SANTIAGO, Chile, Wednesday June 1, 2016 – Latin America’s largest airline is the latest carrier to suspend flights to Venezuela.
LATAM, which was formed by the merger of Chile’s LAN and Brazilian airline TAM blamed the “difficult macroeconomic scenario” for the move.
“Owing to the current complex macroeconomic scenario in the region, LATAM Airlines has announced adjustments to its destination network… it will suspend temporarily and for an undefined time its operations to Caracas airport,” the company said in a statement.
Flights between Sao Paulo and Caracas ceased at the end of May, and those from Santiago and Lima will end in July, the company said, adding that it would work to restart operations “as soon as conditions permitted”.
On Saturday, German airline Deutsche Lufthansa AG also announced that it was halting Caracas-bound operations. It said it was owed more than $100 million in ticket revenue.
International airlines have for years struggled to repatriate billions of dollars in revenue held in Venezuela’s local bolivar currency, as the cash-strapped government failed to convert it to hard currency amid tight exchange controls.
Strict currency controls were first imposed in Venezuela in 2003 by late President Hugo Chavez, and were further tightened two years ago, forcing several airlines to reduce their operations in the country.
Some airlines are now requiring passengers to pay their fares in dollars – no easy task in a country mired in deep recession and skyrocketing inflation.
For its part, Venezuela’s government says it is using its foreign reserves, which are rapidly dwindling, to pay for essential items such as medicines and industrial machinery.
The impact on international carriers prompted Tony Tyler, the chief executive of airline industry body IATA, to warn in March that the few remaining airlines still operating in Venezuela “may throw in the towel.”
“You can sense the frustration, some have said to us privately that they are thinking seriously about whether they can afford to keep these operations going,” he said on the sidelines of an airline conference in Chilean capital Santiago.
Oil-rich-cash-poor Venezuela has been hit hard by the global drop in oil prices and is facing a severe economic crisis and a chronic shortage of basic goods and raw materials.
Casualties in the manufacturing industry include Coca-Cola, which has said it would be halting production of some of its soft drinks because of a lack of sugar, and the tyre and rubber products company Bridgestone, which has also ended its more than 60-year relationship with the country.