Some airlines mull quitting Venezuela over debts: IATA

Wed Mar 26, 2014 4:35pm EDT
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By Anthony Esposito

SANTIAGO (Reuters) - Some major airlines are considering ceasing operations in Venezuela because of currency controls that have left the airlines unable to repatriate $3.8 billion in revenues, the head of the industry's main organization said on Wednesday.

Members of the International Air Transport Association are frustrated with accumulation of local currency that they cannot transfer out of the country without incurring heavy losses, and disappointed with government silence about potential solutions.

"I am aware that some of (the airlines) are considering very significant cutbacks or indeed suspending operations," said IATA Chief Executive Tony Tyler when asked in a Reuters interview on the sidelines of FIDAE airshow in Santiago.

"The airlines want to keep serving the market. They want to keep connecting Venezuela to the world. But they do expect to get paid for it."

Venezuela requires airlines to bill tickets sold to the country's residents in local bolivar currency, but the government currency board has not approved requests to repatriate the resulting revenue.

Tyler said that within the past year, 11 airlines that have been flying to Venezuela have reduced their operations by between 15 percent and 78 percent.

Air Canada ACb.TO suspended its operations this month, citing security concerns related to street protests, and Venezuela immediately cut ties to the airline.

Individual airlines have held meetings with government officials, but without results, Tyler said. Major airlines flying to Venezuela include American Airlines (AAL.O: Quote), Lufthansa LUFT.UL, Delta (DAL.N: Quote), Avianca AVT_p.CN and Copa CPA.N.   Continued...

Venezuela's President Nicolas Maduro speaks to the Union of South American Nations' (UNASUR) foreign ministers at Miraflores palace in Caracas March 25, 2014. REUTERS/Jorge Silva