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Cablegate: Indonesia: Aviation - the Next Step

VZCZCXYZ0000
RR RUEHWEB

DE RUEHJA #1619 2720008
ZNR UUUUU ZZH
R 290008Z SEP 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 3418
INFO RUEHGP/AMEMBASSY SINGAPORE 6599
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS JAKARTA 001619

SIPDIS
SENSITIVE

DEPT FOR E, EAP/MTS, EB/TRA, E/CBA
SINGAPORE PASS TO FAA MARY WALSH, TSA THOMAS KEENE

E.O. 12958: N/A
TAGS: EAIR ECON ID
SUBJECT: INDONESIA: AVIATION - THE NEXT STEP

1. (U) This message contains an Action request. Please see paragraph
6.

2. (SBU) Summary: Indonesia is a major civil aviation market, and
will grow faster if U.S. technical assistance can help bring its
aviation sector up to international standards. A string of fatal
air disasters has heightened awareness of Indonesia's outdated
infrastructure and inadequate regulatory framework. It is in our
interest to help Indonesia regain its Federal Aviation Authority
(FAA) Category-1 rating in order to create new commercial
opportunities for U.S. companies and advance our bilateral
relationship. Comprehensive FAA and Transportation Security
Administration (TSA) assessments are needed as soon as possible to
determine how to provide the appropriate technical assistance. End
Summary.

3. (SBU) The value of Indonesia's transportation sector is expected
to grow to over $33 billion by 2011, and U.S. aviation companies are
already doing big business here. Boeing has $1 billion in current
orders with two Indonesian carriers and will provide the Government
of Indonesia with a new Presidential jet. Bell has a commitment for
$120 million in helicopter sales. In addition to aircraft, real
sales opportunities exist for U.S. air-traffic control systems and
security equipment as well as military aviation equipment and
services. U.S. aviation companies enjoy a unique advantage in this
market over EU competitor Airbus because of our key role in regional
security. This market will continue to grow, and will grow faster if
Indonesia's aviation safety and security improve to meet
international standards.

4. (SBU) The aviation sector witnessed explosive growth after
deregulation in 1999; currently there are 48 air carriers, including
15 passenger service airlines. However, the regulatory authority
and airport infrastructure have not kept pace. Over the last few
years, high-profile aircraft accidents have undermined consumer
confidence in Indonesian aviation safety. Indonesia has been an FAA
Category-2 country since 2007; its airlines still cannot make
regularly-scheduled flights to the U.S. An EU flight ban was
imposed in June 2007. In July 2009, the EU lifted the ban for four
carriers after extensive effort on the part of Indonesian airlines,
regulators and international stakeholders (including the FAA).

5. (SBU) State-owned carrier Garuda has ordered two 777s for
long-haul flights; it would like to commence service to the U.S. by
2012 and will request FAA authority to do so. Regaining Category-1
FAA status will be a laborious and time intensive process involving
multiple stakeholders and government agencies. Failure would be a
setback in our bilateral relationship; we need to engage with
Indonesia now to make sure they succeed. The private sector is
doing its part -- Garuda has already retained independent safety
advisors and Boeing has indicated an intention to do the same.
Embassy is coordinating with both parties.

6. (SBU) Action request: Post requests comprehensive FAA and TSA
assessments as soon as possible to identify what needs to be done to
raise Indonesia's aviation to international standards. A TSA
assessment team is tentatively scheduled to visit Jakarta's
Soekarno-Hatta International airport in November. While this visit
is an important first step, Ngurah Rai International airport in Bali
and other facilities merit prompt attention as well. Following
professional assessment, additional resources should be mobilized
quickly. It is important that we help Indonesia bring its aviation
sector up to speed in time to ensure the success of their Category-1
request. Improving safety and security will boost the market here,
leading to more opportunities for U.S. commercial sales while
enhancing our bilateral relationship.

HUME

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