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No Dollars, No Flights: Airlines Abandon Venezuela

By: María Gabriela Díaz - Jul 10, 2014, 2:43 pm

EspañolVenezuela’s list of epidemic shortages — including food, kitchen appliances, cars, and other basic supplies such as deodorant — has found its latest victim: airline tickets. The country’s foreign-exchange controls have become a trap for international companies that wish to repatriate their earnings, and that includes airlines. After more than two years with the regime owing them a mounting debt of foreign currency, international airlines have decided no more; they are leaving Venezuelans trapped with few ways to flee their country.

In recent years, Venezuela’s central government has required all airlines to sell tickets in the local bolívar currency, and at the official rate of 6.3 Bs. per dollar, fixed since 2013. Now the exchange bills have arrived, and President Nicolás Maduro’s administration has seemingly no foreign funds to give. While those in power seek alternative ways to pay the debts, such as offering fuel and sovereign bonds as part of the payments, airlines have started to raise pressure on the regime by simply decreasing their operations in the South American country.

Already two airlines, Air Canada and Alitalia, have suspended their operations altogether in Venezuela, and more than a dozen have drastically reduced their number of flights, at least until the government pays off the debts. American Airlines, one of the airlines that flew the most between Venezuela and the United States, has cut down from 48 to 10 flights per week, and Delta Air Lines is the latest to have joined this group. On Tuesday, the Atlanta-based airline informed consumers it would also decrease its flights to Venezuela to one per week.

Nonetheless, President Nicolás Maduro is reluctant to negotiate.

“The airline that leaves Venezuela in these circumstances won’t return to this country while we are in power,” the president stated during a press conference.

Maduro said that airlines don’t have any excuse to suspend their flights, and that Venezuelan officials will be the ones taking measures against the airlines if they don’t maintain their regular schedules. “We are a reliable payer,” he assured.

According to the International Air Transport Association, the overall airline debt already surpasses US$4.2 billion, almost a fifth of the country’s international reserves.

Meanwhile, those in Maduro’s administration have offered to pay airlines through partial payments and, most important, at a different exchange rate than the one initially agreed upon. While airlines sold their tickets at 6.3 Bs. per dollar, the new proposal is to pay the airlines at a devalued 11.3 Bs. per dollar. Since this would considerably decrease the total foreign currency debt, most airlines have rejected the deal outright.

Still, perhaps seeing the writing on the wall, some airlines such as AeroMexico, Air Europa, Tiara Air, Insel Air, Tame Ecuador, and Aruba Airlines have accepted these terms, and agreed to receive their payment, even with the devaluation.

Nonetheless, the airlines that constitute the largest portion of the debt are holding out with the regime and await payment. That includes American Airlines ($750 million), Panama’s Copa Airlines ($500 million), Colombia’s Avianca ($300 million), Air France ($270 million), and Spain’s Iberia ($200 million).

In this environment, tickets have been almost impossible to find, not to mention at much higher prices.

“Finding an airline ticket has become pretty complicated for Venezuelans,” explains Julio Correa, a Venezuelan travel agent.

In an exclusive interview with the PanAm Post, Correa told us just how bad the situation has gotten, not only for airlines and passengers, but for travel agencies as well.

Venezuelans wait from 5 a.m. to find a plane ticket
Venezuelans wait from 5 a.m. to find a plane ticket. (Últimas Noticias)

“The ticket availability to go out from Venezuela has decreased approximately 80-86 percent, compared to last year. A lot of people are looking for tickets to go out on vacation or for business trips; however, you just can’t find anything,” Correa asserts.

“There are only tickets for Aruba, Curacao, and Panama. It’s just the only thing you can find nowadays. And if you are lucky enough to find one, the prices are quite exorbitant, if we compare them with the ones set up a few months ago.”

“This problem,” Correa explains, “is due to all the debts that the government still has with airlines. And it’s a problem that affects all of us, the regular citizen, travel agencies, and all companies in Venezuela that specialize in tourism.”

Even though the problem dates back to 2012, Correa cannot believe how it has worsened this year.

“July, August, and September were months when there was little availability, but because all the tickets were sold. This week, in high season, we have only sold three tickets, of which two are domestic flights, and only one is international.”

In their desperation, Venezuelans have resorted to airlines directly, to try their luck.

Venezuelans make long lines to search for tickets
Venezuelans make long lines with the hope that they might find tickets. (Vanessa Arenas)

“Whenever airlines open up few spots, you get to see dozens of passengers standing in line from 5 a.m. at the airline office waiting, with the hope of finding any slot left.”

Correa confessed that he was once in such an urgent need to arrange a ticket for himself, that he went to an airline office. Once he arrived, he couldn’t believe it: “I found a queue of people waiting from the early morning to be assisted. Despite the long lines, the airline’s employees only assisted 30 people in the morning and 30 in the afternoon, without even guaranteeing that there would be any tickets left.”

However, Correa notes that the queues at airline offices have decreased, given that many of them aren’t open to the public anymore.

Further, tourists aren’t the only passengers affected by this problem: “I have a couple of clients, a mother and her daughter. The daughter had an accident in Venezuela, and doctors had to amputate both of her legs. She now needs a special treatment in Spain to get both artificial limbs. We could only find one ticket for the daughter, while her mother waits here to find a ticket and join her daughter.”

Nonetheless, the travel agent explains there’s always a way out: “People can find tickets at any time, only if they pay with foreign currency. The problem is that only a small minority can afford it in these conditions.”

María Gabriela Díaz María Gabriela Díaz

María Gabriela Díaz reported from Caracas, Venezuela, and led the PanAm Post internship program. She has a Bachelor of Arts in political science with a focus in international affairs.