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Discussing cables
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VZCZCXYZ0000
OO RUEHWEB
DE RUEHMO #2462/01 1451314
ZNY CCCCC ZZH
O 251314Z MAY 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0614
RULSDMK/DEPT OF TRANSPORTATION WASHDC IMMEDIATE
INFO RUCPDOC/USDOC WASHDC PRIORITY
C O N F I D E N T I A L MOSCOW 002462
SIPDIS
SIPDIS
STATE FOR EEB BYERLY AND COLEMAN
EUR/RUS FOR WARLICK AND HOLMAN
USDOT FOR STREET AND HATLEY
USDOC FOR 4321/ITA/MAC/EUR/RISA BROUGHER AND BEADLE
USDOC FOR 3004/CS/ADVOCACY/BLOOM
E.O. 12958: DECL: 05/21/2017
TAGS: EAIR ECON PREL RS
SUBJECT: RUSSIA BILATERAL CIVAIR NEGOTIATIONS: FRUITFUL
TALKS BUT NO DEAL YET
REF: MOSCOW 02189
Classified By: Econ M/C Quanrud for reasons 1.4 B and D.
¶1. (C) The U.S. and Russian civil aviation delegations had
productive discussions May 16-17 on updates to the Annexes of
our 1994 Bilateral Air Transport Agreement, but no deal was
reached. On overflights, the GOR continues to bar any use of
the Trans-Siberian routes without a commercial agreement with
Aeroflot but offered to increase crosspolar, Indian
subcontinent, and Trans-East frequencies. On codesharing,
the GOR was not ready to allow third-country codesharing from
Europe, particularly with German-owned carriers, but said it
would study the issue. On rights for Russian carriers, the
GOR asked for limited Seventh Freedom cargo rights for routes
between Asia, the United States, and points beyond. The U.S.
lead negotiator, Bureau of Economic, Energy, and Business
Affairs Deputy Assistant Secretary John Byerly, and the
Russian lead negotiator, Director General Gennady V.
Loshchenov of the Ministry of Transport,s Department of
State Policy in Civil Aviation, agreed to meet again
September 4-6 in Washington.
-------------------------------
OVERFLIGHTS: NO TRANS-SIBERIAN,
BUT INCREASES ON CROSS-POLAR,
INDIAN, AND TRANS-EAST ROUTES
-------------------------------
¶2. (C) On Trans-Siberian routes, Byerly requested traffic and
tech stops in Novosibirsk and Krasnoyarsk and also raised the
issue of the Chinese requirement for planes using route
"L888" to exit Chinese airspace at navigation point "Revki."
Loshchenov was absolutely clear that he was not in a position
to negotiate on any Trans-Siberian routes -- including use of
the Revki crossing point -- without a corresponding
commercial agreement between the airline concerned and
Aeroflot for use of the route. A final deal between the GOR
and Europe to phase out the payments to Aeroflot required by
such agreements had not been vetted through the Russian
inter-agency process in time for the Russian-EU Summit in
Samara May 17-18. The deal, however, is expected to involve
a phasing out of such payments for existing flights by 2014,
coupled with an understanding that there would be no charges
for new flights. (Comment: Loshchenov clearly did not want
to appear to be offering a free-ride to the Americans when
the Europeans negotiated hard for a seven-year phase out. He
said, "I'd have every European carrier crying foul at my
door." End comment.)
¶3. (C) The GOR would not allow any stop in Krasnoyarsk
(principal hub of AirBridgeCargo, formerly Volga-Dnepr), but
Loshchenov said it would consider a technical stop in
Novosibirsk, provided the U.S. carrier entered into a
commercial agreement with Aeroflot. Likewise, all traffic
including flight navigation point "Revki" and points farther
north would require a commercial deal. Loshchenov hinted
that the amounts that U.S. carriers would be required to pay
would be modest. The U.S. delegation responded that
mandatory commercial agreements were a "bad policy" that the
United States and its carriers had consistently opposed. To
Loshchenov,s apparent surprise, the U.S. indicated its
intention to drop the issue of Trans-Siberian routes, pending
the outcome of the EU-Russia deal, rather than consider any
form of pay-off to Aeroflot.
¶4. (C) On other overflights, Loshchenov offered increases as
part of an overall package with some room for bargaining.
First, he offered 83 East-bound, 83 West-bound cross-polar
frequencies; the USG requested 84-84 now, 119-119 in March
2008, and 126-126 in Winter 2008. Next, Loshchenov called
service to India "sensitive" to Russian companies because of
the connections they offer to India, through Moscow, for
North American passengers and therefore offered 41-41; U.S.
carriers are effectively using that now, and the U.S. side
thus requested an increase to 52-52 in March 2008. Finally,
Loshchenov offered 300-500 for the Trans-East route as part
of a larger package, which was acceptable to the USG.
---------------------------------------------
RUSSIA NOT READY FOR THIRD-COUNTRY CODESHARES
---------------------------------------------
¶5. (SBU) Though the GOR would like to see Aeroflot's
applications for bilateral codesharing with Northwest,
Continental, and Delta approved, it was still reluctant to
offer third-country codesharing (even on a limited basis) to
U.S. carriers wanting to serve Russia in cooperation with a
European partner. Loshchenov said that the whole Russian
industry came to a consensus that third-country codesharing
would eat too much into their European market share now.
Loshchenov specifically said he was barred by bilateral
protocol from allowing any third-country codesharing with a
German-owned carrier. (Comment: This obviously includes
United's bid to codeshare with Lufthansa but could als
o bar
any cooperative marketing arrangements with Swiss Air, as it
is now Lufthansa-owned. End comment.) Loshchenov did say,
however, that he would study the protocol with Germany,
consult with Russian industry, and consider, before the next
round, the possibility of limited third-country codesharing
(perhaps one flight to Moscow per day for each of the six
principal U.S. carriers).
--------------------------------------------- ----
SEVENTH FREEDOM CARGO RIGHTS FOR RUSSIAN CARRIERS
--------------------------------------------- ----
¶6. (C) Besides approval of the Aeroflot codeshare
applications, the GOR had only one major request. It wanted
limited Seventh Freedom cargo rights for routes between Asia
and Alaska, continuing on to Chicago (and perhaps another
point in the lower-48 states), and beyond, without servicing
Russia. Andrey Shumilin, the representative from
AirBridgeCargo (formerly Volga-Dnepr), told us privately that
his company is interested in carrying cargo between Asia and
the United States. With substantial loads, such flights
would refuel in Krasnoyarsk. He said, however, that
AirBridgeCargo would like the option to forgo the stop in
Krasnoyarsk during the low season (when it has very low
payloads) because the extra landing fees in Krasnoyarsk would
not make the trip profitable. Shumilin stressed that this
right would be for occasional use only, perhaps for 10
percent of a total of no more than 300 flights per year
(i.e., perhaps 30 flights would forgo the stop in Krasnoyarsk
and operate on a Seventh Freedom basis). Byerly replied to
both Loshchenov and Shumilin that the U.S. has never granted
Seventh Freedom all-cargo rights outside of an Open Skies
agreement, but that the U.S. delegation would nevertheless
study the matter before the September round.
--------------------------------------
OTHER RUSSIAN PROPOSALS TO THE ANNEXES
--------------------------------------
¶7. (SBU) During the opening session of the negotiations, the
GOR proposed modifications to the Annexes, particularly Annex
I, Section 6 and Annex II, Sections 1-3, tabling specific
texts. (Comment: Interestingly enough, the GOR never raised
the drafts again in either the plenary sessions or the
chairmen's meetings. It is therefore not entirely clear how
important these changes were to the Russian side. End
Comment.)
¶8. (U) The proposed changes to Annex I, Section 6 address
intermodal cargo and, according to Loshchenov, were requested
by Russian Customs. The changes to Annex II, Section 1 would
remove the requirement that charter carriers be designated by
diplomatic note. In Section 2, Paragraph C, the Russians
requested we strike the three listed reasons for a denial of
an application: reciprocity, safety, and national security.
Finally, the GOR proposed deleting Annex II, Section 3
entirely, which would mean that humanitarian charters would
count against the numerical limitation on charter flights.
--------------------------
OTHER DOING BUSINESS ITEMS
--------------------------
AIR NAVIGATION SERVICE FEES AND STATE FLIGHTS:
¶9. (C) The Federal Air Navigation Service presented a chart
to Byerly of all the U.S. carriers (and other entities) that
allegedly owe money for air navigation services. Natalia
Kirillova explained that much of the money owed comes from a
recent change of their operational dollar-ruble exchange
rate. Kirillova also stated that the U.S. Embassy owed for
state flights to and over Russia but acknowledged that this
topic would be discussed in Washington during upcoming state
flights negotiations. (Comment: Kirillova, her boss Mikhail
Parnev, Alexander Zakharov from the Ministry of Foreign
Affairs, and Elena Mikhayeva from the Ministry of Transport
all raised the issue of state flights on the margins of the
talks. End comment.)
FAA ISSUES:
¶10. (SBU) The Federal Air Navigation Authority (FANA) also
brought up concerns it had about air traffic control
procedures on crosspolar routes and possible alternate
landing destinations in the United States for Russian
aircraft flying to Canada. The U.S. Federal Aviation
Administration (FAA) is aware of these issues and is working
to get an answer for FANA.
-------
COMMENT
-------
¶11. (C) Perhaps Loshchenov said it best in his closing
remarks, "There is no need to panic. Even though we don't
agree, we still have very good relations." Though we didn't
come to a solution this round, talks were open, honest, and
friendly. Both Byerly and Loshchenov acknowledged the need
to consult in their capitals with the goal of finding a
solution in the September talks.
-------------------------
LIST OF U.S. PARTICIPANTS
-------------------------
- John Byerly, Head of Delegation - Deputy Assistant
Secretary for Transportation Affairs, Bureau of Economic,
SIPDIS
Energy, and Business Affairs, U.S. Department of State
- Mary Street - Assistant Director for Negotiations, Office
of International Affairs, U.S. Department of Transportation
- Kathleen Milton - Attorney-Advisor, Office of the Legal
Adviser for Economic and Business Affairs, U.S. Department of
State
- Steven Hatley - Senior Negotiator, Office of International
Aviation, U.S. Department of Transportation
- Laura Trejo - Senior Attorney, Office of International Law,
U.S. Department of Transportation
- Brian Staurseth - FAA Representative, U.S. Embassy Moscow
- Kristen Grauer - Civil Aviation Officer, U.S. Embassy Moscow
- Sametta Barnett, Director of Government Affairs, Delta
Airlines
- Cecilia Bethke - Managing Director of International
Affairs, Air Transport Association
- Kai Uwe Detering - Public Affairs Manager, United Parcel
Service Germany
- Oracio Marquez - Manager of Alliances, International, and
Regulatory Affairs, United Airlines
- Kevin Montgomery - Washington Representative of Polar Air
Cargo
- Jeffery Walker Morgan - Director of International and
Regulatory Affairs, Northwest Airlines
- Richard Page - SOAR International Ministries
- David Short - Senior Counsel, Regulatory and Industry
Affairs, FedEx Express
- Daniel Weiss - Director, International Policy and
Regulatory Affairs, Continental Airlines
- Robert Wirick - Director, Regulatory Affairs, American
Airlines
----------------------------
LIST OF RUSSIAN PARTICIPANTS
----------------------------
- Gennady V. Loshchenov, Head of Delegation - Director
General, Department of State Policy in Civil Aviation,
Ministry of Transport
- Irina G. Fedechinka - Head of Air Services Division,
Department of State Policy in Civil Aviation, Ministry of
Transport
- Elena A. Mikh
eeva - Deputy Head of Air Services Division,
Department of State Policy in Civil Aviation, Ministry of
Transport
- Yulia V. Volodina - Senior Expert of the International
Agreements Division Legal Department, Ministry of Transport
- Yuri Romanenko - Civil Aviation Officer, Department of
International Relations, Ministry of Transport
- Alexander Delezha - Acting Director of the Air Transport
Department, Russian Federal Air Transport Agency
- Natalia Kirilova - Department of International Relations,
Russian Federal Air Navigation Authority
- Alexander Zakharov - Head of the Bilateral Relations, North
America Desk, Ministry of Foreign Affairs
- Igor Regush ) Aeroflot
- Kamil Feizafmanov - Aeroflot Cargo
- Martya Goryashko - Aeroflot Cargo
- Andrey A. Shumilin - AirBridgeCargo
- Yuri A. Malishev - AirBridgeCargo
- Dennis Ilyin - AirBridgeCargo
- Aleksei Leonov - AirBridgeCargo
- Natalia V. Nazarova - AirBridge Cargo
- Natalia Pechinkina - Transaero
- Denis Savchenko - Transaero
- Glenn Wicks - The Wicks Group
- Katya Grimes - The Wicks Group
- Sergey Teselkin - Polet
- Denis Zuzanov - Polet
- Yuri Lavrentiev - TESIS
BURNS
Wikileaks: Russia 