Cablegate: U.S.-Colombia Flights Takeoff

VZCZCXYZ0008
RR RUEHWEB

DE RUEHBO #8592/01 3531623
ZNR UUUUU ZZH
R 191623Z DEC 07
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 0545
INFO RUEHCV/AMEMBASSY CARACAS 9693
RUEHPE/AMEMBASSY LIMA 5729
RUEHLP/AMEMBASSY LA PAZ DEC QUITO 6430

UNCLAS BOGOTA 008592

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EAIR ECON EINV CO
SUBJECT: U.S.-COLOMBIA FLIGHTS TAKEOFF

1. SUMMARY: A new aviation agreement between the USG and the
GOC unleashed a flood of interest by U.S. and Colombian
carriers. The agreement should increase flights between the
two countries by at least 50 percent. U.S. carriers with
established flights to Colombia want to expand the number of
flights and destinations, while new U.S. carriers seek to
break into the Colombia market. Colombian carriers also plan
to take advantage of the new agreement by increasing flights
to the U.S. END SUMMARY.

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A New Agreement Gets Off the Ground
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2. The USG and the GOC reached an agreement to expand and
liberalize civil aviation relations at the end of September,
following two years of negotiations. The new agreement
represents the first increase in flights between the two
countries since 2003. It boosts scheduled weekly frequencies
(round trip flights) of U.S. carriers by 30 percent, from 70
to 91, with increases phased in between December 2007 and
October 2008. In addition, it opens up unlimited flights for
U.S. carriers to the tourist-friendly cities of Cartagena and
Barranquilla, and permits charter services to Cartagena and
three other destinations. Colombian carriers received
corresponding increases in frequencies. Given the high level
of industry interest in the new unlimited flights, the
agreement should result in at least a 50 percent increase in
flights between the U.S. and Colombia.

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Runaway Interest in New Flights
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3. Six U.S. carriers have expressed interest in new flights
to Colombia. Three of the carriers, American, Delta, and
Continental, already have daily flights to Colombia but look
to increase their frequencies and destinations. Others,
including Spirit, Jet Blue and US Airways, hope to enter the
growing Colombia market. Some of the proposed new flights
also open new U.S. destinations. Most, however, focus on
Florida given the heavy concentration of Colombians living
there.

4. American Airlines, which currently has twice daily
flights from Miami to Bogota as well as a daily flight from
Miami to Medellin, started a new daily flight to Barranquilla
on December 13. American intends to add additional daily
flights to both Bogota and Medellin. American also plans to
shift some frequencies previously used for Cartagena flights
(now unnecessary with Cartagena's new unlimited flight
status) to cover other routes. Jose Maria Giraldo,
American's General Manager for Colombia, told us their
decision to increase flights to Colombia was based on the
country's increased security, booming economy, and
record-breaking numbers of tourists. Giraldo anticipates
demand for flights between the U.S. and Colombia will grow by
at least 10-15 percent annually over the next five years.

5. Delta Airlines currently has one daily flight from
Atlanta to Bogota (although it partners with Colombian
carriers for other flights). Delta plans to offer new daily
service from New York to Bogota, and from Atlanta to Cali (3
flights per week) and Medellin (4 flights per week).
Continental Airlines, which currently has daily flights to
Bogota from both Houston and Newark (as well as to Cali),
plans an additional daily flight from Houston to Bogota.

6. Low-cost U.S. carrier Spirit Airlines has been the most
aggressive of the new entries into the Colombia market.
Spirit plans three flights a week between Fort Lauderdale and
Cartagena, and is negotiating a partnership with Colombian
carrier Aires for flights to both Bogota and Medellin.
Martin Harrison, Spirit's Chief Operating Officer and
Executive Vice President, told us Spirit sees Colombia as key
to its plans to expand into Latin America. Spirit Airlines
Latin America Director of Communications Juan Arbelaez
explained that the two million plus Colombians living in the
U.S. create a huge potential market. Arbelaez said Spirit
projects offering fares 30-40 percent lower than current
fares, and expects this will put pressure on the entire
market to drop fare costs.

7. Other U.S. carriers looking at the Colombia market
include US Airways and Jet Blue. US Airways hopes for daily
flights between Charlotte and Bogota. US Airways President
Doug Parker said he considers Colombia an especially
attractive market that fits well into US Airways'
international strategy Jet Blue hopes to move deeper into
the Florida market with Orlando-Bogota and Ft.
Lauderdale-Bogota routes.

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Colombian Carriers Pursue More Routes
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8. Avianca, Colombia's largest airline plans flights from
Bogota to Washington DC six times a week, as well as
once-a-week flights from Bogota to Los Angeles and from
Barranquilla to New York. Avianca is also expanding
internationally with new flights to London and Frankfurt.
AeroRepublica, the local unit of Continental Airlines' Copa
Holdings, plans new daily flights from both Bogota and Cali
to Miami. Colombian carrier Aires plans daily flights from
Bogota to New York and from both Barranquilla and Cartagena
to Fort Lauderdale.
Brownfield

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