Loonie Left: Air Canada Ditches Venezuela

When it comes to idiotic conspiracy theories, Venzuela's President Nicolas Maduro is pretty hard to beat. Almost everything he finds disagreeable is part of an American conspiracy to overthrow him. The latest case in point is Air Canada canceling its three weekly round-trip flights to Caracas. Due to currency controls, Venezuela makes airlines sell tickets domestically in bolivars, after which they will be converted into US dollars. Or so the government's jibba-jabba goes. Actually, it has accumulated over $3 billion in arrears to various carriers who are unable to receive promised foreign exchange. How bad is the situation? Even TAME, the airline of neo-Marxist Ecuador has stopped flying there due to unpaid accounts. So much for socialist solidarity.

So, it was inevitable others would follow suit. On top of long overdue payments, Air Canada cites violence as a reason not to go to Venezuela:

Air Canada has suspended flights to and from Venezuela, citing concerns over security. The airline said it would consider resuming operations once the situation in Venezuela had stabilised. It operated three return flights between Toronto and Caracas per week...."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," says the Canadian airline in a statement...

Several international airlines have reduced operations in recent weeks in Venezuela, but their main grievance has been the government's tight currency controls. International airlines say the government of Nicolas Maduro owes them more than $3bn (£1.8bn). Tough foreign currency controls make it difficult for foreign airlines to repatriate money obtained from ticket sales in Venezuela.

My belief is that Air Canada is creating a specious excuse to get out of Venezuela. Like the others reducing flights there, being unpaid and instead holding funny money is not an attractive proposition. At any rate, Venezuela has since banned Air Canada:

The Venezuelan government said Tuesday it is severing commercial relations with Air Canada after it suspended flights to the country for security reasons. "We are putting an end to this commercial relationship with Air Canada until President Nicolas Maduro decides otherwise," Venezuela Transportation Minister Herbert Garcia said...

But the International Air Transport Association says the government has made no dollar payments to the airlines since October, running up a $3.7 billion backlog. Tony Tyler, who heads IATA, said Wednesday: "Airlines certainly cannot sustain operations indefinitely if they can't get paid."

Venezuela's President Nicolas Maduro responded on Saturday, warning airlines of "severe measures" if they reduced their operations. "The company that leaves the country will not return while we hold power," Maduro said.

What are they going to do? Not pay the airlines what they're owed? That's already happening. If Maduro and company remain--and there may be reason to believe his regime is durable despite Zimbabwe-like economic mismanagement--the only question is when North Korea-like isolation will arrive. Nothing--FDI, foreign exchange, goods, services, people--is coming in and everything wants to go out.