VZCZCXYZ0017
RR RUEHWEB

DE RUEHQT #0986 2891331
ZNR UUUUU ZZH
R 151331Z OCT 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 9491
INFO RUEHBO/AMEMBASSY BOGOTA 7788
RUEHCV/AMEMBASSY CARACAS 3224
RUEHLP/AMEMBASSY LA PAZ OCT LIMA 2849
RUEHGL/AMCONSUL GUAYAQUIL 3853
RULSDMK/DEPT OF TRANSPORTATION WASHDC

UNCLAS QUITO 000986 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EC
SUBJECT: CIVAIR ECUADOR UPDATE: TRAVEL AGENT FEES AND AIRPORT FEES 
 
REFTELS: A) STATE 103467, B)07 QUITO 2168 
 
¶1.  (SBU) Summary.  Per reftel A demarche, Emboffs urged U/S of 
Aviation Guillermo Bernal not to set minimum travel agent fees, but 
Bernal favors regulation to protect small travel agents.  On a 
separate aviation matter, foreign carriers reached agreement with 
the Quito airport concessionaire on airport fee increases over the 
next two years.  End Summary. 
 
Travel Agent Commissions 
------------------------ 
 
¶2.  (SBU) Econoffs and Commercial Counselor met with Under Secretary 
for Aviation and Airports Guillermo Bernal on October 3 to deliver 
reftel A points on travel agent fees.  Bernal listened politely but 
clearly favored continued regulation to protect small travel 
agencies.  Emboff noted that airlines would prefer that the market 
determine the appropriate fees.  Bernal replied that previously all 
travel agencies received a 10% commission, but now many agencies 
receive fees as low as 1%, which he described as "the other 
extreme."  He noted that consolidators sometimes receive as much as 
20% fees.  He suggested that he was trying to allow smaller agencies 
to compete with their larger rivals, looking for a "mid-point" of 
fees that would keep them from being wiped out.  He clearly felt 
that the current 3-4% commission was appropriate, but suggested that 
he would be willing to sit down with airline officials to discuss 
the matter.  He emphasized that he would view this as a negotiation, 
however, and hoped that the airlines would not simply insist on 1% 
commissions without offering any flexibility. 
 
Other Ticket Fees 
----------------- 
 
¶4.  (SBU) Bernal also noted frustration with the airlines over what 
he described as illegal fees imposed on customers.  According to 
Bernal, airlines are charging ticket issuance fees, even though 
travel agents are the ones issuing the tickets and are imposing the 
same fee on clients.  Bernal stated that charging a fee for no 
service or product is illegal. 
 
¶5.  (SBU) Bernal informed Emboffs that the GOE is beginning to 
incorporate airport exit fees into airline tickets.  He stated that 
this would be a phased process, since Quiport - the airport 
concessionaire - would have to adjust to payments arriving every 15 
days rather than instantaneously.  He said that American Airlines 
was the only company to approve the process thus far, but said that 
others would be allowed to follow suit. 
 
Quiport and Airlines Narrow Differences Over Airport Fees 
--------------------------- ----------------------------- 
 
¶6.  (SBU) In the course of the meeting, Bernal also noted that 
airlines have come to agreement on airport fees with the Quito 
airport concessionaire, Quiport (ref B).  Separately, Econoff spoke 
with Quiport CEO Luis Perez, and confirmed that some airlines, 
including U.S. carriers Delta and Arrow Air, had signed "Principles 
of Cooperation" (POC) agreements with Quiport, in which they 
negotiated lower fee payments until the new Quito airport opens in 
2010 (at which time the payments will rise by approximately 15-20%). 
 The airlines that did not sign POCs will pay the 
regularly-scheduled operating fees.  Perez confirmed that all the 
airlines are now paying fees directly to Quiport, and that Quiport 
has had several good meetings since May with the airline 
association.  (Note:  In September 2007 an Ecuadorian court rejected 
the airlines' legal challenge to the Quiport fee increases, and 
subsequently clarified that the airlines could not continue their 
practice of paying the fees, under protest, to the court.) 
 
¶7.  (SBU) Comment:  Bernal apparently sees himself as a mediator 
between competing interests in the Ecuadorian aviation industry.  He 
sought to narrow the differences between Quiport and international 
carriers, and now he seems intent on striking a balance between 
airlines and travel agents rather than letting the market set 
commissions. 
 
 
 
 
 
Hodges