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RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BRASILIA 000297 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/TRA: JEFF HORWITZ, JOEL REIFMAN 
TSA FOR VICKI REEDER, SUSAN HASMAN 
 
SIPDIS 
FAA FOR C. TERE FRANCESCHI, MAYTE ASHBY 
DEPT OF TRANSPORTATION FOR BRIAN HEDBERG 
 
E.O. 12958: N/A 
TAGS: EAIR OTRA ECON BR
SUBJECT:  AMBASSADOR LOBBIES MINISTER OF TOURISM AND CIVAIR 
REGULATORS FOR INCREASED FREQUENCIES TO NORTHEAST BRAZIL 
 
¶1.  (SBU) Summary:  On Feburary 13, Ambassador Sobel, EconCouns and 
Civair Officer met with Minister of Tourism Walfrido dos Mares Guia 
Neto, and National Civil Aviation Agency Director-President, Milton 
Sergio Silveira Zuanazzi, to discuss flight frequency issues and 
tourism development in Brazil, particularly in the underserved and 
underdeveloped Northeast.  Per Embassy's contacts with US air 
carriers operating in Brazil, these airlines seek to expand their 
routes, fairly aggressively in the case of carriers with Miami hubs, 
though more cautiously for those with other US departure points. 
Discussion with the Minister and ANAC President focused on the 
possibility of raising the current 105-slots-per-week frequency 
ceiling and the GOB's desire to attract US investment, especially in 
the travel and hospitality industries.  This cordial meeting will be 
followed up with individual meetings by the Ambassador with airlines 
flying to Brazil from the US, as well as with interested US hotel 
chain operators, to discuss expansion and investment opportunities 
in Brazil.  End Summary. 
 
¶2.  (U) The US carriers flying to Brazil-American, United, Delta, 
and Continental-have fully exhausted their collective allotted 105 
frequencies under the bilateral civair agreement.  However, given 
the recent bankruptcy of Varig-and before it, Vasp and 
Transbrasil-Brazil is currently operating only 28 of its 105 
frequencies, fewer than 27% of its allotted capacity under the 
agreement.  Key Brazilian airlines such as TAM and Gol are 
struggling to deal with recent crises in the domestic market, and 
lack aircraft to devote to long-haul international routes.  This has 
drastically reduced the number of international flights to and from 
the US.  The Ambassador stressed the myriad beautiful locations in 
Brazil that American tourists should and would see, if travel to and 
within the country were made easier and not centered on the south of 
Brazil.  Miami would be just four hours from Brazil's Northeast by 
air.  Instead, flights currently are concentrated in 
capacity-plagued Sao Paulo airports and/or Rio de Janeiro. 
 
¶3.  (U) The Minister agreed with the Ambassador's assessment, and 
added that it is no longer just Portuguese-speaking Europeans who 
are interested in exploring the Northeast; Eastern Europeans are now 
arriving in greater numbers.  The Minister stated that Sao Paulo 
really is the problem right now-Congonhas, in particular (Sao 
Paulo's domestic airport) is operating at over-capacity and with few 
opportunities for expansion of flights.  The Minister made it clear 
that if Brazil were to allow US carriers increased frequencies under 
a renegotiated bilateral agreement, such an accord would not allow 
US airlines to unilaterally expand service to Sao Paulo, either 
Congonhas or Guarulhos, the city's international airport.  (Comment: 
 Congonhas Airport is also beset with infrastructure problems, such 
as excess rubber on the runway, which causes aircraft skidding in 
periods of heavy rain. The runways, therefore, are subject to 
shutdown at any given moment and there is no prospect of getting 
rubber removal equipment in for at least another few months.  Also, 
a third runway due to be constructed to help alleviate the situation 
will not be ready for "at least another two years," according to the 
Minister.  End comment.) 
 
¶4.  (SBU) The Ambassador stressed the idea that expanded air links 
would foster hemispheric integration; the positive aspects of 
liberalizing our bilateral civair regime; and that this could be a 
win-win situation for both countries.  The Minister agreed, 
producing a hefty report written this past year and recently 
released in conjunction with Zuanazzi entitled "Programa de 
Integracao Fisica da America do Sul: Modulo Aereo--Foco Turismo" 
("South American Physical Integration Program:  Air Module--Tourism 
Focus"), which he noted was presented to President Lula in a 
three-hour explanatory session.  Several hundred pages in length, 
 
BRASILIA 00000297  002 OF 002 
 
 
the report details international air traffic within South America; 
between South America and North America; between South America and 
Europe; and between South and Central America.  Based on an IDB 
study, it looks at the "post-Varig crisis" and suggests, among other 
things, granting fifth and even sixth freedoms to selected 
countries. Currently, the countries mentioned are all on the South 
American continent, but the report nebulously refers to "the north" 
for fifth freedom and "the south" for sixth freedom concessions. 
 
¶5.  (SBU) This was not the Ambassador's first meeting with the 
Minister, but it was his first opportunity to meet with Zuanazzi. 
Zuanazzi appears to share a warm, yet somewhat deferential 
relationship with the Minister, having previously served as his 
chief of staff and having been nominated by Mares to head the newly 
created ANAC in late 2005.  Zuanazzi commenced his term a little 
less than a year ago, in March 2006. 
 
¶6.  (SBU) Comment:  While traditionally Brazil has prized the 
principle of reciprocity, post believes that the lure of greater US 
tourism and investment could well entice the GOB into offering us 
increased frequencies, especially for flights to the Northeast.  Now 
that this issue is on the table, it could comprise part of a 
positive agenda to be considered by Presidents Bush and Lula at 
their upcoming meetings in March.  End comment. 
 
SOBEL