May 19--CARACAS, Venezuela -- Italian airline Alitalia has announced that it is suspending all flights to Venezuela "due to the ongoing critical currency situation" in the country," which is "no longer economically sustainable."
The decision by Alitalia follows a similar suspension in late March of all flights to Venezuela by Air Canada.
The latest pull out follows Venezuela's failure to honour a commitment made in March to permit the repatriation of $3.9 billion of airline funds at fair exchange rates.
The funds are from sales of airline tickets in Venezuela and are being held in contravention of international treaties.
"The situation is unacceptable. In March the Venezuelan government promised airlines that it would release their money for repatriation at fair exchange rates. Since then there has been very little progress. Airlines are committed to serving the Venezuelan market but they cannot sustain operations indefinitely if they can't get paid," said Tony Tyler, director general and CEO of the International Air Transport Association (IATA).
IATA has continued its call for the immediate release of the blocked funds for repatriation at the exchange rates in place at the time the funds were generated. In most cases this was 6.3 Bolivars to the US dollar.
Throughout the month of April, the Venezuelan government made various offers to release some of the airlines' funds, but at inferior exchange rates or with arbitrary discounts. These actions contradicted prior commitments to enable the airlines to repatriate the full amount they are owed and were rejected by the airlines. Through IATA, the carriers are calling on the government to release the full amounts at the exchange rates applicable when the funds were generated.
IATA cautioned that that failure to release the airline monies puts at risk a major contributor to the well-being of the Venezuelan economy -- sustainable air connectivity.
In the last year, a number of other airlines have reduced flights to and from Venezuela for this reason. This year, Colombia's Avianca has reduced itineraries by more than two-thirds. Other airlines represented by the International Air Transport Association are considering suspending all flights to Venezuela.
However, addressing the issue in late March, Venezuelan President Nicolas Maduro said, "Airlines have no excuse to reduce flights to Venezuela. I will take severe measures against any airline that does so. If an airline chooses to leave the country, it won't come back as long as we're the government. They will have to overthrow us. They won't return. I'm telling this to the owners of international airlines."
In March, the Curacao government was called on to bail out local airline Insel Air after it found itself in a dire financial situation as a result of the nonpayment of some $80 million owed to the airline by Venezuela.
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