The latest airline casualty to Venezuela’s civil unrest is United Airlines, which announced that it will be cutting flights between Houston and Caracas, Venezuela starting July 1st. The route operates daily with Boeing 737 aircraft, and has been popular with oil executives due to Venezuela’s large oil reserves and the Venezuelan ownership of Citgo. However, Venezuela’s indebted state has led to decreased demand from the Venezuelan and U.S. markets, leading the airline to cut services.

“In every market we serve, we continually review demand for service, and because our Houston-Caracas service is not meeting our financial expectations, we have decided to suspend it,” United’s spokesman, Charles Hobart, said. United is not the only carrier that has reduced or cut service to Caracas from the U.S.; American and Delta have both cut service in recent years due to the state of the country.

United has tried to keep the service alive, first cutting service to four times weekly, then increasing it to a daily service during this summer season, to adjust to demand patterns. The service was further adjusted earlier this year when United re-routed its outbound flights via. Aruba so crew working on the Caracas flight would not be forced to overnight in Caracas, due to security concerns. However, United now follows in the footsteps of airlines such as Air Canada, Alitalia, Aeromexico, Lufthansa, LATAM, GOL and Insel Air, who have all decided to cut all service to Venezuela.

People waiting in front of a closed United Airlines ticket office in Caracas, Venezuela. Photo Credits: CCTV News

United passengers will still have access to Caracas through Star Alliance partners Avianca (from Bogota, Colombia) and Copa Airlines (from Panama City, Panama), and passengers looking to travel on U.S. airlines to Caracas can still fly American Airlines twice daily from Miami, and Delta on Saturdays from Atlanta.

Financially, carriers have had trouble retrieving money made from tickets sold in bolivars, the Venezuelan currency. In 2016, American Airlines, Delta and United asked the U.S. Department of Transportation for antitrust immunity to discuss the $3.8 billion stuck in the country. In 2015, American Airlines (the largest carrier by capacity operating to Venezuela) took a $592 million charge to write down the value of its Venezuelan ticket sales made in bolivars, while Delta has also written down the value of its Venezuelan sales. Some carriers, including TAP Portugal, have stopped selling plane tickets in Venezuela in order to prevent further money made on Venezuelan ticket sales from being stuck in the country.

Last month, the country’s civil aviation sector was thrown into chaos when Conviasa halted operations due to issues with the airline’s insurance, and Wamos Air stopped international operations on behalf of Conviasa. You can read our coverage of the event here.


Categories: Industry Talk