MIAMI — Back in the 1980s, the defunct Venezuelan carrier Viasa was a main player in Latin America. Caracas Simon Bolivar Airport (CCS) was considered to be the gateway of the Americas, and the most relevant international carriers used to have CCS among its destination networks.
Later, in 1997, Viasa went bankrupt in shady circumstances. All of a sudden, Venezuela began to lose relevance in the air travel market as the stability of the country began to decline and other regional markets such as Panama and Colombia began to boom. Most of Viasa talent ended up at Asian and European carriers, and its fleet, comprised by McDonnell Douglas DC-10s and Boeing 727s was relegated to history.
Seven years later, during the presidency of Hugo Chavez, Conviasa (V0) was founded as the new flag carrier of Venezuela. It began with an initial capitalization of $16 million and four aircraft (two Boeing 737s, one Airbus A340 and a de Havilland Dash 7). Plans were set to make Conviasa one of the leading airlines in the region so that Venezuela could regain its air travel relevance. Just as a comparison, Emirates was founded in 1985 with capital of $10 million and two second-hand 727 aircraft.
“We Are A Socialist Airline”
During an interview with Cesar Martinez Ruiz, president of Conviasa in 2012, he stated at that time that “Profits are irrelevant to us as we are a Socialist Airline”, consistent with the guidelines of the leftist government led by President Chavez. At that time, V0 had a mixed fleet of Boeing, Airbus, ATR, Bombardier and de Havilland aircraft. Soon after, the Embraers E190 came to the mix. As oil prices were above $100 and a burgeoning demand stimulated air traffic, everything seemed to be bright for the Venezuelan airline.
However, three years later, the reality knocked at the door. Today, most of the Conviasa fleet is grounded due to several maintenance issues. The service has become irregular with severe delays and most of its destinations have been suspended or cancelled.
Is The Airline Nearing The End?
The crisis in Conviasa is the consequence of wrong managerial decisions. The fleet grew without taking into consideration commonality between equipment, turnaround times in its short-to-medium haul fleet might be of up to three hours in some cases, and, incredibly, poor fleet utilization with absurd decisions. For example, most of the fleet used to be grounded on Saturdays all day long for maintenance, just to name a few.
The use of the fleet for political motives has also been controversial. During electoral campaigns, it is well known the use of its fleet to transport government supporters from different regions of the country to Caracas, for major political rallies. Despite the denouncements, no sanctions were ever actually enacted.
The current situation of air travel in Venezuela has become critical. The lack of international connections due to the default in the payment to international carriers, and the operational disruptions Conviasa is experiencing is leaving Venezuelans with few but expensive travel options. For example, the Caracas – Miami route, the most popular international route- prices start from $600 and in some cases, have skyrocketed up to $5,000 depending on the season.
A Possible Solution Ahead?
Several rumors in the industry after the intervention of Conviasa early this year indicate that the airline might be divided. A regional division and an international one that might be sold. However, the inability of the airline to operate to Europe as it was blacklisted in 2010 after a series of accidents, leaves the brand with little or no value to use.
Eventual changes in Conviasa should include the standardization of its fleet to a sole type and a well-planned route network, together with the optimization of resources. Some basic changes may cause the “social model” airline to work, just as occurs with Satena in Colombia. However, the deteriorating political and economic situation in Venezuela and the scarcity of dollars in the market – a key factor for aviation business, may seal the fate of the airline in the coming months.