Italian airline cites "ongoing critical currency situation" for its flight suspensions
In Venezuela, money from airline ticket sales goes into a government account
"The government is holding that money and not releasing it to the airlines," trade group VP says
11 others have cut flights, and Venezuela owes 24 airlines a combined $4 billion, he says
First, Air Canada decided to suspend all of its flights to Venezuela in late March. And now, Alitalia is following suit.
In a statement sent to CNN, the Italian airline says that it’s suspending the flights “due to the ongoing critical currency situation in Venezuela,” which is “no longer economically sustainable.”
The suspension goes into effect on June 2.
For the last 11 years, Venezuela has tightly controlled all cash flow within its borders. Under the Venezuelan system, all money collected in ticket sales has to be deposited into an account controlled by the government. No funds can be withdrawn from the account without permission from the officials who control it.
The government sets exchange rates for different sectors of the economy, according to priorities also set by officials.
“The bottom line is the airlines are asking for their money; the money that they’ve earned for services provided in transporting passengers from and to Venezuela. Unfortunately, again, the government is holding that money and not releasing it to the airlines,” said Peter Cerda, regional vice president for the International Air Transport Association, which represents airlines around the world.
He calls the situation “an urgent issue.”
In an interview with CNN, Cerda said Alitalia is not the only airline facing problems. In fact, he says, Venezuela owes 24 airlines around the world a combined $4 billion.
Cerda also says in the last year, 11 other airlines have reduced their number of flights to and from Venezuela for the same reason. This year, Colombia’s Avianca has reduced itineraries by more than two-thirds. Other airlines represented by the International Air Transport Association are considering suspending all flights to Venezuela.
“We may begin to see a trend of other airlines following suit because simply an airline cannot continue to operate if they’re not going to be paid for their services,” Cerda said.
The International Air Transport Association has been in negotiations with the Venezuelan government for the last six months. The last meeting happened a month and a half ago, according to Cerda. He says that even though officials have given them assurances they will make arrangements to pay, they have yet to see a proposal in writing. Discussions to pay off the debt have involved a combination of payments in fuel, cash and bonds.
CNN reached out to the Venezuelan officials for comment about Alitalia’s decision, but a spokesman said there’s no official reaction yet. Addressing the issue in late March, President Nicolas Maduro didn’t sound very conciliatory.
“Airlines have no excuse to reduce flights to Venezuela. I will take severe measures against any airline that does so. If an airline chooses to leave the country, it won’t come back as long as we’re the government. They will have to overthrow us. They won’t return. I’m telling this to the owners of international airlines,” he said.
Reacting to Air Canada’s decision to suspend flights to Venezuela in late March, Transportation Minister Hebert Garcia said Venezuela remains a very attractive destination, regardless of any actions taken by the airlines.
“Canadians will still keep on flying to Venezuela. I’m sure of that. Venezuela is a very safe country with excellent tourism alternatives like Margarita Island,” he said.
But airline executives and travelers are concerned about the recent social unrest in the South American country. Violent anti-government protests have left more than 40 people dead and around 800 injured in the last three months.
All hope is not lost. Alitalia executives say they would consider resuming flights “once the situation has stabilized,” a position shared by other airlines.