Air Canada Suspends Service to the Failing State of Venezuela

Air Canada is halting its thrice-weekly service between Toronto and Caracas as hyperinflation and violence continue to engulf Venezuela.

In a statement, Air Canada said–

Due to ongoing civil unrest in Venezuela, Air Canada can no longer ensure the safety of its operation and has suspended flights to Caracas until further notice.

Passengers who are booked on Air Canada on a future flight will receive a full refund, though that hardly seems like a deal if you have to buy a last minute ticket on another airline.

There’s something else at work here too: cash-starved Venezuela is skimming money from airlines:

International Air Transport Association’s CEO Tony Tyler said in a speech March 12 that the Venezuelan government is stopping airlines from repatriating around $3.7 billion in earnings.

For several months, airlines have reportedly been unable to access money earned in ticket sales in Venezuela due to the company’s tight currency controls. Ecuadorean flag carrier Tame suspended flights to Venezuela for three days in January over blocked payments.

“It is unacceptable that the Venezuelan government is not playing by the rules to which it is treaty bound,” said Tyler.

“The impact of this blocked cash is quite easily seen when you consider that airlines this year will only make $18.7 billion globally. Of course this is cash and not pure profit.

“Airlines certainly cannot sustain operations indefinitely if they can’t get paid. I have written to President Maduro asking for his urgent attention to this issue.”

Meanwhile, the incredibly unpopular President Maduro has vowed to reporters that Air Canada and any other carrier who pulls out will never be allowed to return while he is in power.

Despite its vast oil reserves and beautiful nature, Venezuela is a prime candidate for becoming the latest failed state. The command economy has totally failed the Venezuelan people and I have utter disdain for Maduro and his administration. Supply and demand are totally out of sync and even staple products like grain and dairy are facing dangerous shortages and long lines reminiscent of other failed experiments, like the Soviet Union.

My heart goes out to the Venezuelan people. Their savings have been evaporated, they are faced with the constant spectre of political and economic oppression, and a total failure in leadership continues to make the problem worse.

I hope for better times for Venezuela, but until the ruling junta (and I do use that term loosely) is removed and the IMF goes into clean up the mess, I cannot blame Air Canada for pulling out and I would encourage others to pull out as well if the government is blatantly stealing earnings and unable to provide for the safety of its citizens and guests.