GLOBAL ECONOMY

Dynamic among Venezuela carriers struggling to survive amid drastic flight cuts

The Venezuela-bound plane that caught fire Thursday in a Fort Lauderdale airport was a fully-boarded Boeing 767 from Dynamic Airways, one of the discount airlines that have stepped up in to provide service in an increasingly shutdown country.

For Venezuelans hoping to travel abroad, the options have been severely reduced to little-known carriers such as Dynamic or domestic carriers, which due to the country's economic crisis, have struggled to import replacement parts.

In the last two years, American Airlines, United and Delta – to name a few – have cut in half their flights to and from Venezuela.

Altogether, two years ago airlines offered 15,276 tickets weekly to the U.S. Today the number is 11,590 — a 25 percent fall.

The last airline to cut part of its international flights was state-owned Conviasa on Oct. 5, when they announced the suspension of flights to Madrid and Buenos Aires. The decision affected 12,000 passengers who already had bought their tickets.

But U.S.-based airlines have made the biggest cuts. Between 2013 and 2015, American Airlines went from 6,972 seats to 3,040, United from 1,232 to 620, and Delta from 1,260 to 496.

The reason behind the cuts is directly related to the cumbersome currency conversion laws put in place by Chavismo in the early 2000s, which critics say try to mask a dire financial reality.

Jason Sinclair, communications manager for the Americas at the International Air Transport Association (IATA), explained that flights frequency is being reduced because Venezuela’s government is preventing the airlines from converting the money they make by selling tickets to hard currency.

“This is an unprecedented case. Airlines are really committed to operating in Venezuela, but the government blocks their capacity to charge for their service. The government owes $3.8 billion to airlines,” Sinclair told Fox News Latino.

For over a decade Venezuelans across the board are living under severe exchange controls that limit all foreign currency transactions. So the bolivars the airlines get from selling tickets can only be exchanged through official mechanisms at a fixed, overvalued rate — yet in late 2013 the government stopped releasing enough dollars and the companies are no longer able to repatriate their dividends.

For almost two years now, the debt owed to airlines by the government has been accumulating and growing. And the situation only got worse last year as the oil-wealthy country was hit by a 50 percent drop in oil prices.

According to IATA numbers, Venezuela was the only Latin American country where the number of air passengers fell in 2014 — it now stands even behind Cuba.

“Many non-U.S. airlines are flying to Cuba right now and have no problems retrieving their funds,” Sinclair said.

José Yapur, president of Venezuela's Tourism Board, points to a different reason as to why Cuba may seem a more attractive destination for airlines: the expected spike in tourism, now that the island is giving signs of moving toward a more democratic system.

“Cuba has great tourist attractions and spends a lot of money promoting tourism. Airlines think that the island can become a popular destination for Americans as it already is for Europeans and Canadians,” Yapur told FNL.

According to Caribbean News Digital, a website targeting professionals from the travel industry, 54 non-American airlines are operating right now in Cuba (far more than the 17 currently operating in Venezuela) currently offer flights to 60 cities worldwide. 

“Since 2008, the number of foreign tourists coming to Venezuela has fallen dramatically. It’s a market that relies heavily on Venezuelan passengers and airlines view this as risky,” Yapur added.

The only way out of this bottleneck, Sinclair and Yapur say, is for the government to make bold economic decisions first, and then try to revive tourism.

“The country has to solve its problems with exchange rates, has to create a payment schedule with airlines and has to be open to counsel about certain issues like airport taxes,” Sinclair said.

But even if the government begins to take steps today, recovery has a long road ahead. “It will take about three to four years to recover the level of tourism that Venezuela had in the 90s,” Yapur said.

Meanwhile, Venezuelans’ options to travel abroad are bound to keep dwindling and ticket prices to keep rising.

In 2013, a Caracas-Miami flight cost around 20,000 to 30,000 bolivars. Today the fare is upward 200,000 bolivars — and that if you are lucky enough to find an airline that sells tickets in bolivars. 

Most tickets now are priced in dollars, and they tend to be pricier ($450-$700). With the black market rate at about 800 bolivars per dollar these days, a $500 ticket translates to 400,000 bolivars: more than double the Venezuelan minimum wage per year.

Since 2013, foreign airline companies have resorted to selling tickets in dollars only to avoid further financial losses and control a debt that is already close to the $4 billion mark.

Franz von Bergen is a freelancer reporter living in Caracas.

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