Latam Airlines Group, the South American company that was created after a merger between Chile’s Lan and Brazil’s Tam airlines, announced on Monday that it will suspend all flights to Venezuela “temporarily and indefinitely.” Latam is the first airline in the region to make this decision. Panama’s Copa and the Colombian firm Avianca are still operating flights to and from Caracas, although they have reduced frequency and capacity while they fight to repatriate millions of dollars in revenue held in Venezuela in bolivars because of the government’s strict currency-exchange controls.
Latam did not, however, cite these monetary restrictions as its motive for interrupting services. Instead, the company said the decision was due to “the complex macroeconomic scenario in the region,” adding that “the companies of the Latam group consider Venezuela to be a relevant market and will work to reestablish operations as soon as global conditions permit.”
The company said the decision was due to “the complex macroeconomic scenario in the region,”
The announcement will be immediately effective for all flights between Sao Paulo and Caracas, while other destinations, such as Lima and Santiago de Chile, will see services extended until late July.
The news comes just days after the German airline Lufthansa announced that it will suspend flights to Venezuela. Air Canada, Alitalia and Tiara Air from Aruba have also canceled operations in Venezuela, as the country grows more isolated week by week.
Tight currency controls established by former President Hugo Chávez in 2003 require international companies to obtain a special permit from a specific government agency in order to exchange their earnings in bolivars and repatriate profits. The process, always mired in slow-moving bureaucracy and glitches, began to break down in 2012, the year Venezuela’s coffers began to run dry.
International companies need a permit to exchange their earnings in bolivars and repatriate profits
Since then, the government has only allowed partial exchanges, and even then it opted for a selective default with the airline sector. The Geneva-based International Air Transport Association (IATA) says Venezuela owes international airlines $3.7 billion. Despite several rounds of negotiations, the companies were unable to reach an agreement with the Maduro administration.
AITA said in February that demand for tickets to and from Venezuela fell by 35% between 2014 and 2015, and it predicted a 50% drop in 2016, a trend caused by a deep economic crisis that makes it difficult for Venezuelans to travel, leading airlines to reduce capacity.
Conviasa, Venezuela’s last flag carrier, was founded in 2004 with a small fleet that included one wide-bodied aircraft and about 20 short-haul jet airliners. The now-defunct company was plagued by poor management but there are still a few small and privately operated planes with ancient equipment around.
English version by Dyane Jean François.