MIAMI— While other key economies in Latin America report positive numbers in passenger traffic, Venezuela has experienced 8.5% decrease in 2014, according to the International Air Transport Association (IATA).
“The 8.5% fall in passenger numbers is significant. By contrast, other key Latin American economies saw passenger growth in the 2 to 12% range. An urgent change of policies is needed,” said Tony Tyler, IATA’s Director General and CEO.
The decline outpaced the 3.0% Gross Domestic Product (GDP) experienced in Venezuela during the same period, reflecting the impact of the restrictions in air travel after THE government led by leftist president Nicolas Maduro has not cleared international carriers to repatriate accrued funds in foreign currency, arising from the sale of passenger tickets and cargo space during 2013 and 2014.
Since 2003, Venezuela has had in place currency exchange controls that limit the repatriation of funds for corporations and travel allowances for nationals. Despite this, the system worked without problems for almost a decade. The death of ex president Hugo Chavez in 2013 together with a economic crisis caused by the decrease in oil prices, caused progressive delays in the clearance of the funds.
“The Venezuelan government’s policies are crippling the air transport sector and depriving its people of the economic benefits that it could bring. Air travel options in Venezuela are diminishing while the country’s citizens and businesses pay more to travel due to the negative impact of government policies” Tyler said in a statement.
Since October 2013, several airlines have opted to decrease or cease their service to Venezuela. While Air Canada and Alitalia have opted to stop flying to Caracas, others have drastically cut frequencies.
The lack of a sound flag carrier in Venezuela, plus the reduction in size of major Venezuelan airlines given the lack of foreign currency to cover maintenance / operational expenses have caused carriers to reduce or close domestic destinations in favor of those international ones, further deteriorating the country’s already limited air connectivity.
“Venezuela’s economic woes should not be an excuse for inaction. The government needs to take steps to re-orient the operating environment for air carriers to prevent an even deeper deterioration in the country’s connectivity to global markets and international trade” Tyler commented.
In the last Annual General Meeting held in Miami, Peter Cerda, IATA’s Regional Vice President, addressed the issue “We hadn’t had any relevant progress in the negotiations so far and, to be honest, we don’t believe we will see any advances in the coming two years,” he admitted.
Threatening Skies Ahead
IATA has denounced that foreign carriers serving Venezuela will have now to pay for fuel in foreign currency instead of Bolivars, the local Venezuelan currency. The Association reports that the measure goes against the non-discriminatory spirit of the Chicago Convention which Venezuela has signed.
With an oil-dependent economy slowing down and a high import dependency to cover the basic needs of Venezuelans, the economic scenario is going to worsen in the coming months as foreign currency will be scarcer. “We could expect some more foreign airlines to cease flights to Venezuela in the coming months” commented aviation analyst Orlando Suarez. “The Venezuelan Airline Association ALAV has warned the government over the recent measure. Nevertheless, the response has been nothing but silence.”
Tyler exhorts Venezuelan government a call to action to solve the issues “a single and fair bolivar (VEF) exchange rate for the sale of tickets and the payment of airline fees and charges should be established. Venezuela should also commit to a transparent consultation process with the airlines before imposing any new taxes or regulations which affect air carriers.”