aviation Institute (INAC) and doubles 
funding for civil aviation.  By bringing Nicaragua's Civil 
Aviation code into compliance with International Civil 
Aviation Organization standards, the law also paves the way 
for Managua International Airport to achieve FAA Category I 
status.  The next step in this process is for Nicaragua to 
host an FAA inspection. 
 
¶3. (C) In a meeting with Deputy PolCouns, MOD staff expressed 
displeasure about not having a seat on INCA's Board of 
Directors.  During the National Assembly debate, the Army 
successfully argued that it be given MOD's seat.  Alvaro 
Miranda, Legal Counsel at the Direction of Civil Aviation 
(DGAC), told econoff that the MOD lost out because it was not 
tracking the legislation closely enough.  They were unaware 
of the proposed change until after its approval.  When 
questioned about the Army's interest in INAC, Mr. Miranda 
responded that the Army often tries to take positions of 
power because they may serve some purpose in the future. 
However, he also stated that the President appoints the 
majority of the members of the Board and, therefore, should 
be able to control policy.  (Comment: Since 1990, the 
Nicaraguan Army, formerly the Sandinista Popular Army, has 
become more professional.  Although as an institution the 
Army has accepted the principle of civilian control, elements 
continue to resist subordination to the MOD.  End Comment.) 
 
----------------------- 
Issues for the airlines 
----------------------- 

¶4. (U) The original bill presented in June 2006 included 
several articles that were objectionable to U.S. airlines, 
including one that fixed the commission airlines pay to 
travel agents at six percent and another that allowed the GON 
to reject airfares set by airlines.  These two were removed 
from the bill, but other articles of concern remain.  One 
proposed by a Sandinista Assembly Member prohibits the 
privatization of national airports.  Vaguely written, the 
article may be interpreted to apply to physical airport 
facilities or, more broadly, to airport management companies. 
 Currently, a private company runs Managua International 
Airport.  Another article allows INAC to establish a floor 
and ceiling for airline fares when it is in "the national 
interest." 
 
¶5. (C) Country Director for Continental Airlines Rodolfo 
Saenz expressed concern about a provision in the law that 
would require airlines to accept payment in Nicaraguan 
cordobas.  Currently, U.S. airlines only take payment in U.S. 
dollars and in turn pay all of their fees to the GON and 
Civil Aviation in dollars.  Switching to cordobas would 
generate exchange costs and might be a roadblock when it 
comes to repatriating profits.  The foreign airlines in 
Nicaragua have decided, for the moment, not to highlight this 
issue as they feel they won a great deal in the removal of 
the articles on commissions and control of airfares.  The 
airlines will continue to quote prices in dollars and 
passengers who insist on paying in cordobas will pay the 
official exchange rate of the date of purchase. 
TRIVELLI