IATA issues stern warning to Venezuelan government over US$3.8bn debt to foreign airlines

Back in March 2014, 11 airlines began to trim back flight services to Venezuela in light of rising debt owed for non-payment of ticket sales to appropriate airlines. At the time it was estimated that Venezuela owed airlines in excess of US$3.80bn for ticket sales during 2012 and 2013 and as a result of the impending actions, the government agreed that it would make the funds available to settle what was owed based on exchange rates between the Venezuelan bolivar and American dollar at the time of the sales. In March 2014 the Bolivar (FLV) was struggling as a result of a number of devaluations and was trading as low as 65 Bolivars to the dollar. At this time it was seen as a major victory for the airlines who had basically used the fact that Venezuela imports over 70% of its goods and therefore continued flights to the country are critical. However move forward nine months to last December and according to Humberto Figuera, President of the Venezuelan Airlines Association (ALAV), only one fifth of what was then outstanding had been repaid, leaving US$3.45bn outstanding, adding that half of the debt was owed to three principal airlines: American Airlines, Panamanian Copa Airlines and Colombian Avianca, for a combined total of US$1.8bn.
Today IATA is taking a much sterner approach to the situation, demanding that Venezuela now adopts three new courses of action: First to establish a single and fair Bolivar (VEF) exchange rate for the sale of tickets and payment of airline fees and charges; second to work with airlines in establishing a sensible achievable payment schedule to settle the current outstanding debt; and finally to agree to consult with airlines in advance of the imposition of any new taxes or regulations that will directly affect them. During the IATA AGM this Monday their Director General, Tony Tyler made the problem abundantly clear. IATA is currently campaigning in 12 countries where airline funds are being withheld by governments. However the majority—some 90% of those funds—is owed by Venezuela. Tyler said IATA’s Caracas office had managed to make some headway in getting the attention of the government, but the money had still not been released. “Our message is clear—this must stop. This is airline money and it needs to be paid,” Tyler commented.
At the moment foreign airlines are forced to sell tickets using an exchange rate of 12 Bolivars to the US dollar, but have to make payments such for airport use with a floating rate that currently stands at 199 Bolivars per US dollar. “The Venezuelan government must take action to resolve this untenable situation with the airlines. In Latin America, aviation supports over 4.9 million jobs and generates US$153bn in economic activity. Air connectivity in Venezuela has suffered because of the lack of progress over the blocked funds issue and the deterioration in the operating environment,” Tyler underlined.