October 25, 2014
Airlines warn Venezuela will lose connectivity
Umbrella group says exponential rise in price of tickets will lead to further contraction in sector
CARACAS — A group of airlines that operate in Venezuela said yesterday that the sector is at risk of contraction and that the country’s aerial connectivity could suffer a reduction if the price of plane tickets rises as planned.
The sector is already in crisis due to the government’s failure to pay a multi-million dollar debt that it holds with airlines.
The Association of Venezuelan Airlines (ALAV), an umbrella group for around 20 national and international carriers, said the government’s decision to adjust the price of tickets using the Sicad II exchange rate — and not the official rate — was causing even more uncertainty in the sector, with the move having the potential of causing a significant drop in sales.
The change is scheduled to take place today.
The official rate is at around 6.3 bolivars per dollar, while the Sicad II rate is at around 50 bolivars per dollar. This means that the price of tickets could suffer a 500 percent increase.
ALAV warned in a communiqué yesterday that the raise in prices “could produce a contraction in the sector and a reduction in the country’s aerial connectivity, this time caused by a drop in demand.”
In May, when the government’s decision was announced, Transport Minister Herbert García Plaza said that the government would work with airlines “to decrease the price in dollars” of the tickets.
The Venezuelan government owes more than US$4 billion to airlines that operate in the country.
In the beginning of June, the administration of President Nicolás Maduro cancelled its debts with AeroMéxico, Colombia’s Avianca, Ecuador’s Tame, Tiara Air Aruba, Insel Air and Aruba Airlines. Other airlines received proposals for the debt to be cancelled in installments.
Humberto Figuera, the president of ALAV, said that several airlines — including Air Canada and Alitalia — have temporarily suspended their operations in the country due to the government’s delay in payment. He also underlined that the companies that are still flying to Venezuela are doing so with “smaller aircrafts and less frequently.”
American Airlines, for example, announced in June that starting this week it would only maintain 10 weekly flights to Venezuela, instead of the 48 it operated until now and that it would only fly to Caracas from Miami — cancelling all departures from Dallas, New York and San Juan, Puerto Rico.
The airline said that Venezuelan authorities owe it more than US$750 million.
Maduro has reacted angrily in the past when airlines have said they would cut flights to Venezuela and has threatened carriers not to allow them back.
“Whoever leaves Venezuela in the midst of this economic war doesn’t return to Venezuela because Venezuela must be respected,” he warned in May.
He has said the airlines’ decision to halt flights to the country is not related to debt but to the World Cup, which had supposedly forced companies to re-direct flights to Brazil due to increased demand.
“Some of these European airlines have reprogrammed flights until the World Cup is over and they’re re-routing flights to Brazil, given the large number of people around the world who want to enjoy the best World Cup we’ll see,” he said.
Herald with AP