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DE RUEHNR #4441/01 3180547
ZNR UUUUU ZZH
P 140547Z NOV 07
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 3443
INFO RUEHGV/USMISSION GENEVA 4269
RUEHMT/AMCONSUL MONTREAL 0119
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSDMK/DOT WASHDC
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UNCLAS NAIROBI 004441 
 
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DEPT ALSO PASS TO DOT FOR CONNIE HUNTER AND KEITH GLATZ 
DEPT ALSO PASS TO USTR FOR BILL JACKSON 
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FAA FOR DONNA KRIMSKI 
 
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E.O. 12958:  N/A 
TAGS: EAIR KTIA ECON KE
SUBJECT: Kenya Air Services Negotiations; Questions from Kenya 
Airways 
 
REFS: A) 11/2/07 Reifman e-mail, B) NAIROBI 4252, C) STATE 135337, 
D) NAIROBI 3667 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY.  FOR 
INTERNAL USG DISTRIBUTION ONLY. 
 
¶1. (U) This is an action message.  Please see para 7. 
 
¶2. (SBU) Summary: Kenya Airways sees no real benefit from Kenya 
signing an Open Skies Agreement with the U.S. until Kenya achieves 
Category 1 status.  In fact, it is concerned about the potential 
competition from U.S. airlines that could serve Nairobi if an Open 
Skies Agreement were reached.  End Summary. 
 
Kenya Airways Wary of Open Skies Agreement 
------------------------------------------ 
¶3. (SBU) Econoff met with Kenya Airways (KQ) officials to learn 
their understanding of some of the issues raised in ref A.  They had 
already reviewed the model Open Skies Agreement (OSA) and recognized 
many of the provisions as industry standards.  KQ has not yet 
analyzed the potential commercial impact of an OSA, and has no 
position yet on whether Kenya should sign one.  It would partly 
depend on whether other countries in the region would allow KQ to 
transfer passengers from the U.S. to other African countries via 
Kenya (implementation of the Yamoussoukro Agreement).  However, the 
officials saw no reciprocal advantage in an OSA for KQ until Kenya 
achieves Category 1 status, thereby allowing KQ to apply for direct 
flights to the U.S.  Wet leasing is expensive, and Kenya Civil 
Aviation Authority (KCAA) regulations restrict its use.  Code 
sharing with Northwest or other Star Alliance partners is not 
allowed without Category 1.  KQ officials asked whether the OSA 
could be implemented in stages, but could not specify which 
provisions they meant.  (Note: Econoff told them the entire OSA 
cannot be made provisional or transitional.  End note.) 
 
¶4. (SBU) The KQ officials said KCAA and the Kenya Airport Authority 
(KAA) claim that meeting security requirements for Category 1 and 
direct flights requires completing the new terminal at Jomo Kenyatta 
International Airport, mainly to separate incoming and outgoing 
passengers.  However, the KQ officials claimed that KQ's and JKIA's 
security procedures have been approved by Israeli security officials 
for direct flights to Israel.  Although incoming and outgoing 
passengers mingle in the main concourse at JKIA and on the tarmac 
while walking to/from planes, they suggested KQ and JKIA could meet 
TSA requirements by screening passengers for a flight to the U.S. at 
 
SIPDIS 
the gate, holding them in a sterile area, and then sending them to 
the airplane by shuttle bus. 
 
¶5. (SBU) KQ's current inventory of airplanes and crew would prevent 
KQ from starting service to the U.S. immediately, but at some point 
it might be possible to divert a Boeing 777 to the U.S. route. 
However, the uncertainty of when Kenya will achieve Category 1 makes 
it difficult for KQ to make plans for serving the U.S.  The 
officials agreed that Delta's proposed direct flight to begin in 
June 2008 could benefit KQ by providing passengers for KQ's flights 
to domestic and regional destinations including Mombasa, Zanzibar 
and Dar es Salaam. 
 
Comment 
------- 
¶6. (SBU) The comments and questions from the KQ officials indicated 
KQ is not prepared to support an OSA at this time, and may subtly 
oppose one by raising too many important issues for the Ministry of 
Transportation to ignore.  Absent a more immediate prospect of Kenya 
achieving Category 1, KQ appears to be focused on more urgent 
problems, and would likely postpone the costs of analyzing the 
potential commercial impact of an OSA. 
 
Kenya Airways Questions About Model OSA 
--------------------------------------- 
¶7. (SBU) KQ requests answers to the following questions.  Embassy 
would appreciate answers from concerned Washington agencies. 
 
- Please confirm whether KQ could enter into a code sharing 
arrangement in which a U.S. partner flies the Dakar-U.S. leg and KQ 
flies the Nairobi-Dakar leg before Kenya achieves Category 1.  Would 
 
an OSA affect this? 
 
- Please confirm whether an OSA would allow KQ to code share with a 
U.S. or non-U.S. carrier on flights via Europe before Kenya achieves 
Category 1. 
 
- Would chapter 11 protection or USG subsidies constitute unfair 
competition and fall under Article 12.1.c limits on intervention by 
the Parties to protection of airlines from prices that are 
artificially low due to direct or indirect governmental subsidy or 
support? 
 
- What is the purpose of including a provision on intermodal 
transportation in an aviation agreement?  KQ has no landside 
delivery service, and any prospect of it developing one may excite 
resistance to the OSA from road and rail carriers in Kenya, who are 
unlikely to want to operate in the U.S.  Is the potential benefit to 
U.S. firms worth raising this issue with Kenyan stakeholders? 
 
- Under the Fly America Act, would USG travelers be required to fly 
Delta or any other U.S. carriers' direct U.S.-Kenya flights, or 
could they still choose to fly via Europe on KLM and KQ? 
 
- Would the change of gauge provision require Kenya to allow a U.S. 
carrier to base aircraft in Nairobi to provide onward service to 
other East African destinations, in direct competition with KQ? 
 
- Since Kenya has only one international airline, could it swap 
higher frequency of flights for co-termination and cabotage rights, 
i.e. the right for one flight to serve multiple U.S. points and 
carry U.S. passengers between those points? 
 
- KQ requests clarification of the Fifth Freedom Rights between two 
countries that sign OSA's with the U.S.  Would the U.S. help Kenya 
by encouraging Senegal to allow a KQ flight to the U.S. to carry 
passengers between Dakar and the U.S. and Dakar and Nairobi?  Delta 
appears to be offering this service, which would compete directly 
with KQ's service to Dakar.  Would such an agreement be covered in 
the OSA or in a side agreement? 
 
- Please explain Annex 1, section 2.2, operational flexibility.  How 
can one aircraft operation have two flight numbers? 
 
RANNEBERGER