VZCZCXRO5423
PP RUEHDBU
DE RUEHKB #0400/01 1351223
ZNY CCCCC ZZH
P 151223Z MAY 09
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 1210
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 3383
RUEHMO/AMEMBASSY MOSCOW PRIORITY 0819
RUEHFT/AMCONSUL FRANKFURT PRIORITY 1897
RUEHIT/AMCONSUL ISTANBUL PRIORITY 0133
RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 BAKU 000400 
 
SIPDIS 
 
COMMERCE FOR DANICA STARKS, EEB/CBA FOR TIM GILMAN, EEB/TRA 
FOR JOHN BYERLY, MOSCOW FAA FOR BRIAN STAURSETH, FRANKFURT 
FOR FRDCD 
 
E.O. 12958: DECL: 05/15/2019 
TAGS: ECON EAIR ETRD ADCO AJ
SUBJECT: AZERBAIJAN: AIRLINES THREATEN TO CEASE BAKU 
SERVICE, THEN PULL BACK 
 
Classified By: Political-Economic Counselor Rob Garverick for reasons 1 
.4(b) and (d). 
 
¶1.  (C) SUMMARY: On April 22, 2009, officials at Baku's 
Heydar Aliyev International Airport announced that a nightly 
curfew, to begin July 2, 2009, would shut the airport from 
0000 to 0700.  Airlines reacted with shock and said they 
might cease operations to Baku, as trans-Atlantic connections 
in Europe would be jeopardized.  Less than two weeks later, 
though, Lufthansa and BMI both announced new timetables that 
accommodate the curfew.  Rumors as to why the curfew was 
enacted range from the First Lady's insomnia to aggressive 
anti-competitive tactics from national carrier Azal.  Even if 
all foreign airlines adjust their schedules, a pending 
950,000 USD lawsuit against Lufthansa for "mental anguish" 
caused by a flight delay in December 2008 continues.  If the 
lawsuit is not resolved according to international legal 
conventions, the carrier may respond by ceasing service, and 
the Embassy's classified pouch, as well as other official 
correspondence and travel, could be affected.  End Summary. 
 
¶2.  (C) On April 22, 2009 officials at Baku,s Heydar Aliyev 
International Airport announced that the airport would begin 
a nightly curfew from 0000 to 0700 each night, effective July 
2, 2009.  The announcement stated that exceptions would be 
made for "state, sanitary  (medical), humanitarian, and 
emergency" flights.  Foreign airlines said the short notice 
was not in compliance with international norms.  At present, 
Austrian, Lufthansa, and Baltic Airlines operate all of their 
flights within the proposed curfew window, and BMI, Turkish 
Airlines, and Aeroflot operate a portion of their flights 
within the window.  Wolfgang Groeger, the Country Manager for 
Austrian Airlines, told participants in an AmCham meeting 
that if the curfew goes ahead, Austrian may cease operations 
to Baku on either a temporary or a permanent basis.  Control 
of the airport is (on paper) now separate from control of the 
airline, but business leaders and foreign airline staff all 
believe that true control of both still rests in the hands of 
Azerbaijan Airlines (Azal) President Jahangir Askerov. 
 
----------------------------- 
PRESERVING WHOSE ENVIRONMENT? 
----------------------------- 
 
¶3.  (U) Rumors abound as to why this curfew was imposed. 
Officially, Azal says the curfew was imposed "to ensure 
convenience and normal rest for Baku residents at night." 
The airport is located 25 km from Baku in a sparsely 
populated area, and most landing aircraft approach the runway 
from over the Caspian Sea.  The road to the airport offers a 
view of land polluted by centuries of oil production. 
 
¶4.  (C) The President's summer cottage is on the shores of 
the Caspian, not far from the airport, and one theory has it 
that First Lady Mehriban Aliyeva (who rumor suggests was also 
behind an earlier ban on automotive window tinting) could not 
sleep and ordered her husband to do something about it.  On 
the other hand, some Baku businessmen say that they suspect 
the curfew may be an attempt by airport authorities to cut 
costs.  Azal has been losing money, laying off some employees 
and not paying salaries to others.  In fact, these 
businessmen say Azal has openly admitted to them the reason 
for the nighttime shutdown is to cut more jobs.  Others point 
to a history of anti-competitive acts by Azal as evidence the 
airline is trying to drive foreign competition out of Baku. 
Those who subscribe to this belief hold that the exits of 
KLM, Swiss, and Emirates in recent years underscore the 
hostile nature of Azal and GOAJ officials.  In the murky 
political environment of Baku, each of these theories is 
plausible. 
 
--------------------------------------------- --------------- 
"WE MAY CEASE FLIGHTS." (PAUSE) "HERE IS OUR NEW TIMETABLE." 
--------------------------------------------- --------------- 
 
¶5.  (U) International businesses, all of which depend on 
regular connections to the outside world, were quite alarmed 
at rumors that some or all western airlines might cease 
operations in Baku.  In response, AmCham's Tourism Committee 
asked Austrian Airlines country manager Wolfgang Groeger to 
 
BAKU 00000400  002 OF 003 
 
 
speak to AmCham members on May 4 about the possible effects 
this ban would have on foreign airlines.  Groeger said that 
while airport curfews are common worldwide, it is generally 
accepted practice to announce them one year in advance to 
allow airlines time to reschedule their aircraft.  Groeger 
explained that because aircraft are so expensive, airlines 
schedule carefully to ensure maximum utilization and minimum 
time on the ground.  Thus, if Baku authorities ask him to 
land several hours later, he does not simply have an extra 
jet on standby.  Austrian must make another jet available at 
that hour by removing it from another route.  This sets off a 
chain reaction in the scheduling system, where another 
aircraft must be substituted for the one that is now moved to 
Baku.  Finally, all these new schedules must be harmonized to 
ensure connections work.  Groeger said that if a flight from 
Baku reaches Vienna after connections to North America have 
departed, customers will choose another airline rather than 
spend a night in Vienna.  This choreography takes time, he 
said, and if Austrian cannot find an available jet at the 
time slot requested by the GOAJ, they may temporarily or 
permanently cease Baku service.  Groeger said no final 
decision has been made by Austrian because they still hold 
hope the GOAJ will grant a delay on this curfew. 
 
¶6.  (C) Lufthansa General Manager for Azerbaijan Hakan Tin 
first pled a similar case to the Embassy, but in a surprise 
move, Lufthansa told EmbOffs this week that it was able to 
swiftly adjust its schedule (its jets will now depart Baku at 
08:00 daily) and has published this new timetable on its 
website.  Similarly, BMI also published a new schedule.  All 
its flights to London were outside the curfew, but the 
flights to Baku, which were not, have now been moved about 
3.5 hours earlier, reaching Baku at 22:50 daily.  Austrian, 
Azal, Turkish Airlines, and Aeroflot have not yet announced 
their new schedules, and it is unclear if they will reduce 
operations. (Turkish flies from Istanbul 21 times per week.) 
 
--------------------------------------------- ------------ 
EVERYTHING'S SOLVED... EXCEPT THAT PESKY $1M OF "ANGUISH" 
--------------------------------------------- ------------ 
 
¶7.  (C) Lufthansa still suffers from a separate problem: an 
ongoing lawsuit which has frozen its local bank accounts, 
making it difficult for the airline to continue to do 
business.  A group of seven angry (and presumably 
well-connected) passengers sued the airline in local court 
after weather conditions and a technical alert forced their 
flight to divert to Ashgabat.  After servicing Ashgabat, the 
flight continued back to Baku.  (The flights normally stop in 
Baku both ways between Frankfurt and Ashgabat.)  The 
passengers argued that the delay had caused them "mental 
anguish" and demanded Lufthansa pay them 100,000 EUR each 
(approx. 955,000 USD total) in compensation.  None of the 
other passengers on board that flight have lodged any lawsuit 
claiming any anguish.  The court has not yet ruled on the 
case but has frozen Lufthansa's local bank account, making it 
difficult for the company to do business.  Lufthansa General 
Manager for Azerbaijan Hakan Tin said there is no basis for 
such a claim in the Warsaw Convention (which limits liability 
in cases of physical injury to approx. 9,300 USD per 
passenger).  Lufthansa has appealed the asset freeze, and Tin 
says that he recently scored a small victory: the Supreme 
Court recently returned this case to the Court of First 
Instance for what Tin called "further negotiation."  Tin says 
Lufthansa refuses to negotiate and insists on abiding by the 
Warsaw Convention.  Local courts have a reputation of being 
easily bought or instructed from atop, and if the court finds 
in favor of the plaintiffs, Lufthansa's frozen assets are 
likely to be disbursed before the case completes the appeal 
process.  In this case, Tin says the airline would consider 
ceasing operations.  He says the worry is not merely the loss 
of the money, but the precedent it sets, opening the door for 
Lufthansa to continue to suffer such losses by vindictive, 
well-connected passengers. 
 
------------------------------------- 
WHAT HAPPENS TO THE CLASSIFIED POUCH? 
------------------------------------- 
 
¶8.  (C) If Lufthansa operations were shut down, the primary 
 
BAKU 00000400  003 OF 003 
 
 
impact to Embassy operations would be a disruption of the 
classified pouch.  Embassy Baku is served by a diplomatic 
courier based at the hub in Frankfurt; that same courier 
continues to Ashgabat on board the same jet.  If Lufthansa 
ceased Frankfurt ) Baku operations, it is not immediately 
clear how the Department would re-route the classified pouch. 
 
¶9.  (C) COMMENT:  The high drama of recent weeks, in which 
the business community and the airlines warned that Baku 
would fall off the map, appears to have toned down.  It's 
unclear if Lufthansa really would cease Baku operations, but 
if they did, the Embassy's classified pouch operations could 
be seriously affected.  Finally, it's also unclear, and also 
unlikely, that these seven passengers are acting on their 
own.  It's more likely they are cogs in a larger machine 
(directed by Azal or some other powerful entity) to send a 
message that Lufthansa has overstayed its welcome in 
Azerbaijan.  End Comment. 
LU