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IATA AGM 2014: Concern over Venezuelan aviation taxation

IATA AGM 2014: Concern over Venezuelan aviation taxation

The International Air Transport Association has called on the Venezuelan government urgently to honour its commitment made in March to permit the repatriation of $3.9 billion of airline funds at fair exchange rates.

The funds are from sales of airline tickets in Venezuela and are being held in contravention of international treaties.

IATA cautioned that that failure to release the airline monies puts at risk a major contributor to the well-being of the Venezuelan economy - sustainable air connectivity.

“The situation is unacceptable.

“In March the Venezuelan government promised airlines that it would release their money for repatriation at fair exchange rates. Since then there has been very little progress. 

“Airlines are committed to serving the Venezuelan market but they cannot sustain operations indefinitely if they can’t get paid,” said Tony Tyler, IATA director general.

IATA continues its call for the immediate release of the blocked funds for repatriation at the exchange rates in place at the time the funds were generated.

In most cases this was 6.3 Bolivars to the US dollar.

Throughout the month of April, the Venezuelan government made various offers to release some of the airlines’ funds, but at inferior exchange rates or with arbitrary discounts.

These actions contradicted prior commitments to enable the airlines to repatriate the full amount they are owed and were rejected by the airlines.

Through IATA the carriers are calling on the government to release the full amounts at the exchange rates applicable when the funds were generated.

Growing Challenges in Providing Connectivity

A total of 24 airlines are affected by the Venezuelan currency controls. Blocked funds stood at $3.5 billion at the end of 2013.

This figure has now increased to $3.9 billion.

The situation is being exacerbated by other charges and taxes which are not aligned with International Civil Aviation Organization policy:

  • In December 2013 airport charges were hiked by 70 per cent with no consultation or improvement in services provided.
  • Special taxes have been levied on the air transport sector to fund activities completely unrelated to air transport.

Air transport is succumbing to these growing challenges.

Within the past year, 11 of the 24 airlines operating in Venezuela have reduced operations between 15 per cent and 78 per cent while one has stopped flying to the country altogether.

“Globally, aviation supports over 57 million jobs and generates $2.2 trillion in economic activity.

“Preserving and protecting Venezuela’s connectivity should be a priority for the Venezuelan government.

“Connectivity to Venezuela is deteriorating.

“Urgent government action is needed.

“IATA stands ready to help, but we cannot move forward without the government’s commitment to make good on its promises,” said Tyler.