Venezuela Agrees to Pay Airlines the Billions They're Owed

Source: Businessweek

In a battle of ideology vs. air service, airlines just scored a win in Venezuela. The government of President Nicolás Maduro agreed on Friday to make enough dollars available so international carriers could repatriate $3.8 billion, which they’ve been unable to do amid a shortage of greenbacks in the nation.

The airlines’ boxed-up funds are from ticket sales they made in 2012 and 2013 in Venezuela, which requires that the sales be conducted in bolivars. The process of gaining approval to convert the sales to dollars and repatriate the money ground to a halt last year. The government said on Friday that the currency transactions will be made at the rate in effect when the tickets were sold—a major victory for airlines.

The dispute had led to some cuts in air service to Venezuela but threatened to create much larger reductions as airlines became less willing to continue flights for which they would not receive payment. At least 11 airlines trimmed their service to the country in the past year, according to the International Air Transport Association. “This is not the government’s money—it is money the airlines earned by providing air transportation to the citizens of Venezuela,” Tony Tyler, IATA’s director general and chief executive officer, said on Wednesday in Santiago, Chile. “Airlines are committed to serving the Venezuelan market, but they cannot sustain operations if they can’t get paid for the services they provide.”

Air Canada ended flights to Caracas earlier this month over the issue, while Ecuador’s Tame has curbed its schedule and stopped selling tickets in Venezuela. Air Canada spokesman Peter Fitzpatrick said on Friday that the airline is monitoring the situation but had “nothing new to add at this time.”

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