VZCZCXRO6190
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHVB #0073/01 0401156
ZNR UUUUU ZZH
P 091156Z FEB 09
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC PRIORITY 8986
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0969
RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RHMFIUU/FAA WASHINGTON ARTCC WASHINGTON DC PQORITY

UNCLAS SECTION 01 OF 02 ZAGREB 000073 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EEB/TRA, TRANSPORTATION FOR FAA, MOSCOW FOR 
FAA FIELD OFFICE 
 
E.O. 12958: N/A 
TAGS: EAIR ECON HR PGOV
SUBJECT: CROATIA CIVIL AVIATION REFORM: POSITIVE SIGNS BUT 
MANY CHALLENGES TO OVERCOME 
 
¶1.  Summary.  Econoff met with the director of the recently 
formed Croatian Civil Aviation Agency (CCAA) to disQs 
reform of aviation oversight and the IASA proQs.  The 
director appears to have a good grasp of the problems and 
challenges identified by the FAA during their IASA inspection 
last year.  He also has an ambitious timeline and a carefully 
thought out strategy for dealing with each area.  However, 
bureaucratic infighting and turf battles with the old Civil 
Aviation Authority are forcing the CCAA to fight to establish 
its authority as described in the law.  The Agency also faces 
a significant challenge in getting from its current six 
employees to a full staff of 55 by the summer.  Additionally, 
questions loom on adequate funding of the agency, which by 
the summer will rely on industry user fees to function. 
While the CCAA is due to fully take over its mandate in 
March, it is uncertain whether the Agency will have enough 
qualified inspectors and certification administrators on 
staff in such a short time.  End Summary. 
 
¶2.  Former Croatia Airlines executive Omer Pita was named the 
Director of the new Croatian Civil Aviation Agency last fall, 
a full year and a half after the Agency was created on paper. 
 He told econoff that his agency will officially take over 
its full mandate of oversight, regulation, certification, and 
surveillance by March.  To make this plan realistic will 
require a rapid increase in staffing from the current six 
employees, who occupy modern, attractive but almost 
completely empty office space just outside the center of 
Zagreb, to a full staff of 55.  The CCAA has been promised 25 
people from the old Civil Aviation Authority, and they listed 
advertisements two weeks ago for a number of others, 
particularly for qualified technical inspectors.  Pita said 
the initial response to the ads has been very promising, but 
that the Ministry of Transport was dragging its feet in 
naming the 25 from the old authority who would transfer over. 
 He admitted recruitment of pilots to perform flight 
operations certification was proving difficult, as qualified 
current pilots preferred to fly aircraft rather than work for 
the government agency.  He has a plan to hire several 
Croatian pilots, who currently work with foreign air 
carriers, on a part-time basis to fill the required positions. 
 
¶3.  Pita claims the CCAA is fully funded for the first 
quarter and will not be affected by an increasingly unstable 
budget.  Once the Agency assumes its mandate, user fees made 
up of a combination of route charges, ticket surcharges, 
cargo surcharges, and certification issuance fees, will kick 
in and make the CCAA 100 percent industry funded.  The 
economic downturn anticipated for 2009, including reduced 
passenger and cargo traffic, adds an element of risk to the 
agency's funding scenario.  However, its fiscal situation 
will be impossible to judge until it assumes operation and 
its operating costs become more clear. 
 
¶4.  A key area identified by the FAA in its IASA report was 
the fragmentation of aviation oversight in Croatia across 
multiple agencies.  Despite the creation of a CCAA with full 
statutory authority over aviation oversight in Croatia, this 
problem has not been fully addressed.  A new aviation law 
under development in the Ministry of Transport, which is 
being drafted in part by an EU consultant, would at least 
partially solve this problem.  It would allow the CCAA to 
absorb the separate Transportation Inspectorate, which 
previously handled all non-compliance and enforcement issues. 
 However, according to a senior official at the existing 
Civil Aviation Authority, progress on development of this law 
within the Ministry is extremely behind schedule.  He 
complained that, for reasons he could not fathom, the 
Ministry had just engaged a new EU consultant and the process 
was back to square one. 
 
¶5.  Regardless of what finally emerges in the new law, the 
old Civil Aviation Authority within the Ministry of Transport 
will continue to exist, responsible for international 
agreements and aviation policy matters.  According to our 
contact, the office continues to be dysfunctional. 
Applications for new routes from European airlines are 
pending for months with no reply, senior managers lack basic 
experience with the aviation industry, and bureaucratic 
infighting continues to hamper their ability to operate 
efficiently.  They are also not being proactive or open in 
helping the new Agency get on its feet, according to Pita. 
The result has reportedly been a high level of frustration 
with Croatia both from European airlines, as well as EU civil 
aviation authorities. 
 
ZAGREB 00000073  002 OF 002 
 
 
 
¶6.  Comment.  The director of the new Agency presents a clear 
action plan which tracks almost identically the areas of 
concern identified by FAA in the IASA.  His strategy for 
dealing with each area seems reasonable, and he has set an 
ambitious timeline to complete most reforms by June 2009, 
when a European Union aviation safety assessment is due to 
take place.  On paper, the Agency has the mandate and the 
independence to achieve these reforms and function according 
to international standards.  Whether it works in practice and 
can overcome the bureaucratic problems that plagued the 
former authority will not be clear until after March.  We 
plan to conduct monthly visits to the new Agency to track 
Croatia's reform progress. 
BRADTKE