Monday, July 7, 2014

Venezuela: Delta Joins American Airlines in Drastically Reducing Flights

According to The Latin American Tribune, Delta Air Lines is joining American Airlines in cutting service to Venezuela.

Delta, which serves 333 destinations in 64 countries, has announced that it is reducing its flights to Caracas to one a week because of unrepatriated currency.

Delta previously flew daily to Caracas from Atlanta, where it is based. The company flies more than 165 million customers each year, employs nearly 80,000 employees worldwide and operates more than 700 aircraft. 

Venezuela staff report that when they came in this morning to the company's Caracas office there were signs on the door advising them that no tickets were to be sold until after a morning meeting discussion at which they were told of the flight reductions beginning August 1.

Delta spokeswoman Sarah Lora confirmed Monday (July 7) that the carrier is reducing service by 85%.

Delta declined to state how much Venezuela owes the airline as a result of its inability to exchange its bolivar currency for dollars.

The International Air Transport Association (IATA) says Venezuela has not been exchanging bolivars for dollars for most of its airline members since 2012 and airlines are stuck with a backlog of $4 billion in an unexchangeable and rapidly devaluing currency. 

COMMENT: While the government's official rate of exchange requires only 6.3 bolivars to purchase a dollar, the black market requires 70 bolivars to purchase a dollar, so the difference is monumental.

At the beginning of this month, American Airlines cut its service to Venezuela from 48 flights a week to 10 and only to and from Miami. American says it has over $750 million trapped in the country.

Venezuela's embattled President Nicolas Maduro has threatened that any airline that stops flying to the country will not be allowed to return.
International airlines are not the only ones in Venezuela strapped for dollars. 

Domestic carrier Laser Airlines said last week that it would suspend flights within 30 days unless the government exchanged the foreign currency it needs. 

Most airlines are leased, repaired and maintained at service centers outside of the country that must be paid for in hard currency.