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Cablegate: Commercial Considerations Key to Gulf Air Purchase

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

UNCLAS MUSCAT 000990

SIPDIS

SENSITIVE

STATE FOR NEA/ARP, EB/CBA (B.BEHRENS)
COMMERCE FOR ITA (C.OBERG)
MANAMA FOR S.SIMPSON

E.O. 12958: N/A
TAGS: BEXP EAIR ECON ETRD PREL BA MU
SUBJECT: COMMERCIAL CONSIDERATIONS KEY TO GULF AIR PURCHASE
OF AIRCRAFT

REF: MUSCAT 896

-------
Summary
-------

1. (SBU) Conversations with the Minister of Transportation
and Communications and the Under Secretary for Civil Aviation
Affairs indicate that Gulf Air's upcoming purchase of
aircraft will be based on purely commercial grounds, with
fuel efficiency being the top concern. While careful not to
tip their hands, both appeared to lean towards Boeing. End
Summary.

------------------------
Fuel Efficiency Important
------------------------

2. (SBU) On June 18, the Ambassador raised Gulf Air's plans
to purchase new long and medium-range aircraft with Minister
of Transportation and Communications Sheikh Mohammed bin
Abdullah al-Harthi. The Minister responded that Gulf Air's
Board of Directors had decided to leave the decision to Gulf
Air's management so that it would be made on commercial
rather than political grounds. Al-Harthi continued that Gulf
Air's most important consideration was fuel consumption,
given that the airline's losses primarily resulted from the
use of older, less fuel-efficient aircraft. Al-Harthi
expressed optimism that Gulf Air's upcoming acquisitions
would enable the carrier to compete in the region, and
commented that Manama-based Gulf Air CEO James Hogan has not
raised any concerns regarding Boeing's proposal. He closed
with the comment that the "pressure is now on Airbus."

---------------------------
Treat Your Customers Nicely
---------------------------

3. (SBU) On June 17, the DCM raised the upcoming purchase
with the Ministry of Transportation's Under Secretary for
Civil Aviation Affairs Muhammed Sakhir al-Amri. Al-Amri
responded that deliberations were underway and that an
announcement would be made soon. He further dismissed
Airbus' recently reported woes (stock scandals, production
delays) as being immaterial to Gulf Air's decision.

4. (SBU) Al-Amri then recounted his difficulties in traveling
to Seattle on behalf of Oman Air (33% government-owned) to
finalize the purchase of new Boeing 737 aircraft in February
2002. He expressed dismay at being denied boarding
privileges by authorities stationed in Amsterdam over a
three-day period, then having to be re-routed, on order of
U.S. immigration, through Detroit, rather than direct to
Seattle. Upon arrival in Detroit, al-Amri was held for
questioning in secondary inspection for several hours,
resulting in a missed connection. Upon al-Amri's departure,
immigration officials argued in front of him as to whether he
should be escorted to his flight. A U.S. graduate and a
former pilot with Gulf Air, al-Amri noted that he understood
the concerns of the U.S. authorities, but objected to the
disrespectful manner in which he was treated.

-------
Comment
-------

5. (SBU) While both Gulf Air board members were careful not
to tip their hands, Post is cautiously optimistic that Oman
is favorably disposed to Boeing, in spite of the Under
Secretary's unpleasant travel experience in 2002. Al-Amri

SIPDIS
had a hand in Oman Air's previous decision to go with Boeing
in a region that has, until recently, been dominated by
Airbus. (Note: Oman Air recently ordered 2 more Boeing
737's, and is eyeing 787's for long-haul expansion. End
note.)
GRAPPO

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