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Viewing cable 09BOGOTA4048, COLOMBIA'S POWERFUL TRAVEL AGENCIES SEEK STATE INTERVENTION

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Reference ID Created Released Classification Origin
09BOGOTA4048 2009-12-18 21:51 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bogota
VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #4048/01 3522152
ZNR UUUUU ZZH
R 182151Z DEC 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 1680
INFO RHMFIUU/FAA NATIONAL HQ WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA
RUEHCV/AMEMBASSY CARACAS
RUEHPE/AMEMBASSY LIMA
RUEHQT/AMEMBASSY QUITO
RUEHZP/AMEMBASSY PANAMA
RULSJGA/DEPT OF TRANSPORTATION WASHINGTON DC
UNCLAS BOGOTA 004048 
 
SENSITIVE 
SIPDIS 
EEB/TRA/AN, DOT OFFICE OF NEGOTIATIONS 
 
E.O. 12958: N/A 
TAGS: EAIR ETRD EINV ECON EINT PGOV CO
SUBJECT: COLOMBIA'S POWERFUL TRAVEL AGENCIES SEEK STATE INTERVENTION 
IN ONLINE TICKET SALES 
 
1.  (SBU) Summary.  Colombia's powerful travel agency association 
has consistently lobbied for protectionist regulations to stave off 
the airlines' competitive advantage in online ticket sales.  Two 
regulations are pending GOC approval that airlines oppose:  one 
would require airlines to charge an administrative fee for online 
sales, and the second would allow travel agencies to offer the same 
discounted ticket prices to their clients as the airlines sell 
online.  Vice Minister of Tourism Oscar Rueda told us the GOC will 
likely not approve the online administrative fee, but may force the 
airlines to make their discounted fares available to the travel 
agencies.  Post has consulted frequently with the U.S. airlines and 
advocated that the GOC not adopt these measures.  End summary. 
 
 
 
TOP COVER 
 
--------------- 
 
2.  (SBU) In recent years, Colombia's travel agency sector has had 
a powerful ally in President Uribe, who has supported regulations 
that help travel agencies, sometimes at the expense of the air 
transportation industry.  Coincidentally, Uribe opened the annual 
congress of ANATO, Colombia's association of travel agencies, seven 
of the last eight years.  Travel agencies have an effective lobby 
in ANATO.  It has lobbied against a resolution that would require 
travel agencies to send weekly payments to the airlines from ticket 
sales rather than twice-monthly payments, and for several 
regulations that would block airlines from posting lower fares 
online than the travel agencies can offer. 
 
 
 
PROPOSED REGULATIONS FAVOR TRAVEL AGENCIES 
 
--------------------------------------------- -------------------- 
 
3.  (SBU) Delta, Continental, and American told us that their 
direct sales make up between 8-20% of their total sales in 
Colombia, with internet sales representing only a small part of 
direct sales.  American Airlines manager Jose Maria Giraldo said 
Colombians are still very cautious about making purchases online, 
and Colombian "signature on file" laws make online purchasing 
difficult.  However, all three airlines told us they were concerned 
about two regulations that would affect their online sales. 
 
 
 
4.  (SBU) The two new regulations, under consideration by the GOC, 
appear to favor the travel agencies:  the first regulation would 
require airlines to charge an administrative fee for online sales 
(it is not clear where the fees would go); and the second would 
allow travel agencies to sell tickets at the price the airlines 
offer on their websites.  Travel agencies have pushed for these 
regulations, complaining that their industry is in danger of 
collapse.  The first regulation was nearly approved in June, but 
after pushback by the airlines and the Embassy, the government 
backed down and requested a study of the impact this proposal would 
have on the airlines.  Ironically, ANATO conducted the study, which 
is under review by the President's office. 
 
 
 
5.  (SBU) According to the association of air transport companies 
in Colombia (ATAC), ANATO's study does not take into account the 
international market, and concludes that the domestic market for 
airfares is inelastic and therefore will not be affected by the 
administrative fees.  ATAC, which represents 95% of airlines that 
operate in Colombia  -- including Delta, Continental, and American 
-- disagrees with the methodology of the study and its conclusions, 
arguing that the data is incomplete and  the domestic market is 
sensitive to price elasticity.  The airlines note that the increase 
in travel this year is largely a result of lower prices. 
 
 
 
GOC LOOKING FOR A COMPROMISE 
 
--------------------------------------------- 
 
 
6.  (SBU) A decision on the internet regulations is expected soon. 
EconCouns raised the airlines' concerns in a meeting with Vice 
Minister Rueda on December 17.  Rueda responded it was unlikely 
that the GOC would approve an administrative fee for internet 
sales.  Rueda argued that a regulation allowing travel agencies to 
offer the airlines' discount online rates to customers could be 
acceptable if the airlines did not pay agency commissions or incur 
any costs. 
BROWNFIELD