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Owed $750 million, American Airlines cuts flights to Venezuela
Published on June 19, 2014 Email To Friend    Print Version

By Caribbean News Now contributor

CARACAS, Venezuela -- Apparently frustrated over the continued non-payment of some $750 million owed to it by Venezuela through March 31, American Airlines will next month cut its weekly flights to the South American country to ten, down from 48 currently.

American now flies to Venezuela from Dallas-Fort Worth, Miami, New York-JFK, and San Juan, Puerto Rico. Starting July 2 it will fly only once per day from Miami to Caracas, with one extra flight on Saturdays, and will operate two weekly flights from Miami to Maracaibo.

The move is the latest of reductions in airlift to Venezuela by international carriers, who have so far rejected the government’s offers to repatriate revenue delayed by local currency controls.

Italian airline Alitalia announced last month that it was suspending all flights to Venezuela "due to the ongoing critical currency situation” in the country, "which is "no longer economically sustainable."

The decision by Alitalia followed a similar suspension in late March of all flights to Venezuela by Air Canada and a number of regional airlines have reduced the frequency of flights. Colombia's Avianca has reduced itineraries by more than two-thirds. Other airlines represented by the International Air Transport Association (IATA) are considering suspending all flights to Venezuela.

Last week, Lufthansa said the Venezuelan problem had cost it €60 million ($81.2 million) and contributed to the airline’s profit warning. The German carrier also suspended ticket sales in the country for several days last month and will reduce its Frankfurt-Caracas service to three weekly flights from daily beginning in July.

“The airlines get to a point where they want to serve the country and they want to serve the Venezuelan people,” said IATA spokesman Jason Sinclair. “But they’re owed so much money, it just becomes not viable to operate in Venezuela.”

The Venezuelan government and a half-dozen, mostly smaller airlines in the region agreed last month to terms on repayments. The deal reduced the outstanding debt owed to the airlines by about $200 million, Sinclair said.

One of the airlines finally receiving payment from CADIVI, the Venezuelan foreign exchange authority, was Curacao airline InselAir, which was reported to have been paid a large part of its outstanding debt of $75 million.

The exact amount is not known, but it is said to be about three-quarters of the total outstanding debt.

According to the Association of Venezuela Airlines (ALAV), out a total of 25 international airlines operating to and from Venezuela, 16 have not yet signed a payment agreement with the government, through the aeronautical authorities.

Those companies that are still waiting for an agreement are Air Canada, Air France, Alitalia, American Airlines, Avianca, Caribbean Airlines, Copa Airlines, Delta Air Lines, Federal Express, Iberia, LACSA, LAN Airlines, Lufthansa, TACA, TAP Air Portugal and United Airlines.

ALAV indicated that the cumulative amount owed as of December 2013 is $3.4 billion.

Most of the major international airlines flying to Venezuela have declined the government’s offers because they include significant discounts on the principal amounts and have long repayment schedules.

“The terms were very complicated, and the offers that were made to different airlines were very different,” Sinclair said. “The discounts were arbitrary. There wasn’t a calculation to them that we saw.”
 
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