MIAMI — After two years, countless meetings and diplomatic calls, the funds of international airlines serving Venezuela still in a legal limbo as its financial and institutional crisis worsens.
International carriers operating in Venezuela are still waiting for the government’s action over the repatriation of accrued funds in foreign currency, arising from the sale of passenger tickets and cargo space during 2013 and 2014.
During the last year, the possibility of international operators of retrieving their income became gradually complicated, causing airlines such as Air Canada to suspend flights indefinitely to the Latin American country. Other carriers have opted to reduce frequencies or slash destinations such as US-based American Airlines and Delta Air Lines
The Association of Airlines in Venezuela (ALAV) assures that the situation is still “complicated,” and the international carriers are still expecting that the government, led by President Nicolás Maduro, will comply with all bilateral agreements entered into the countries these airlines come from.
Mr. Humberto Figuera, President of ALAV, stated that “the mere fact that Venezuela is a member of the World Trade Organization, obliges the country to grant to other nations the most favorable deal in this matter.”
Conversely, the International Air Transport Association has taken a more critical position. In a recent press note, the association alerted that “If Venezuela fails to settle the debt, the country would be isolated from the world”; hence, urging its government to not just to reach agreements, but also fulfilling them.
Meanwhile, some carriers have sought the support of their countries to find a diplomatic solution. During a visit to Port-of-Spain held last February, President Maduro and Trinidad and Tobago’s Prime Minister, Kamila Persad-Bissessar, discussed a potential settlement of the remittance owed to the state-owned Caribbean Airlines, which is estimated to be about $50 million USD.
On the other hand, Copa Airlines is currently managing the case through its government. During last year, the devaluation of the Bolivar, the Venezuelan currency, caused a loss of approximately $6.6 million USD to the Panamanian airline and a capital equivalent to $470 million USD retained in the country.
“More than debt, we are dealing with a lack of funds (in Venezuela) in foreign currency. Copa Airlines, which is being managed by the Ministry of Trade,” stated Melitón Arrocha, Trade Minister of the Central American nation. However, and like the case of Caribbean Airlines, conversations seem to be at a standstill.
Some other countries, such as Argentina and Brazil, whose governments are close allies to Maduro’s leftist administration, have also brought the topic to diplomatic levels upon petition of Aerolineas Argentinas, and GOL and TAM, respectively.
In the meantime, the seat availability and frequencies for traveling overseas still limited for Venezuelans, who are facing a myriad of obstacles, namely the unavailability of tickets, blocking of travel dates, additional surcharges, and tickets sold in foreign currency.
These actions, according to sources of the industry, are intended to decrease the exposure to the risk of foreign carriers, given the deteriorating, economic, political and social conditions of the country, and the measures that Maduro´s government may eventually take (especially in the matter of foreign exchange policies).
Regardless of the events to unfold in the coming months, it is evident that the constrained connectivity and foreign travel choices in Venezuela will last over a long time, leaving locals with limited options, and foreign airlines to cope with a high-risk and volatile market with unpredictable consequences.