CARACAS, June 17 (Reuters) - American Airlines said on Tuesday it will cut almost 80 percent of its weekly flights to Venezuela in response to the government’s refusal to repatriate $750 million in revenue trapped by exchange controls.
As of July 2, American will run 10 weekly flights with service to Miami only. Its current schedule includes 48 weekly flights to San Juan, Dallas/Forth Worth and New York.
The International Airline Transport Association (IATA) says its member airlines have $4 billion in ticket revenue that they have been unable to repatriate due to delays in the South American nation’s currency control mechanism.
“Since we are owed a substantial outstanding amount ($750 million through March 2014) and have been unable to reach resolution on the debt, we will significantly reduce our flights to the country,” an airline official wrote in an email.
The company says it has worked in Venezuela for more than 25 years, and the country was the airline’s first destination in South America.
President Nicolas Maduro has threatened to kick out airlines that halt flights or restrict service. He recently attributed the problem to flights being rerouted to Brazil for the World Cup soccer championships.
Venezuela’s 11-year-old currency control system requires that airlines bill tickets in the bolivar currency. But it has provided only limited approval to repatriate those funds back into dollars.
Air Canada recently cut flights to Venezuela because of security concerns, while Alitalia suspended services due to delays in repatriating revenue.
The government last month reached a deal with six small airlines that agreed to reduced payment, and the economy vice-president said another $486 million would be released to the airline industry.
Despite some advances, the airlines remain frustrated at the situation, an IATA spokesman said.
Airlines for years priced tickets at the strongest official exchange rate, which has been devalued over the last 18 months.
Starting in July, the government will allow airlines to repatriate revenue at a rate of around 50 bolivars per dollar, from roughly 11 bolivars currently. (Writing by Brian Ellsworth; Editing by Dan Grebler)