American cuts Venezuela schedule as trapped cash mounts

[700UW]

 

American cuts Venezuela schedule as trapped cash mounts

By: Edward Russell
Washington DC
Source:
in 5 hours


American Airlines will cut its schedule to Venezuela significantly in July, as the amount of cash it has trapped in the country continues to mount.
The Fort Worth, Texas-based Oneworld alliance carrier will discontinue 38 of its 48 weekly flights between the USA and Venezuela and end service between Caracas and Dallas/Fort Worth, New York JFK and San Juan on 1 July, it tells Flightglobal.
 
American will continue to operate eight weekly flights between Miami and Caracas, and two weekly flights between Miami and Maracaibo, it adds.
 

http://www.flightglobal.com/news/articles/american-cuts-venezuela-schedule-as-trapped-cash-mounts-400484/

 

[eolesen]

This was bound to happen. AA is (or was) the largest carrier there if I recall, so this will hurt Venezuela much harder than it will AA.

 

[700UW]

The article states AA is indeed the largest carrier in Venezuela.

 

[jimntx]

Why are we even bothering to schedule 8 flights/week into Venezuela? Just do like Air Canada, stop all service. Countries like Venezuela who pull stunts like this should experience full transportation embargoes to be in place until the airline/whatever gets their money at an acceptable exchange rate.  Venezuela declaring that the Bolivar is worth 32/$1 doesn't make it so.  A lot of countries need to grow up and accept the fact that actions have consequences.

FYI, according to a currency converter I found through Google, the current exchange rate is 6.29 Bolivars to the dollar. So, Venezuela is attempting to pay out our money to us at approx. 1/5 of the actual exchange rate.

 

[eolesen]

After the pullback, AA is only slightly ahead of UA/DL and a handful of other carriers who operate but a single daily flight to CCS.
 
CM and G3 still show 3 and 2 daily flights respective, unless they also take the hint and cut back their ops.

 

[UPNAWAY]

I'd drop it to one a day to just to keep a foothold and try and recoup my money!

 

[WorldTraveler]

And the real question is if or when AA will ever be allowed to increase service.

The losers are N. America consumers who will see much higher fares; Venezuela originating traffic, local currency denominated traffic has all but dried up.

 

[eolesen]

You're assuming there are still North American consumers looking to travel to Venezuela... It's not exactly known for its resorts or casinos.
 
There's a component of VFR's in the market, and maybe some oil business.
 
As for re-establishing service... there isn't an Open Skies agreement with Venezuela, but I can't imagine they'd turn down the prospect of hard currency.  They don't have a national carrier to replace AA.

 

[WorldTraveler]

there is a true paying market from N. America to Venezuela. VFR and business. As with many Latin countries, the majority of the market in volume comes from Latin America but the highest fares come from the US.

I'm not doubting that AA made the decision given the likely inability to repatriate its money - which has happened in other countries in Latin America at various times in the past.

The only real question is how easily AA or any other airline will be able to restart service in the future; Venezuela has indicated that service that has been cut will not be allowed to restart.

 

[eolesen]

That's their loss if they don't allow services to resume. They want the fuel sales, they want the landing fees.
 
In the meantime, I'm sure AA will find a much more profitable use for the assets.
 
I do feel sorry for AA's employees there -- it's not like there is a booming economy and they can fall into another line of work easily...

 

[WorldTraveler]

it's a loss for everyone. The people who live in Venezuela are living an economic nightmare.

But Venezuela's actions today could serve as a permanent reset to the market arrangement when it reopens at some point.

and history does say that at some point Venezuela will become more business friendly.

 

[DallasConehead]

So what, its AAs problem, not mine. Threads like this just pollute the board.

 

[700UW]

It is your problem flight cuts can lead to job cuts and having $750 million stuck in limbo effects the bottom line.

 

[FWAAA]

The problem has been around for years, but lately the numbers have grown much larger.
 
At the end of 2012,  AA had $413 milion stuck in Venezuela.   Now it's about $750 million.  

 

[Rogallo]

It is your problem flight cuts can lead to job cuts and having $750 million stuck in limbo effects the bottom line.

Yup, maybe they'll have to lay off the outsourced, non-union personnel doing our work!!