Consumer Protection Agency: Airlines in Venezuela Use “Abusive Pricing Structure”

Mérida, 23^rd October 2013 (Venezuelanalysis.com)— The head of Venezuela’s consumer protection agency, Eduardo Saman, has slammed airlines for allegedly blocking consumers from purchasing cheap fares, and says penalties may be imposed.

According to Saman, the president of the Venezuelan Institute for the Defence of People in Access to Goods and Services (Indepabis), a number of airlines operating out of the Simon Bolivar International Airport prioritise the sale of the most expensive economy class tickets; only making cheaper fares available as the higher priced seats sell out.

 “What is the justification? There is no economic justification,” he stated.

Saman told Venezuelan media on Tuesday that airlines are using between five and 12 different rates for international economy class tickets, with prices varying significantly.

In a system he described as “unfair” and “abusive”, Saman argued that by prioritising the sale of the most expensive tickets, airlines are effectively blocking consumers from accessing the most affordable fares.

He also alleged that some airlines have required passengers to purchase return tickets in US dollars instead of bolivars, and imposed penalties as high as 25,000 bolivars for missed flights.

“This cannot keep happening,” Saman said. “Everyone repudiates this. There is a consensus around the idea that airlines are being abusive,” he added.

The allegations come following a joint investigation into flight prices conducted by Indepabis, Venezuela’s Civil Aviation Institute (INAC), the Commission for the Administration of Currency Exchange (Cadivi) and the Ministry for Tourism. According to authorities, the investigation was prompted by public complaints of not only airline prices, but also of shortages of outbound international tickets.

While visiting one travel agent in Merida last month, Venezuelanalysis found economy tickets with some airlines booked out until next year. When we returned to the same agency a week later, some economy class fares had increased by as much as 30%.

Despite recent reports that supply isn’t keeping up with demand, some flights are reportedly departing with empty seats. The proportionately high rate of no-shows has been blamed on “the scrape”, a currency scam that takes advantage of access to preferential foreign exchange rates for Venezuelan residents travelling abroad.

Over the weekend, President Nicolas Maduro called for “hard measures” to tackle the scrape, and alleged that some airlines could be “accomplices” in the scam.

After announcing a crackdown on travellers participating in the scrape earlier this month, Saman says authorities are now going after airlines.

“We are inspecting airlines, not passengers, because they have an unfair fee structure,” he said.

According to Saman, Indepabis may attempt to force airlines to change their allegedly “abusive pricing structure” as early as next week. Fines may also be imposed.

“We cannot allow these arbitrary actions; the unjustified and unfair actions of the airlines are affecting the people,” Saman said.

Head of the Association of Venezuelan Airlines (ALAV) Humberto Figuera has denied the allegations made by Saman, arguing that airlines have little influence on prices.

“Once we have launched the ticket offer on the market have no control of the system,” Figuera told Venezuelan media. “We cannot hide or block rates,” he said.

According to Figuera, around 80% of airline tickets are sold by travel agents, and just 20% are sold directly to consumers by airlines. He also said that flights cannot be paid for in dollars.

Figuera also hit back at claims that airlines are complicit in the scrape.

“It was the ALAV and its affiliated airlines that proposed Cadivi hand over the data of no-show travellers,” Figuera stated. He also said that in the past the ALAV had alerted the government of concerns over currency issues, including advising the Maduro administration to limit ticket purchases for foreigners travelling to Venezuela just buy onward tickets, taking advantage of the weakened value of the bolivar on the black market.

He also argued that the ALAV had warned the government of the risk of currency scams like the scrape years ago.

“If they had accepted our proposals five years ago, these crimes with the credit cards wouldn’t be occurring,” he said, referring to credit cards used by Venezuelan travellers to access foreign currency at the official exchange rate.

“For the past five years airlines have been proposing the measures that Cadivi has now taken. We are part of the solution, not the problem,” Figuera tweeted.