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Cablegate: Kenya's Flight Towards Faa "Category-1" Stalls

VZCZCXYZ0000
RR RUEHWEB

DE RUEHNR #2326/01 2831044
ZNR UUUUU ZZH
R 091044Z OCT 08
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC 7247
INFO RUEHXR/RWANDA COLLECTIVE
RULSDMK/DOT WASHDC
RHMCSUU/FAA WASHDC
RUEAHLC/HOMELAND SECURITY CENTER WASHDC

UNCLAS NAIROBI 002326

SENSITIVE

DEPT FOR AF/E, AF/RSA, AND AF/EPS
DEPT FOR EEB/TRA J EMERY
DEPT ALSO PASS TO DOT FOR CORNELIA (CONNIE) HUNTER
TSA FOR JILLENE MACCREERY, CARLOS DE LA TORRE, AND MIRIAM MOSES
FAA FOR DONNA KRIMSKI
FAA REPRESENTATIVE DAKAR

SIPDIS

E.O. 12958: N/A
TAGS: EAIR ECON ASEC PTER KCRM KE
SUBJECT: KENYA'S FLIGHT TOWARDS FAA "CATEGORY-1" STALLS

REF: NAIROBI 2041

1. (SBU) Summary: A plan by Prime Minister Odinga to provide the
Kenya Civil Aviation Authority (KCAA) with resources to quickly hire
and retain inspectors to certify Kenya Airways' (KQ) fleet is
languishing in Cabinet. KCAA needs these inspectors onboard now to
certify KQ's Boeing 737s, 767s, and 777s as the crucial next step
towards FAA Category 1 and direct flights to the United States.
Ministry of Transportation PermSec Ali remains confident in
near-term Cabinet approval, but concedes the upgrade may still leave
KCAA short of the resources needed to hire/retain the inspectors.
Meanwhile, KQ's CEO indicates direct flights to the U.S. may not be
in the airline's financial interest. Nevertheless, we will continue
to push for Kenya's achievement of Category 1 as safer skies help
protect tens of thousands of Americans who fly in Kenya - and on KQ
- each year. End Summary.

2. (SBU) Reftel reports inter alia on an August 2008 plan by Prime
Minister Odinga and Transportation Minister Mwakwere to quickly
upgrade the para-statal status of the Kenya Civil Aviation Authority
(KCAA). According to Odinga and Mwakwere in August, once upgraded,
KCAA would have the resources to hire the three inspectors (two
covering flight ops, the other airworthiness) needed to certify
Kenya Airways' (KQ) diverse fleet of aircraft, including Boeing
737s, 767s, and 777s. Kenya must hire/retain these inspectors as
the crucial next step toward achieving FAA Category 1. Category 1
is a prerequisite for direct flights to the U.S., allowing Kenya to
take full advantage of the June 2008 Open Skies agreement signed by
Odinga in Washington. Delta Airlines continues to plan for direct
flights beginning in June 2009.

3. (SBU) During an October 6 meeting with a GAO civil aviation
study team, the DCM, EconOffs, and the Managing Directors of KCAA
and the Kenya Airports Authority, Ministry of Transportation PermSec
Ali indicated that Cabinet approval of the para-statal upgrade is
forthcoming. He cautioned, however, that the upgrade "may not be
enough" to provide KCAA with the resources it needs to hire/retain
the necessary inspectors. He said the Ministry was working on "a
package" to resolve the compensation issue within the next few
weeks; the package would need the support of the highest levels of
government, he added.

4. (SBU) According to PermSec Ali, over the long-term the GOK plans
to increase the supply of inspectors (and lower their price tags)
through higher turnout at KCAA's East Africa School of Aviation. In
response to a question from the DCM regarding KQ's interest in
flying direct to the U.S., Ali - noting his membership on KQ's Board
- said it was "desirous." Horticulture and tourism would directly
benefit, he said. The Managing Directors of KCAA and KAA agreed
with the benefits of direct flights and expressed sincere
appreciation for U.S. assistance under the "Safe Skies for Africa
program."

5. (SBU) KQ CEO Titus Naikuni told us October 7 that he was "still
thinking about" whether direct flights to the U.S. were in the
airline's financial interest, assuming achievement of Category 1.
He expressed some consternation that Delta planned to start direct
U.S.-Kenya service in June 2009 without reciprocity for KQ. The CEO
said he supported KCAA's para-statal upgrade, noting that KQ had
avoided poaching by Middle Eastern airlines by paying
internationally competitive salaries.

6. (SBU) Comment: Kenya is at a crossroads. By signing the June
2008 Open Skies agreement, Kenya signaled its desire to operate
direct flights to the U.S. But Kenya either underestimated or
ignored the structural and policy changes that must implemented in
order for it to take advantage of the agreement. While the
government is now aware of and pursuing the necessary structural and
policy changes needed to achieve FAA Category 1 status (i.e.,
security upgrades to Jomo Kenyatta Airport and certification of all
of Kenya Airways aircraft), the management - and some of the major
shareholders - of Kenya Airways are ambivalent about the U.S.
market on commercial grounds. Kenya Airways is the only Kenyan
carrier capable of flying to the U.S. and its market plan is clearly
focused on the Middle East, Asia and Europe. The airline is 26
percent owned by the Air France/KLM (and now NW and Delta)
consortium. The Government of Kenya/Ministry of Transportation has
a minority (23 percent) share and it may well face an uphill battle
persuading oher ministries and the airline's owners of the need to
expend considerable financial resources to achieve Category 1
status. In the meantime, at least one American carrier - Delta - is
gearing up to commence direct flights between the U.S. and Kenya.
That said, our interests are clear and we will continue to push
Kenya to achieve Category 1 status so that the security of the tens
of thousands of Americans who fly to/from and in Kenya every year -
largely on KQ - are protected by safer skies. End Comment.

SLUTZ

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