American Airlines (AA, Dallas/Fort Worth) will reduce its services to Venezuela from the current 48 to 10 weekly services with effect from July 2. In a statement seen by ch-aviation, the airline said the ongoing Foreign Currency Remittance Crisis affecting the South American state had forced it to terminate its Caracas Simón Bolivar to New York JFK, Dallas/Fort Worth, and San Juan Luis Muñoz Marin routes but noted that its Caracas and Maracaibo to Miami International routes would remain untouched.
"Since we are owed a substantial outstanding amount and have been unable to reach resolution on the debt, we will significantly reduce our flights to the country after July 1," American's Director of Corporate Communications, Casey Norton, said.
American is owed more than USD750million by Nicholas Maduro's socialist government with another 23 foreign carriers still owed more than USD3.5billion in revenue dating back to 2012.
Thus far, Caracas has reached an agreement with a handful of operators, albeit under drastically reduced terms. While InselAir (Curaçao), TAME Ecuador (Quito International), Aruba Airlines (AG, Aruba) and Aeroméxico (AM, México City International) have agreed to a reduction in the total amount of foreign currency owed with the balance to be paid in a lump sum, other carriers - Tiara Air (Aruba) (Aruba), Air Europa (UX, Palma de Mallorca), and Aerolíneas Argentinas (AR, Buenos Aires Jorge Newbery) - were obliged, among other things, to accept the exchange rate in force two years ago.
The remaining carriers - Air France (AF, Paris CDG), GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas), Alitalia, Air Berlin (1991) (Berlin Tegel), TACA International Airlines (San Salvador International), American, Caribbean Airlines (BW, Port of Spain), United Airlines (UA, Chicago O'Hare), TAP Portugal (Lisbon), LAN Airlines & TAM Linhas Aéreas (São Paulo Congonhas), Delta Air Lines (DL, Atlanta Hartsfield Jackson), Air Canada, Lufthansa, and Copa Airlines (CM, Panamá City Tocumen International) - have all refused to budge and consequently have not accepted Caracas' terms of payment.
The crisis has already begun to impact various carriers' operations with Lufthansa (LH, Frankfurt International) having partially blamed its recent profit warning on its inability to access EUR60million (USD141million) in revenue still locked up in Venezuela. For its part, Aruban carrier Tiara Air, which had teetered on the brink of bankruptcy as a direct result of the Crisis, has used the paltry funds disbursed to help clear some of its outstanding debts.
To offset losses and to leverage guarantees out of Caracas, 11 airlines have reduced their capacity between 15 and 78% while Alitalia (AZA, Rome Fiumicino) and Air Canada (AC, Montréal Trudeau) have suspended their Venezuelan operations completely. This week, LAN Airlines (Santiago de Chile) announced it would suspend its Santiago de Chile to Miami International via Caracas Simón Bolivar route during the month of July.
Airlines have demanded their remittances be converted at the exchange rate used at the time of the ticket's issuance - VEF6.3 to 1USD - while Caracas has pushed for a revised, less favourable rate.
In May, Vice Minister of the Economy, Rafael Ramirez, said airlines will begin setting local ticket prices according to the revised SICAD II exchange rate of VEF50 to 1USD with effect from July 1.
