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Cablegate: Civair: Safety Issues Could Result in European Blacklist Of

VZCZCXRO5918
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHHI #0814/01 1960345
ZNR UUUUU ZZH
R 140345Z JUL 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 8132
INFO RUEHHM/AMCONSUL HO CHI MINH 4917
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEHZS/ASEAN COLLECTIVE
RUEHFR/AMEMBASSY PARIS 0516
RUEHBS/USEU BRUSSELS

UNCLAS SECTION 01 OF 02 HANOI 000814

SENSITIVE
SIPDIS

DEPT FOR EEB/TRA/AN AND EAP/MLS
SINGAPORE FOR FAA MARY WALSH
MANILA FOR TSA SCOTTIE R. LAIRD

E.O. 12958: N/A
TAGS: EAIR ETRD ECON BEXP KTIA VM
SUBJECT: CIVAIR: SAFETY ISSUES COULD RESULT IN EUROPEAN BLACKLIST OF
VIETNAM AIRLINES

HANOI 00000814 001.2 OF 002


(U) This cable is sensitive but unclassified and not for internet
distribution.

1. (SBU) Summary: U.S. aviation experts from the FAA, Boeing, and
Robinson Aviation met with officials of the Civil Aviation
Administration of Vietnam (CAAV) and Vietnam Airlines. The team
discussed the results of a December 2007 civil aviation safety audit
conducted in Vietnam by the International Civil Aviation
Organization (ICAO), and the resumption of a technical assistance
project to help Vietnam upgrade its civil aviation safety posture.
The ICAO audit finds serious shortcomings in Vietnam's civil
aviation safety oversight system. The FAA cited safety checks in
Paris on Vietnam Airlines' Boeing 777s and rumors that the EU may
blacklist Vietnam's air carriers. A European ban could damage
Vietnam Airlines' business plan, including purchases of Boeing
aircraft, and Vietnam's tourism and investment climate. A CAAV
official recommended high-level intervention by the Embassy with the
Minister of Transport to underscore the seriousness of Vietnam's
civil aviation regulatory issues and to urge an increase in funding
and staffing for the CAAV. End summary.

2. (SBU) From July 8-11, 2008 a team of aviation experts from the
FAA, Boeing, and Robinson Aviation, a technical contractor for the
U.S. Trade and Development Agency (TDA), traveled to Vietnam to meet
with officials of the Civil Aviation Administration of Vietnam
(CAAV) and Vietnam Airlines. The team discussed the results of a
December 2007 Universal Safety Oversight Audit (USOAP) conducted in
Vietnam by the International Civil Aviation Organization (ICAO), and
the resumption of a technical assistance project to help Vietnam
upgrade its civil aviation safety posture. According to a report of
the ICAO audit, which is not yet publicly available but which ICAO
will make public in September, Vietnam has serious problems with its
civil aviation safety oversight system.

SOURCES SAY EUROPE MAY BLACKLIST VIETNAM AIRLINES
------------------------------------------- -----

3. (SBU) According to the ICAO report, which the CAAV provided to
the Embassy, the CAAV has insufficient resources to hire and retain
qualified inspectors and experienced aviation safety technical
staff. The report says that Vietnam's national civil aviation law
does not empower the CAAV to regulate and oversee aviation safety,
including inspections of aircraft and aviation facilities. (Note:
Boeing and RVA sources told Econoff that the GVN has imposed a
170-employee limit on the CAAV. The CAAV also has no fulltime
inspectors. By comparison, Miami International Airport has 400 FAA
inspectors. End note). The ICAO report cites other shortcomings,
including weak oversight over airport safety operations, unclear
lines of responsibility, poor record keeping, a failure to conduct
medical assessments on pilots, improper handling of hazardous goods,
unlicensed personnel, the absence of a safety management system or
accident prevention program, and other issues. The ICAO USOAP audit
examines sixteen annexes and CAAV had issues in every annex.

4. (SBU) Although ICAO has no enforcement powers per se, the audit
is significant because aviation regulators around the world rely on
ICAO reports in their own evaluations of whether states are carrying
out their aviation safety obligations. According to the FAA,
airport authorities in Paris, presumably tipped off by USOAP
inspectors, have recently been conducting ramp safety checks on
Vietnam Airlines' Boeing 777s and have confirmed a number of
violations contained in the ICAO report. The FAA cited rumors that
Vietnam Airlines could be the next carrier to join a growing list of
airlines banned from European airspace. In 2007, after ICAO
conducted an equally poor audit in Angola, the EU blacklisted
Angola's national flag-carrier, TAGG, shortly after Paris airport
authorities began conducting similar ramp checks. In 2007, the EU
also banned all 51 Indonesian carriers, including state-run Garuda,
from flying to Europe. We also understand from an FAA source that
on July 14, 2008, the European Union will announce whether it will
blacklist all airlines in Cambodia and the Philippines.

TDA SAFETY PROJECT WILL NOT REMEDY SAFETY SYSTEM
--------------------------------------------- ---

5. (SBU) The CAAV and technical contractor Robinson Aviation are
about to resume work on a long-delayed $1.4 million technical
assistance project funded principally by the TDA to help Vietnam
upgrade its civil aviation safety posture. Although the project
will help improve Vietnam's civil aviation regulation, the FAA,
Boeing and Robinson Aviation all emphasized that the CAAV's chronic
lack of resources and staffing would preclude Vietnam from
implementing much of the project's work, including the necessary

HANOI 00000814 002.2 OF 002


information technology systems. They also said the CAAV would be
unlikely to pass an FAA International Aviation Safety Assessment
(IASA) and secure a Category I safety rating, allowing Vietnam
Airlines to open service to the United States, even after CAAV
completes the project. A Boeing source, who previously conducted
IASA audits for the FAA, opined the FAA would never grant a Category
I safety rating to Vietnam if the EU were to blacklist Vietnam's air
carriers first. The sources all stressed that an EU ban would doom
Vietnam Airlines' business plan, including its purchase of Boeing
Aircraft, and damage Vietnam's investment and tourism climate.

GVN LEADERSHIP UNAWARE OF THE PROBLEM
-------------------------------------

6. (SBU) In a June 10, 2008 meeting, CAAV Deputy Director General
Lai Xuan Thanh acknowledged to the FAA's Mary Walsh and Econoff the
depth of Vietnam's civil aviation safety woes. He intimated that
the GVN's leadership, including Minister of Transport Ho Nghia Dung,
was unaware of the disastrous results of the ICAO audit, its
implications for Vietnam Airlines' business plan, and the serious
impact that a European flight ban could inflict on Vietnam's
economy. Thanh proposed a meeting between either the Ambassador or
DCM and the Minister of Transport to impress upon the Minister the
gravity of the situation and implore the GVN to pour more resources
into the under-funded and understaffed CAAV.

7. (SBU) Comment: The airline sector has dramatically outpaced the
growth of the regulator in Vietnam. Vietnam Airlines, which plans
to equitize in 2009, flies international routes aboard ten modern
Boeing 777 airplanes, has 21 Boeing 787 Dreamliners on order (with
plans to order at least eight more in 2008), and has ambitions to
become one of the preeminent air carriers in Southeast Asia. In
addition, two new privately owned startups, VietJet Air and Air
Speed Up, recently signed agreements to procure Boeing 737 jets.
Sources from the FAA, Boeing, and Robinson Aviation all emphasized
that if the GVN does not increase funding to the CAAV in the short
term, either by increasing direct government support or diverting
revenue from well-funded Vietnam Airlines, that Vietnam's air
carriers could find themselves with fleets of modern jets but no
routes to fly.

8. (SBU) The FAA's Mary Walsh cleared this cable.

MICHALAK

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