VZCZCXRO9545
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #1091 1770640
ZNR UUUUU ZZH
R 260640Z JUN 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 2703
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS COLL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RUEANHA/FAA NATIONAL HQ WASHINGTON DC

UNCLAS JAKARTA 001091 
 
SIPDIS 
 
DEPT FOR EEB/TRA/OTP KGUSTAVSON 
FAA FOR FAA/API 
SINGAPORE FOR MARY WALSH 
BANGKOK FOR MARK DUNN 
DEPT PASS USTDA DROSSITER 
 
E.O. 12958: N/A 
TAGS: EAIR ECON SN TH ID
SUBJECT: USTDA GRANT FOR AVIATION SAFETY - ANOTHER POSITIVE STEP 
 
REFS: A) 08Jakarta2304 
B) 08Jakarta775 
C) 07 Jakarta 3249 
D) 07 Jakarta 1077 
 
¶1. Summary: The U.S. Trade and Development Agency (USTDA) awarded 
$341,000 in grant funds to Indonesia's Directorate General of Civil 
Aviation (DGCA) to enhance the safety and security of the country's 
aviation sector.  The technical assistance grant is the latest 
effort to bolster the civil aviation regulatory authority and help 
Indonesia meet international standards for aviation safety.  DGCA is 
making progress in reforms and is receiving assistance from the 
Federal Aviation Administration (FAA), Australia, Japan, the 
European Union (EU) and the International Civil Aviation 
Organization (ICAO).  However, the Indonesian government and 
airlines remain stung by the EU ban on Indonesian airlines, and to a 
far lesser extent by the 2007 FAA downgrade to Category "2" (Ref D). 
 The USTDA grant will help DGCA develop a plan for meeting 
international safety standards, but will not cover implementation 
costs.  The restructuring and strengthening of DGCA's regulatory 
capabilities will foster continued growth in Indonesia's aviation 
sector and provide opportunities for U.S. business.  End Summary. 
 
USTDA grant - a critical part of the solution 
--------------------------------------------- 
¶2. Ambassador Hume and DGCA Director General Herry Bakti signed the 
$341,000 grant agreement on June 23 at the Ministry of 
Transportation.  The USTDA grant will fund a review of the DGCA's 
current operations, make recommendations to strengthen its 
regulatory authority, and develop an implementation plan for the 
DGCA to comply with international standards for aviation oversight 
and regulation.  The recommendations and plans will provide an 
over-arching logic and path forward considering the ongoing DGCA 
reforms, the new civil aviation law, and the myriad of assistance 
efforts. 
 
¶3. The FAA, Australia, Japan, EU, and ICAO are all engaged to help 
the DGCA become an effective aviation safety regulator.  The FAA 
provides on-going technical assistance to the DGCA and most recently 
focused on runway assessments at the airports in Bali and Jakarta. 
In the past year, FAA and Post organized an exchange program through 
the International Voluntary Visitor Leadership Program for DGCA 
staff to meet with counterparts in the U.S.  Australia, the largest 
donor in the sector, has a $22 million assistance program that 
includes building capacity for DGCA in aviation planning, air 
navigation services, safety, and training for air traffic 
controllers and technicians.  Japan, EU, and the International Civil 
Aviation Organization (ICAO) are other partners with projects and 
assistance to improve aviation safety and security in Indonesia. 
 
Why do they need help? 
---------------------- 
¶4. DGCA, as the regulatory authority, and the airport infrastructure 
have not kept pace with industry growth.  The Indonesian aviation 
sector ballooned after deregulation in 1999 -- currently there are 
51 air carriers, 16 of which are passenger service airlines. 
Several high-profile, fatal passenger aircraft accidents put 
Indonesian aviation safety under increased scrutiny.  In April 2007, 
FAA downgraded Indonesia to Category "2" status due to concerns 
about the DGCA's safety oversight of air carriers.  In June 2007, 
the EU followed suit and banned all Indonesian airlines.  The 
Indonesian reaction has been more negative toward the EU ban than 
the FAA downgrade because of the EU ban's economic impacts and the 
manner in which the ban and the exemptions process have been 
handled. 
 
EU Ban and FAA downgrade - looking forward 
------------------------------------------ 
¶5. The Indonesian government is seeking exemptions to the EU ban for 
individual airlines including for state-owned Garuda Airlines. 
After over a year of attempts, the DGCA is cautiously optimistic 
that an upcoming EU parliamentary meeting will approve exemption of 
some airlines from the EU ban.  In the coming year, the FAA 
downgrade may get more attention.   As a result of the 2007 FAA 
downgrade of Indonesia's safety oversight from Category "1" to 
Category "2", Indonesian airlines are prohibited from flying to the 
U.S.  To date, this has been a non-issue because no Indonesian 
airlines fly to the U.S. (Note: Garuda Airlines last flew to Los 
Angeles in 1997.)  However, Garuda aspires to resume flights to the 
U.S. in the next one to two years using recently secured, but not 
yet delivered, Boeing 777 jets.  The DGCA will have to overcome 
significant hurdles for FAA reconsideration once Garuda or another 
Indonesian airline is ready to fly to the U.S.