Blocked funds: Airline’s patience cracks over Venezuelan route.

*LATAM, Lufthansa latest carriers to pull out of Caracas

By our correspondent in Dublin

LATAM Airline Group  and Lufthansa have become the latest carriers to scrap flights to Venezuela amid the continued challnges of repatriating revenues earned in the country.

LATAM Airlines Brazil affiliate has withdrawn flights between Caracas and Sao Paulo and at the end of July, LATAM will pull service between Lima and Caraca and service on its Santiago-Guayaquil-Caracas route.

The airline cites “the complex macro-economic scenario” taking place in the region as the rason behind the suspension, which will be for an undefined period.

Lamtan and Luftansa

“The companies of LATAM Airlines Group consider Venezuela to be an important market, and as a result, will work to resume these services as soon a macro –economic conditions permit,” says the carrier.

READ ALSO:  Dana Passengers to Pay Less on tickets , Cab Services with new Product, partnership  

While LATAM is South America’s largest carrier, Venezuela service make up only a small portion of its network. LATAM has said Venezuela service contributes only about one per cent of its total revenue.

It join airlines including Air Canada, Alitalia, Gol and most recently Lufthansa which have decided to stop serving the country.

The German carrier will pull its thrice-weekly service between Frankfurt and Caracas from June 17 until further notice.

“Demand for international travel to Caracas saw a further year-on year decline in 2015 and in the first quarter of 2016. At the same time, Lufthansa’s currently non-transferable local currency earnings have now reached a triple-digit million euro amount, “, it says.

READ ALSO:  Reduced operations forced us to cut workforce- Bristow Helicopters

Lufthansa though says onward connections to Caracas continue through Bogota and Panama City via its Star Alliance partner carriers Avianca and Copa Airlines services.

Foreign carriers have faced issues in repatriating cash-strapped Venezuela in recent years, and airlines that continue to fly to the country are selling airfares only in US dollars.

The few airlines that have succeeded in epatriating portions of their revenue have usually done so at a loss, accepting a less favourable exchange rate than the one that was in place when the revenue was booked.

IATA at the end of March estimated that the Venezuelan government continued to withhold more than $3.8 billion in airline funds earned in the country.

READ ALSO:  NAMA scales ICPC anti-corruption hurdle, scores 76.7% ACTU effectiveness index

“We have to keep the pressure on the government to allow carriers’ to repatriate their blocked funds,” said IATA director-general, Tony Tyler, at a briefing in Dublin on the eve of the AGM.

“Its important to remember, it’s not profits, this is money they have spent in mounting the operations.

“What we want is to keep the place connected, because Venezuela’s economic difficulties will only get worse if it becomes isolated even more.”

Wole Shadare