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Cablegate: Aviation Minister Makes Pitch in Behalf Of

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ABUJA 001670

SIPDIS

SENSITIVE BUT UNCLASSIFIED

DOT FOR OIA, ALSO FAA

E.O. 12958: N/A
TAGS: EAIR EINV PREL NI
SUBJECT: AVIATION MINISTER MAKES PITCH IN BEHALF OF
VIRGIN NIGERIA AIRWAYS

REF: (A) ABUJA 1558, (B) LAGOS 1905

1. (SBU) Summary. Aviation Minister Yuguda pleaded
with Econ Counselor September 27 for the USG not to
put up obstacles to Virgin Nigeria's plans to serve
U.S. cities under the US-Nigeria open skies agreement.
Yuguda said Obasanjo would be "devastated" were the
USG to do so. Econ Counselor repeated the substance
of a demarche two weeks earlier; that is, that the GON
should reconsider the matter, adding that the GON
should take account of the state of the airline
industry in the United States and of our aviation
relationship with the United Kingdom in its
deliberations. Yuguda offered to accept an invitation
to go Washington to make his case. He referred to our
designation of Continental Airlines and suggested,
seemingly half in jest, that the GON would act on our
designation in the light of action the USG might take
with respect to Virgin Nigeria Airways. End summary.

2. (SBU) In an hour long meeting to which Embassy
Econ Counselor was invited by Minister of Aviation Isa
Yuguda on September 27, the Minister made a last pitch
to convey to us his Government's case with respect to
the imminent announcement of the establishment of
Virgin Nigeria Airways. Yuguda explained that the
Government of Nigeria and the United Kingdom's Virgin
Atlantic Airways are close to finalizing an agreement
creating Virgin Nigeria Airlines under which Nigerian
investors will hold a 51-percent stake, and that
Virgin Atlantic through its Virgin Group will hold the
remainder.

3. (SBU) Yuguda was well briefed on the meeting and
demarche we had made to the Ministry's Permanent
Secretary two weeks earlier (ref A). We had then told

SIPDIS
the PermSec that any application to DOT by Virgin
Nigeria for the necessary authorizations to serve U.S.
cities will encounter severe difficulties on the
grounds that UK interests should not be allowed to
benefit under the US-Nigeria Open Skies agreement
while the US-UK market remains restricted. Throughout
the hour-long discussion September 27, Yuguda
repeatedly expressed his hope that the United States
will not permit its dispute with the United Kingdom to
block the yet-to-be-formalized Virgin Nigeria Airlines
from landing in the United States. He professed not
to understand why the dispute between the USG and the
United Kingdom should be extended to include Nigeria.

4. (SBU) Yuguda, who did much of the talking, also
gave several reasons why the USG should not oppose the
new airline, including job creation in Nigeria and
helping Africa to have an internationally competitive
airline. Yuguda said the USG has long been
recommending that Nigeria open its markets, and Virgin
Nigeria is a step in that direction. Since the USG has
often said it wants to help develop Nigeria, the USG
should welcome the joint venture with Virgin Atlantic
since it might make it possible for Nigeria to capture
as much as $1.5 billion of the $3.0 billion in annual
revenues generated by the air transport industry in
Nigeria, resources that clearly would benefit Nigeria.
Moreover, the United States and Nigeria have excellent
relations. Nigerians therefore would not understand
why its "powerful friend" would sabotage the deal
between Virgin Atlantic and the Government of Nigeria
were that to come about. Moreover, President
Obasanjo, who is personally engaged in the matter,
would be "devastated" if the venture were to fail
because of U.S. opposition to it.

5. (SBU) Econ Counselor repeated the USG position as
documented in the pro memoria he had left with the
PermSec. He also said the sad state of the airline
industry in the United States is a circumstance to be
taken account of in calculations of what may or may
not be inimical to U.S. aviation policy or interests.
Yuguda repeated that Virgin Nigeria is a Nigerian-
registered airline. As such, it can be designated by
the Government of Nigeria to serve U.S. cities under
the open skies agreement. The airline is being called
Virgin Nigeria Airways only for the purposes of using
the Virgin brand name. At some point, Virgin
shareholders will cede some of their 49 percent equity
in the venture. "This is a purely Nigerian company,"
he concluded.

6. (SBU) According to Yuguda, Nigeria does not want
this disagreement to rise to the presidential level.
Economic Counselor concurred, recommending that our
political concerns be taken account before the GON
proceeds further. He added he would convey the
Minister's concerns to the Department. Yuguda then
said he his willing to go to Washington to explain the
Nigerian Government's position. Yuguda concluded by
requesting that the Embassy state clearly in a letter
the USG's views on this issue to which he promised a
reply. Economic counselor agreed to provide such a
letter September 28. (The letter is essentially the
pro memoria of two weeks ago reformatted.)

7. (SBU) Comment. We don't know the equities behind
the Minister's commitment to finalizing the deal with
Virgin Atlantic. He is aware that we have designated
Continental to fly between Lagos and U.S. cities and
disclosed having met with Continental's Vice President
for Network William Brunger a week ago in Abuja.
Yuguda was also aware of the meeting in New York last
week between Obasanjo and a Continental executive.
Half in jest, but indicating a thought establishing
linkage, Yuguda said that if the USG were to prevent
Virgin Nigeria from serving U.S. cities, the GON could
well prevent Continental from operating in Nigeria.
Having said this, Yuguda immediately added that
Nigeria, as a friend, of course wouldn't do this.

CAMPBELL

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