VZCZCXRO1172
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #0931/01 0912247
ZNR UUUUU ZZH
R 012247Z APR 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 4117
RUEANHA/FAA NATIONAL HQ WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
INFO RUEHZS/ASEAN COLLECTIVE
RUEHKO/AMEMBASSY TOKYO 0435
RUEHBY/AMEMBASSY CANBERRA 0601

UNCLAS SECTION 01 OF 03 JAKARTA 000931 
 
SIPDIS 
 
SIPDIS 
 
DEPT ALSO PASS NTSB FOR MACINTIRE/BENZON/ENGLISH 
DEPT FOR EAP/MTS AND EB/TRA/AN 
SINGAPORE FOR FAA-WALSH 
 
E.O.  12958: N/A 
TAGS: EAIR ECON ETRD ID
SUBJECT: INDONESIA - CIVIL AVIATION UPDATE 
 
REF: JAKARTA 12825 
 
¶1.  (U) Summary.  On March 22, the Directorate General for Civil 
Aviation (DGCA) unveiled a new, three-tier rating system for 
Indonesian Airlines that places the majority of domestic carriers in 
the middle, or "not fully compliant" category, including state-owned 
Garuda.  Despite complaints about the ranking system's methodology, 
the newly installed Director General for Civil Aviation, Budhi 
Suyitno, told us on March 23 that the DGCA is committed to imposing 
sanctions on airlines that could not meet safety standards.  Suyitno 
added that state-owned transportation insurer Jasa Rahardja may pay 
for the recovery of wreckage of Adam Air KI-574, possibly speeding 
up the stalled recovery process.  The Inspector General at the 
Ministry of Transportation and former Director General (DG) for 
Civil Aviation told us the same day that he has recalled all 100 
principle maintenance and operation inspectors from the field in 
order to reduce conflicts of interest in the airline inspection 
process.  A new Ministry of Transportation "roadmap" for improving 
aviation, sea, road, and rail safety is short on detail, but 
includes proposals to more accurately reflect safety costs in the 
airline tariff structure, impose stricter sanctions on 
non-performing airlines, and improve regulation governing airports 
and airport management.  Australia is developing an Aus$ 10 million 
aviation safety assistance program that may feature multiple 
workshops with Indonesian and Australian aviation safety officials, 
the development of a joint action plan on safety solutions, and 
training.  End Summary. 
 
Airline Rankings - Questions about Methodology 
--------------------------------------------- - 
 
¶2. (U) Indonesia's civil aviation authorities are under intense 
pressure to improve aviation safety after three serious air 
accidents in as many months.  In response, the DGCA unveiled a 
three-tier rating system for domestic airlines on March 22, ranking 
more than 40 large and small domestic passenger, charter, and cargo 
carriers.  The DGCA system describes the three categories as 
follows: 
 
--Category 1: Airline has met all the requirements of civil aviation 
safety regulations. 
 
--Category 2: Airline has met very minimal requirements of civil 
aviation safety regulations, but some requirements have not been 
implemented. 
 
--Category 3: Airline has met minimal requirements of civil aviation 
safety regulations, but some requirements have not been implemented, 
which may reduce safety levels. 
 
¶3. (U) No Indonesian airline qualified in the top category.  Ten 
passenger airlines, including national carrier Garuda, met Category 
2 requirements.  The DGCA placed two significant carriers in 
Category 3:  Adam Air, which has had both a fatal crash and hard 
landing so far in 2007, and Batavia.  According to a DGCA media 
release, Category 3 carriers will face administrative sanctions and 
will be given a total of nine months, in three month increments, to 
improve safety standards.  If the airline has not demonstrated 
sufficient improvement after the final three-month period, the DGCA 
may revoke the airline's operating license. 
 
¶4. (SBU) Indonesian carriers, independent aviation observers, and 
the media have criticized the ranking system, mostly on the grounds 
that the DGCA has not demonstrated clearly how the safety systems of 
carriers in one category differ from those in other categories.  Air 
carriers have called the assessment criteria "dubious" and 
"inconsistent" in recent media reports.  Some carriers have publicly 
challenged their ratings, and the Indonesian Consumer Foundation 
(YLKI) has called on the DGCA to clarify ratings criteria for 
consumers.  The DGCA also faces skepticism about its ability to 
actually revoke the operating licenses of air carriers, a step it 
has yet to take for a functioning airline.  DGCA officials tell us 
revoking airline operating licenses is extremely difficult under 
current regulations and will entail a lengthy legal battle with 
politically well connected airlines. 
 
The New Team at DGCA 
-------------------- 
 
¶5. (U) We paid a March 23 courtesy call on newly appointed DG Budhi 
Suyitno, with Mary Walsh, the Federal Aviation Administration's 
(FAA) Regional Representative for South East Asia, to discuss the 
DGCA's airline rankings and other aviation issues.  Suyitno said the 
DGCA had based its airline rankings on ICAO criteria, but did not 
elaborate further on the rating criteria or the form administrative 
 
JAKARTA 00000931  002 OF 003 
 
 
sanctions would take.  He said the DGCA also plans to evaluate 27 
international airports by the "middle of 2007."  Suyitno inquired 
about the possibility of FAA training programs available to DGCA. 
Walsh replied the FAA is willing to help Indonesia improve 
transportation safety, but the FAA would first need to conduct a top 
down technical review with Indonesia before offering aid or 
training. 
 
¶6. (SBU) Suyitno also commented that state owned transportation 
insurer, Jasa Rahardja, may provide funds for recovery of the 
wreckage of Adam Air KI-574, which crashed into the Sulawesi Sea on 
January 1, 2007.  Suyitno said estimates for deep water recovery top 
$1 million USD per week with a 2-3 week expected recovery operation, 
and ROV and recovery ship platforms are in short supply and booked 
months in advance.  Our sources at the National Transportation 
Safety Commission tell us negotiations for recovery are currently 
stalled due to calls by Adam Air for deeper discount and a 
contractual guarantee of recovery. 
 
Former DG says no "Quick Fixes" 
------------------------------- 
 
¶7. (SBU) In a separate meeting, the Ministry of Transportation's 
Inspector General (and former DG for Air Communications), Moh. Iksan 
Tatang, agreed there are no "quick fixes" to Indonesia's civil 
aviation safety problems and solutions will require deep engagement 
at all levels of civil aviation.  Tatang repeated themes he 
emphasized during his tenure as DG, including the need for greater 
discipline among air carriers as well as the importance of reducing 
conflicts of interests in the airline inspection process.  He noted 
Indonesia's civil aviation sector grew 600% from 1999 to 2006, with 
no appreciable increase in inspectors or inspection authority, and 
that domestic carriers often employ as pilots the same DGCA pilot 
inspectors charged with inspecting them.  Due to the lack of DGCA 
simulator facilities and training planes, pilots must fly with 
domestic carriers in order to remain up to date with the required 
training.  Further moonlighting is encouraged by the acute shortage 
of qualified pilots in the domestic market. 
 
¶8. (SBU) Other parts of the inspection process face serious 
conflicts of interest, Tatang continued.  Currently 100 principle 
airline operation and maintenance inspectors are spread throughout 
the archipelago, each of whom works 2.5 days a week in each of two 
assigned airlines with little supervisory oversight.  Inspectors are 
stretched thin and receive an approximate salary of $100 USD per 
month.  Tatang candidly admitted that inspectors also receive up to 
$1000 USD per month in "incentives" from each airline they cover, a 
serious conflict of interest that leaves inspectors with very little 
loyalty to DGCA and aviation safety.  He added that inspectors are 
often willing to overlook minor problems and give airlines one to 
two months to fix major problems rather than ground unsafe planes. 
In response to the system's problems , Tatang said he had pulled 
back all 100 inspectors to DGCA headquarters in order to redeploy 
them on short rotations among a number of domestic carriers.  Tatang 
acknowledged carriers are understandably not pleased at the loss of 
their close relationship with their previously dedicated, in house 
inspectors, and confided he believes this is the reason he was 
pushed out of his position as Director General. 
 
Roadmap for Transportation Safety 
--------------------------------- 
 
¶9.  (U) Suyitno also gave us a copy of a recently published Ministry 
of Transportation "National Transportation Safety Improvement 
Roadmap". The roadmap is based on recommendations of a presidential 
team on transportation safety and security.  Although short on 
detail, the roadmap very broadly identifies some of the major 
problems in the civil aviation sector.  Among other issues, it calls 
for: 
 
--Impose minimum tariff levels reflecting pricing of safety costs, 
including maintenance and training costs.  (Note: It is not yet 
clear whether DGCA will acquire the necessary enforcement authority 
to ensure airlines will spend additional safety funds on safety. 
End Note) 
 
--Revisions to regulations on the age of planes entering service in 
Indonesia's aviation market.  (Note: Although the roadmap does not 
specify a maximum age/number of cycles for aircraft entering (leased 
or owned) the Indonesian civil aviation market, there have been 
recent calls for a 10 year maximum. This proposal is not feasible as 
it would eliminate approximately 80% of Indonesia's approximately 
210 large passenger aircraft.  End Note) 
 
--Separate Air Traffic control from Airport Authority 
 
JAKARTA 00000931  003 OF 003 
 
 
 
--Increase infrastructure investments to upgrade radar systems, 
instrument landing systems, and construction and improvement of 
runway, taxiways, and aprons 
 
Australian Engagement 
--------------------- 
 
¶10. (SBU) We also met with David Ramsey and David Barron, from the 
Australian Department of Transportation, to learn about Australia's 
plans for engagement in the civil aviation sector.  Ramsey told us 
Australia has offered Indonesian Transportation minister Hatta 
Rajasa an Aus$ 10 million assistance package which will likely 
include multiple workshops with Indonesian and Australian officials 
to gauge the scope of Indonesia's civil aviation safety problems, 
the development of a joint action plan on safety solutions, and 
assistance with projects and training.  Ramsey told us Australia is 
not willing to provide one-off grants or donations of equipment in 
the package because they believe a solution will require deeper 
structural reforms. 
 
¶11. (SBU) Comment:  Indonesia's recent wave of fatal crashes and 
hard landings has shocked the GOI, the flying public, and the civil 
aviation establishment.  For the first time, the majority of our 
interlocutors in the DGCA, as well as independent observers, agree 
that meaningful reform of Indonesia's troubled civil aviation safety 
system will require a number of tough decisions by the GOI.  The key 
challenges will be increasing the authority, professionalism, and 
remuneration levels at the DGCA, and instilling a culture of safety 
in Indonesia's air carriers and airport operators.  Related to this 
will be reducing the exercise of political influence, and 
opportunities for informal payments, in the regulatory process. 
Another problem will be strengthening DGCA oversight over 
state-owned airport operators Angkasa Pura I and II, both of which 
are mandated to maximize profits and report directly to the State 
Ministry of State-Owned Enterprises.  The GOI will also need to 
grapple with a number of infrastructure issues: Despite rapidly 
increasing revenues from passenger service charges, AP has failed to 
make necessary investments in runways, airport facilities, or 
equipment, a dangerous state of affairs in a country with majority 
short haul flights and 50% of accidents occurring on landing. 
Although the Ministry of Transportation's roadmap touches on many of 
these issues, it will likely take some time, and assistance from the 
U.S. and other countries, for Indonesia to come up with a realistic 
plan for putting its civil aviation sector on a more solid safety 
footing. 
 
Heffern