VZCZCXRO7011
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHTC #0197/01 0821113
ZNR UUUUU ZZH
R 231113Z MAR 09
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC 2692
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAT/AMCONSUL AMSTERDAM 4189
RUEHMT/AMCONSUL MONTREAL 0462
RUCPDOC/DEPT OF COMMERCE WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC

UNCLAS SECTION 01 OF 03 THE HAGUE 000197 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TRA/OTP AND EUR/ERA 
MONTREAL PASS USICAO 
BRUSSELS PASS FAA CBARKS 
 
E.O. 12958: N/A 
TAGS: EAIR ECON ETRD SENV EU NL
SUBJECT:  NETHERLANDS: UPDATE ON KEY AVIATION ISSUES 
 
Ref:  (A) THE HAGUE 177, (B) THE HAGUE 885 
 
THE HAGUE 00000197  001.2 OF 003 
 
 
¶1. (U) Summary:  The Dutch government and KLM are both keen to learn 
the details of the new U.S. Administration's aviation policy, 
especially as it relates to the Second Stage of the U.S.-EU Air 
Transport Negotiations.  The aviation tax, implemented in July 2008, 
continues to cause controversy and is opposed by the Transport 
Ministry and industry.  The Dutch government is more seriously 
investigating the prevention of bird strikes, particularly in the 
wake of U.S. Airways flight 1549's crash into the Hudson. 
Privatization of Schiphol Airport is opposed by KLM and not even on 
the current Cabinet's agenda.  The airport and its operator are 
experiencing hard times due to the economic crisis and the impact of 
the aviation tax on passenger numbers. 
 
---------------------------------- 
U.S.-EU AIR TRANSPORT NEGOTIATIONS 
---------------------------------- 
 
¶2. (SBU) On February 4, 2009, Senior FAA Rep and Econoff held 
introductory meetings with Dutch Transport Ministry aviation 
officials Ellen Bien, Director for Civil Aviation, Michael Lunter, 
Deputy Head for International Affairs Civil Aviation and Market 
Access, and Jan Busstra, Head of Unit Civil Aviation Safety and 
Security Department.  Regarding the second round of the Second Stage 
of the U.S.-EU Air Transport Negotiations, the Transport Ministry 
officials indicated that the GONL was waiting for the United States 
to make the next move and announce its position.  Emboffs met later 
on March 13 with Dutch MFA Transport Advisor Peter Post who echoed 
his Transport Ministry colleagues' comments in stating the GONL is 
in a holding pattern on this issue at the moment.  He added, 
however, that the United States and the GONL may have to reopen 
their former bilateral Open Skies agreement to address current, 
ongoing discussions within the Kingdom of the Netherlands on 
devolution of the Netherlands Antilles.  At present, the islands 
fall under Dutch aviation law, and thereby EU aviation agreements, 
but should some of the islands gain full sovereignty, the United 
States would likely have to renegotiate Open Skies agreements with 
each individual island. 
 
¶3. (SBU) Emboffs met February 2 with senior KLM officials Willem de 
Jonge, Vice President of Government and Industry Affairs, and 
Michiel Laumans, Director of European Affairs (Brussels office), to 
discuss a wide range of industry issues.  KLM stated that the First 
Stage of the negotiations was the most important for its airline 
because it established the European nationality principle.  As for 
the Second Stage, KLM's top priority is simply for it to be 
successful so that the two sides are not forced to return to the 
First Stage.  KLM believes there is uncertainty surrounding the 
Second Stage, especially in the UK's position, and KLM has concern 
the entire agreement could be nullified if negotiations run out of 
time.  KLM is interested in learning the position of the new U.S. 
Administration and has heard rumors that the U.S. will be less 
likely to allow European airlines to acquire U.S. carriers. 
 
------------ 
AVIATION TAX 
------------ 
 
¶4. (SBU) During the February 4 meeting, Transport Ministry officials 
maintained that the aviation tax (see ref B) is more political than 
it is fiscal, as the tax was included in the three-party coalition 
platform which established the current government.  Transport 
Qplatform which established the current government.  Transport 
Minister Camiel Eurlings (Christian-Democrat - CDA) was 
"energetically" discussing the issue within the Cabinet to voice 
industry concerns that the tax is negatively impacting the sector. 
The Transport Ministry would like to see the tax abolished as soon 
as other sources of revenue can be identified for the Finance 
Ministry (headed by the Labor Party - PvdA).  According to the 
Transport Ministry officials, the tax is clearly causing unintended 
economic and environmental costs that outweigh any financial benefit 
to the Finance Ministry.  While it is difficult to say whether the 
tax will be abolished, because of its political underpinnings, the 
Transport Ministry hoped the tax would be eliminated at least by 
2012 when aviation is to be included in the EU's Emissions Trading 
Scheme (ETS-see ref A). 
 
¶5. (U) In late December 2008, Finance State Secretary Jan Kees de 
Jager sent a letter to Parliament addressing the impact of the ETS 
on the aviation tax. De Jager claimed it was still too early to make 
any definitive assessments and explained how the two measures could 
co-exist at the same time since they have different objectives: the 
aviation tax, while billed as a "green" measure, is simply a regular 
tax while the ETS is an environmental tax.  De Jager indicated that 
 
THE HAGUE 00000197  002.2 OF 003 
 
 
the Economic Affairs Ministry would monitor the first signals of the 
tax's impact on operations at Schiphol, as well as its impact on 
tourism, and report back to Parliament before summer 2009. 
 
¶6. (SBU) In the February 2 KLM meeting, KLM officials insisted that 
the aviation tax should not be billed a "green" tax as some 
politicians have done since there is no evidence the revenue stream 
has been contributing to improving the environment.  KLM was opposed 
to the tax and casts its hope in the public words of Prime Minister 
Jan Peter Balkenende who stated it would be abolished by 2012.  KLM 
also relayed how it had heard from its Transport Ministry contacts 
that the tax was not working out well which is blamed on the Finance 
Ministry.  While KLM lacked concrete data, the officials claimed 
that Schiphol Airport has lost anywhere between 500,000-1 million 
passengers since the tax began on July 1, 2008.  While it is 
difficult to estimate how much of this decrease is attributed to the 
tax or the worsening economy, data suggests passenger numbers are 
rising in neighboring countries' airports. 
 
¶7. (SBU) In a December 18, 2008, meeting, Patricia Epting, Managing 
Director, Atlantic Region, Northwest/Delta Airlines, told Emboffs 
her airline found the tax inappropriate and responsible for 
diminishing passenger numbers at Dutch airports.  Epting also 
praised KLM lobbying efforts which succeeded in convincing the 
Finance Ministry to exempt transit passengers from this tax since 
transit passengers make up KLM's core business out of Schiphol.  She 
did not fault the government for backing KLM on this, even though 
some critics rightfully complain that the tax unfairly targets other 
airlines, because of the central role that KLM plays at Schiphol and 
thus within the overall DQh economy. 
 
 
¶8. (U) According to a March 2009 study conducted by the Dutch 
Association of Travel Agents and Tour Operations, the tax costs the 
Dutch economy, particularly tourism,  EUR 1.3 billion per year, as 
well as a loss of 1 million airline passengers to airports across 
the border.  According to the study, there are 11 percent less 
passengers at Schiphol due to the aviation tax, as travelers have 
chosen other transport methods or other airports just across Dutch 
boarders.  The aviation tax means an income loss for the Dutch 
airports worth EUR 90 million, for the airlines EUR 940 million, for 
Dutch travel agencies and tour operators EUR 120-300 million and for 
other tourism service providers (hotels, restaurants) EUR 83 
million, the study estimated. 
 
------------ 
BIRD STRIKES 
------------ 
 
¶9. (SBU) During the February 4 meeting, Transport Ministry officials 
also asked about U.S. approaches for dealing with bird strikes, in 
light of the January 15 crash of U.S. Airways Flight 1549 into the 
Hudson River.  The Dutch indicated they experienced similar problems 
at Schiphol Airport, particularly with geese, and were hoping to 
learn "best practices" from the United States.  The threat of bird 
strikes is increasingly impacting slot allocations, and the 
Transport Ministry is actively working with the Agriculture Ministry 
on how to address this problem by looking at migration patterns and 
how certain vegetation could help keep birds at bay.  Additionally, 
Transport Ministry officials expressed reservations about the EU 
imposing solutions on how to address aviation safety, security and 
Qimposing solutions on how to address aviation safety, security and 
environmental concerns, preferring to keep these issues at the 
member state level. 
 
----------------- 
STATE OF SCHIPHOL 
----------------- 
 
¶10. (SBU) During the February 2 KLM meeting, KLM officials indicated 
that public ownership of Schiphol Airport has never been a problem 
for the airline.  KLM would, therefore, oppose the airport's 
privatization out of concern more investment under private ownership 
would go into non-aviation components, such as the office complex, 
rather than runways and other infrastructure projects that benefit 
airlines directly.  Transport Ministry officials have repeatedly 
told Emboffs privatization of Schiphol is a dead issue within the 
current coalition government. 
 
¶11. (U) In early January, Jos Nijhuis, new CEO of the Schiphol Group 
(which operates Schiphol Airport), declared in his New Year's speech 
the airport had been severely Q by the economic crisis.  According 
to his data, the number of passenger flights out of Schiphol had 
dropped 1.8% and cargo flights by 1.4% in 2008.  Nijhuis expects 
passenger flights to drop by a further 8-10% and cargo flights by an 
 
THE HAGUE 00000197  003.2 OF 003 
 
 
additional 10%.  Nijhuis blamed the economic crisis as well as the 
aviation tax for the current difficulties facing his company. 
Accordingly, the Schiphol Group will be forced to reconsider its 
current strategy in order to weather the downturn, including 
postponing major new investment projects, such as the renovation of 
departure terminal 3, until April 2009 at the earliest. 
 
¶12. (U) Also in January, Transport Minister Eurlings expressed his 
concern to Parliament about the increasing costs of tickets when 
flying out of Schiphol and announced his Ministry's intention to 
study measures on how to improve the airport's international 
competitiveness.  While he made no mention of the aviation tax in 
particular, he stressed that all measures will be under 
consideration. 
 
 
GALLAGHER