While a combination of currency restrictions and political upheaval has caused major air lines to walk away from Venezuela service, a carrier has stepped in to fill the void and turn a tidy profit.
Flying in and out of Caracas Simón Bolívar International Airport (CCS) isn’t an especially attractive business prospect for most air lines right now. One South American air lines, however, has managed to make routes to the beleaguered nation a lucrative proposition.
In June, United Airlines became just the latest airlines to indefinitely suspend service to destinations in Venezuela. The legacy carrier blamed the decision to walk away on “low demand and financial shortcomings.” In truth, currency fluctuations, political unrest, a recent financial meltdown and the near impossibility of moving money out of the country have made flying to the South American nation a losing venture.
Even South America’s largest carrier LATM had announced that it would cease service to Venezuela by May of this year. Airline officials pointed to a “difficult macroeconomic scenario” in the country before abruptly halting flights. By this time, Lufthansa, Air Canada, and Ecuador-based TAME had already shuttered operations in the country. Some of the carriers who continue to offer service to the embattled country, refuse to sell tickets instead insisting that passengers purchase tickets outside of Venezuela’s borders.
Meanwhile, Bloomberg reports that for Santiago, Chile-based Latin American Wings (LAW), business is booming – even in Caracas. Airline officials say that while flights arrive at CCS half-empty, flights leaving the country depart at near capacity.
Although LAW has benefited from much of the competition leaving town, airlines officials say that the air line is positioning itself for a day when the market inevitably stabilizes. In the meantime, a temporary monopoly is making the market especially profitable for the upstart Chilean air lines.
“Our bet, in a market in which everybody ran away, is to say ‘we’re here,’” LAW CEO Andres Dulcinelli told Bloomberg. “When the situation resolves, either for one side or the other, then I think they’ll remember who stood firm.”
Dulcinelli orchestrated a unique strategy for ensuring that the company’s profits aren’t lost to the winds of political change – simply letting someone else worry about that end of the business. LAW partnered with Venezuela-based Estelar which navigates the arduous task of getting profits out of the country.
“All the sales there go to Estelar’s accounts and once a month we transfer between our accounts,” he explained. “They take care of the legal process of getting the dollars and it has worked spectacularly.”