June 3, 2014 / 12:32 PM / 4 years ago

Venezuela must play fair and release airlines' money -IATA

* Airlines say they are owed more than $4 bln in total

* Venezuela expected to release only $486 mln

DOHA, June 3 (Reuters) - Venezuela is being “wilfully irresponsible” in its treatment of airlines that have more than $4 billion of revenue trapped in the country, a leading industry body said on Tuesday.

President Nicolas Maduro’s government requires airlines to sell tickets in the bolivar currency but has been slow to allow them to repatriate the earnings.

The Venezuelan government said last week that it would begin releasing $2.1 billion in hard currency to companies that have struggled to obtain dollars as a result of the controls. The country’s top economic official said airlines would receive $486 million of the total earmarked for disbursement.

The International Air Transport Association (IATA), which is holding its annual meeting in Doha this week, said the proposals are unsatisfactory.

“Airlines are being expected to accept a significant discount ... plus payment would be staged over several years,” IATA Director General Tony Tyler told the meeting of more than 200 airline executives.

“The Venezuelan government takes the top prize for wilful irresponsibility.”

Airlines including Lufthansa, Avianca and Copa have responded by reducing the number of flights to the country and using smaller aircraft.

Air Canada went a step further by halting operations, citing security concerns, while Alitalia is suspending flights over the summer months. Ticket prices have also increased sharply as airlines try to reduce losses.

“You can’t expect airlines to provide a service if they can’t get paid for it. So our call to the Venezuelan government is to play by the rules,” Tyler said.

Small airlines Tame, AeroMexico, Aruba Airlines and Insel Air agreed to receive a single payment of about $200 million between them to cancel debts from 2013, the Venezuelan Airlines Association said last week. It is not known how big a discount the payment represents.

Major airlines, however, are unwilling to agree to the terms, Tyler said.

Lufthansa, Europe’s largest airline by revenue, has said it is owed hundreds of millions of dollars. It suspended Venezuela ticket sales for two days last month.

Reporting by Victoria Bryan; Editing by David Goodman

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