PHOTO: Lufthansa is one of two airlines that are suspending flights to Venezuela.
In what has been building for years, two more airlines - two prominent carriers at that - have suspended flights to Venezuela due to the country's catastrophically unstable economic situation.
Latam Airlines Group SA, Latin America's largest carrier, said Monday it is eliminating all flights to Caracas by August, while on Sunday Lufthansa Airlines said it is suspending its three weekly flights to Venezuela in June "until further notice."
Lufthansa told Fortune magazine it is owed more than $100 million.
In a statement, Latam said: "The companies of the Latam group consider Venezuela to be a relevant market and will work to reestablish operations as soon as global conditions permit."
They join American Airlines, Delta, United and several other carriers who have reduced or suspended service to the country since 2014 as Venezuela enters its third consecutive year mired in a slumping economy.
In addition to the economic woes, at issue is the way the country takes in money for airline tickets and then distributes it. Venezuela insists all money collected in ticket sales must be in bolivars, which it then deposits into a government-controlled account. The government then disperses the money back to the airlines.
But there has been no repatriation of the money. The government is running out of cash and has not made any payments. Venezuela owes 24 airlines across the world more than $4 billion in ticket sales, according to the International Air Transport Association (IATA), the trade association that represents virtually every airline.
Unfortunately, it has meant a lose-lose proposition. The government has been unable to pay back myriad airlines, which, in turn, have reduced or eliminated routes to Venezuela, which, in turn, is slowly becoming a ghost town when it comes to business.
"What we want is to keep the place connected. Venezuela's economic difficulties will only get worse if they are isolated even more and unable to participate in trade because airlines aren't flying there anymore," IATA Director General Tony Tyler told Fortune.
And the situation doesn't appear to be improving. In fact, it could worsen.
According to Bloomberg News Service, Venezuela's economy is projected by the International Monetary Fund to contract by eight percent in 2016, with the average rate of inflation expected to surge to almost 500 percent.
For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.
Topics From This Article to Explore
