A couple weeks ago, Seberino Cordova, a sixty-four-year-old Venezuelan restaurant owner, boarded a bus in Caracas for a four-day journey that would take him over the Andean mountains, across the dicey national borders of Colombia and Ecuador, and into Peru. Cordova was tired of Venezuela’s financial instability, product shortages, and high murder rate, and he hoped to move to Peru. “Of course, I’d rather fly,” he said. “But there are no seats available.” Cordova said that he had tried for a month to get a seat on an airplane, to no avail. That’s because the economic policies that have driven him to leave Venezuela have also made it exceedingly hard for people to depart by air.
More than a decade ago, the government of President Hugo Chávez enacted strict exchange controls on the bolivar, the Venezuelan national currency. The controls pegged the bolivar to the dollar and limited trade between currencies. Because of these rules, airlines that operate in Venezuela are not allowed to freely exchange their accumulated bolivars for dollars, as they can in countries that have free-floating currencies. Instead, every fifteen days, they ask the government to convert their revenue, according to the International Air Transport Association (I.A.T.A.), a trade association for airlines. From 2009 to 2012, airlines typically received the dollars within around six months, according to the I.A.T.A., but by the end of 2012 payments were being delayed for as long as a year—and since October, 2013, almost no payments have been approved at all. “We’re not aware of a similar situation anywhere on the globe where airlines have this sort of struggle,” Peter Cerda, vice-president for the Americas at the I.A.T.A., told me. “This is extraordinary and has no precedent.” Now the I.A.T.A. says that the Venezuelan government owes nearly four billion dollars to a group of twenty-four international airlines. The Venezuelan government hasn’t commented on the details of the delays, but the Transport Minister, Hebert García Plaza, has acknowledged that there is an “outstanding bill.”
Many of the airlines have become so reluctant to accept the bolivar that they have limited the number of tickets for which they will accept the currency. A few have suspended bolivar-denominated sales altogether. “They’re really trying to reduce exposure,” Savanthi Syth, an airline analyst at the financial advisory firm Raymond James, said. “The longer that they go without a payment, the more likely it is that there are going to be fewer bolivar-denominated tickets.” American Airlines, which has forty-eight flights a week to Venezuela, the largest exposure of any U.S. airline, sells tickets for bolivars sporadically, often just a few days in advance. “It’s not that there aren’t seats—it’s that the airlines don’t want to sell them,” Yane González, who stood next to Cordova at the Caracas bus station, told me. (American Airlines declined to answer questions for this article, as did the Venezuelan authorities.)
When people search for plane tickets in Venezuela, online or through travel agents, seats often show up as “not available.” Planes out of the capital, however, are frequently not full; airlines would sometimes, it seems, rather fly without passengers at all than with passengers who have paid in bolivars. The agents often do little but shrug their shoulders when customers ask why so few seats are available. Airline staffers advise potential passengers to visit airlines’ Web sites just after midnight to see if a batch of tickets has become available, or simply suggest they try again the following day.
When airlines do sell seats in bolivars, they often sell them for much more than comparable tickets in other markets, to make up for the risk of not being able to repatriate their revenue. Rates for flights, therefore, are often far out of reach for many Venezuelans. For example, when I recently asked American Airlines for the cheapest round-trip flight from Caracas to New York, it offered economy-class tickets for around sixteen thousand bolivars each. The Venezuelan government uses three official exchange rates; at the “primary” rate, of just over six bolivars per dollar, the ticket would have cost more than twenty-five hundred dollars. The dollar is in such high demand, however, that it sometimes trades on the black market in Venezuela at more than ten times the primary official exchange rate. This means that people with access to dollars can buy a sixteen-thousand-bolivar ticket for just over two hundred dollars, provided the tickets are available. That has turned Venezuela into a regional hub for people with hard currency who want to travel on the cheap.
“If the situation continues to evolve as it has over the last several months, we don’t know how long these airlines will be able to sustain their operations,” Cerda said. President Nicolás Maduro insists that airlines shouldn’t reduce their flights in Venezuela. “I’ll take severe measures against those that do,” he said on state television last month. “Airlines that leave this country won’t be welcome back while we are in government.” In January, the government floated the idea of offering cheap jet fuel to the airlines in lieu of dollars, but no agreement was reached, according to the I.A.T.A.
Airlines are not the only foreign companies that suffer from Venezuela’s rigid currency controls. Toyota’s and Ford’s Venezuelan subsidiaries, lacking in dollars, had to cut production of vehicles because they couldn’t import parts from overseas. “The government makes an enemy of private investment,” José Guerra, a local economist who advises the Maduro Administration’s political opposition and a former director of Venezuela’s central bank, told me.
The problems with Venezuela’s economy have wider implications. Along with shortages of airline tickets and car parts, basic products like chicken, flour, and toilet paper are scarce. Long lines of shoppers are common at supermarkets across the country. Those often fruitless waits, along with wider financial instability, have been a major factor in the anti-government protests that have swept across the country over the past two months.
Last month, García Plaza said that the government would repay the amount owed to the airlines, over the next two years, at the exchange rates that were in effect at the time the revenue was earned. Humberto Figuera, the president of the Venezuelan Airlines Association, was unsure about the likelihood of this taking place. “We’ll see what happens,” he told me after the announcement was made.