VZCZCXRO7238
PP RUEHRG
DE RUEHSO #0090/01 0571033
ZNR UUUUU ZZH
P 261033Z FEB 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC PRIORITY 7938
INFO RUEHBR/AMEMBASSY BRASILIA 9089
RUEHAC/AMEMBASSY ASUNCION 3322
RUEHBU/AMEMBASSY BUENOS AIRES 3074
RUEHCV/AMEMBASSY CARACAS 0684
RUEHME/AMEMBASSY MEXICO CITY 0835
RUEHMN/AMEMBASSY MONTEVIDEO 2627
RUEHLP/AMEMBASSY LA PAZ 3732
RUEHSG/AMEMBASSY SANTIAGO 2323
RUEHRI/AMCONSUL RIO DE JANEIRO 8604
RUEHRG/AMCONSUL RECIFE 4018
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 3035
RHMFISS/CDR USSOUTHCOM MIAMI FL
RUEAIIA/CIA WASHDC
RHMCSUU/FAA NATIONAL HQ WASHINGTON DC
RUEAYVF/FAA MIAMI ARTCC MIAMI FL
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 03 SAO PAULO 000090 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/EPSC AND EEB/TRA 
STATE PASS USTR FOR KATE DUCKWORTH 
FAA FOR CCAPESTANY, BAHUMADA, GBURDICK 
DEPT OF TRANSPORTATION FOR BHEDBERG 
BUENOS AIRES FOR TSA ATTACHE 
MEXICO CITY FOR TSA ATTACHE MGALVAN 
NSC FOR GTOMASULO 
TREASURY FOR JHOEK 
SOUTHCOM FOR POLAD 
USAID FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: EAIR PREL PGOV ECON EINV BEXP BR
SUBJECT: BRAZIL CIVAIR: AMBASSADOR MEETS WITH US AIRLINES 
 
SENSITIVE BUT UNCLASSIFIED--PLEASE PROTECT ACCORDINGLY 
 
REF: A: BRASILIA 0222 
 B: 07 SAO PAULO 0619 
 C: 07 BRASILIA 2309 
 D: BRASILIA 0094 
 E: 07 SAO PAULO 0915 
 
¶1.  (U) SUMMARY: On February 19 the Ambassador met with 
representatives from U.S. carriers American, Delta, and United 
Airlines to elicit their views on the Sao Paulo International 
Airport Guarulhos (GRU) parking fee dispute, follow up on bilateral 
aviation negotiations, discuss the domestic and international 
markets, and lay out future coordination efforts.  The three 
carriers expressed optimism that ANAC would come to a positive 
resolution on the GRU dispute.  The Ambassador also solicited 
suggestions for future Washington, DC meetings for Defense Minister 
Jobim and ANAC personnel.  Subsequently, the Ambassador met with 
Jobim on Feb. 24 at which time Jobim reconfirmed his view there 
would be a positive resolution to the Guarulhos issue.  END 
SUMMARY. 
 
Guarulhos Parking Fee Dispute 
----------------------------- 
 
¶2.  (SBU) The Ambassador opened the meeting by summarizing the 
Mission's meetings on February 13 and 14 with Defense Minister Jobim 
and the National Agency for Civil Aviation (ANAC) and inquired on 
the airlines' sense of where the dispute is headed (Ref A).  Erli 
Rodrigues from American Airlines (AA) noted that the current team at 
ANAC appears more technically prepared than previous teams, but that 
they overreacted after the July 2007 accident at Congonhas (Ref B). 
The airlines referenced a particularly productive meeting with ANAC 
in late January in which the International Air Transport Association 
(IATA) presented their ideas on possible alternatives.  The airlines 
were confident that ANAC was receptive to their concerns and 
understood that the consequences are more far-reaching than they had 
initially envisioned. (They pointed to ANAC Director Alexandre 
Barros as being particularly helpful.) They also noted that the 
Christmas and Carnival travel seasons went smoothly, which may have 
helped to alleviate the sense of crisis. 
 
¶3.  (SBU) The three international carriers told the Ambassador that 
they are sponsoring an IATA technical study for USD 200,000 
regarding the GRU parking issue, and are confident that study will 
demonstrate to ANAC that there are viable alternatives to increase 
aircraft parking capacity at the airport.  All the airlines agreed 
that the best USG approach at this time was to give ANAC some time 
to work this out, particularly because ANAC is indicating that they 
will have an interim solution announced by the end of March.  That 
being said, the airlines reiterated that as a last resort they have 
"the pieces in place to push quickly and hard if the dispute takes a 
turn for the worse".  The Ambassador requested that they keep the 
Mission abreast of any changes on this issue, but for the time-being 
noted that the USG is inclined not to pursue an antagonistic 
approach. 
 
¶4.  (U) Note: Following the meeting, Rodrigues informed the Mission 
that IATA's Country Manager Felipe Reis reported a successful 
meeting with ANAC and INFRAERO that week.  He noted that ANAC had 
presented results in line with those of the IATA study towards a 
 
SAO PAULO 00000090  002 OF 003 
 
 
positive resolution to the fee dispute.  Reis highlighted INFRAERO's 
positive approach and that it had outlined a contingency plan for 
when GRU's maximum parking capacity of 68 aircraft was exceeded. 
They agreed that the final results of the study would hopefully be 
announced at their next meeting the week of March 3.  End Note. 
 
Bilateral Negotiations 
---------------------- 
 
¶5.  (SBU) The Ambassador provided a summary on the USG-GOB 
discussions over the past two months in the aftermath of the 
December 2007 negotiations (Refs C and D).  In particular, he noted 
conversations with ANAC Director-President Solange Vieira in which 
she indicated that the U.S. airlines (passenger and freight) should 
not be shy about providing their wish-list for additional 
frequencies.  The Ambassador encouraged the airlines to seize the 
opportunity to make such requests known and highlighted that the 
ball is in the industry's court to move forward.  The Ambassador 
shared his sense that consensus on freight negotiations is 
achievable and that the GOB would be open to further discussions on 
code-sharing. 
 
Domestic Market 
--------------- 
 
¶6.  (SBU) The Ambassador noted the recent news about JetBlue founder 
and former President David Neeleman's intentions to enter the 
Brazilian market.  Rodrigues underscored the potential for expansion 
in the domestic market.  Michael Guenther from United Airlines (UAL) 
recalled that Neeleman is close to Brazilian low-cost carrier GOL's 
president Constantino Jr.  However, he was unsure whether it would 
be a private business venture or JetBlue's attempt to enter the 
market.  (Note: According to local press reports, Neeleman was in 
Brazil to negotiate the purchase of 36 small Embraer aircraft. 
Neeleman would target the intermediary market between GOL/TAM and 
the small regional companies, with an eventual hub in 
Viracopos-Campinas Airport in Sao Paulo State.  Because Neeleman is 
a dual citizen, his company would not be constrained by foreign 
ownership limits in the aviation sector.  If news reports are 
accurate, Neeleman intends to begin operation by the end of 2008. 
End Note.) 
 
¶7.  (SBU) Regarding the dominant Brazilian carriers TAM and GOL, AA 
predicted that GOL would soon catch up with TAM's size and 
operations.  Rodrigues highlighted the new relationship between GOL 
and Air France for Paris routes as an example.  The Ambassador also 
solicited views about Brazilian low-cost carrier OceanAir and the 
obstacles it is facing that are preventing the company from scaling 
up to offer more flights and options. Rodrigues noted that German 
Efromovich, the owner of OceanAir, is working with Colombia's 
successful Avianca airline, but did not have particular insights 
about OceanAir's plans in Brazil. 
 
International Market 
-------------------- 
 
¶8.  (SBU) The Ambassador referenced his October 2007 meeting with 
GOL in which Constantino Jr. spoke about the company's desire to 
enter the U.S. market (Ref E).  Guenther predicted that GOL will 
initiate its U.S. expansion by the end of 2008. Rodrigues recalled 
that the Brazilian carriers had to move quickly over the past couple 
 
SAO PAULO 00000090  003 OF 003 
 
 
of months to begin service to Europe to avoid losing those routes, 
but no such immediacy exists for routes to the U.S. where there are 
many unused frequencies still available for Brazilian carriers. 
(Note:  only about one-third of Brazil's 105 frequencies to the U.S. 
are currently being used.  End note.) 
 
¶9.  (SBU) The Ambassador pointed to Portuguese carrier TAP's 
successful new routes linking Lisbon directly to Brasilia and Belo 
Horizonte. Guenther noted that part of their success is due to the 
fact that they use Lisbon as a hub for onward flights to Europe and 
Asia. 
 
Future Coordination 
------------------- 
 
¶10.  (SBU) The Ambassador noted that Jobim will be traveling soon to 
Washington, DC which provided the opportunity for further aviation 
discussions.  The Ambassador recommended that the airlines provide 
summaries of the key issues together with ideas for improving 
coordination between the GOB and INFRAERO.  The three interlocutors 
suggested keeping the communication channels open, noting that 
better, more regular communication between the airlines, INFRAERO, 
and ANAC might have prevented the unfortunate December airport 
parking proposal.  The Ambassador also noted that the Embassy is 
working to get an ANAC team to Washington, DC soon and elicited 
scheduling ideas.  Given UAL's Dulles hub, Guenther offered to take 
the lead in providing eventual ideas and assistance. 
 
¶12.  (SBU) Note: Rodrigues subsequently provided an outline of the 
following communication channels within the industry including three 
active channels:  the Airport Operators Committee, the International 
Airlines Board, and the National Union of Airlines as well as one 
inactive group, the Facilitation Committee, which includes the three 
previous groups plus all other moving parts that are involved in the 
operation of an airport.  End Note. 
 
¶13.  This cable was cleared and coordinated with the Embassy in 
Brasilia and Ambassador Sobel. 
 
WHITE