The Canadian Press - ONLINE EDITION

Ecuadorean airline halts flights to Venezuela for nonpayment

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CARACAS, Venezuela - The Ecuadorean airline Tame suspended on Thursday its once-daily flights to and from Venezuela until that country's cash-strapped government pays it $43 million owed for ticket sales.

The carrier was the first to halt flights to Venezuela, whose socialist government owes carriers a total of $3.3 billion, according to Venezuela's airlines association.

The airlines are victims of Venezuela's rigid currency controls, which prevent them from repatriating proceeds from tickets sold in the oil-rich South American country. Adding to difficulties, Venezuela's bolivar has plunged to a tenth of its official value on the black market, making tickets purchased in Venezuela some of the cheapest in the world in dollar terms.

In recent weeks airline representatives have met with officials to discuss a government proposal to pay off the debt with a combination of cash, bonds and fuel.

But talks have so far failed to produce a deal and Tame and several other airlines are losing patience.

In Venezuela, the TV station Globovision reported on Thursday that Air Canada had stopped selling tickets in the country. No one answered the phone at Air Canada's offices in Caracas and a local call centre worker told The Associated Press that she had received orders to suspend all sales and reservations. She said she was not authorized to give her name.

The airline's media office in Canada didn't reply to an email request for comment.

Tame General Manager Fernando Guerrero told reporters in Quito Wednesday that Venezuela hasn't paid the airline since March, the month that Venezuela's longtime president, Hugo Chavez, died of cancer.

He says it costs Tame $5 million a month to keep the daily Caracas-Quito route operating. Venezuela owes bigger airlines, such as Colombia's Avianca, tens of millions of dollars.

Avianca's stock plunged more than 4 per cent on Thursday after Venezuela's government announced that Venezuelans travelling abroad would no longer be able to purchase air tickets at the official rate of 6.3 bolivars per dollar.

Under new currency rules announced Wednesday, travellers will now be required to purchase tickets at a higher rate established at weekly central bank auctions, where the greenback currently fetches about 11 bolivars.

In Venezuela, government and airline officials were meeting Thursday to discuss the debt. According to Humberto Figuera, head of the airlines association, international treaties oblige governments to ensure airlines' costs are covered.

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Associated Press writers Gonzalo Solano in Quito, Ecuador, and Frank Bajak in Lima, Peru, contributed to this report.

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