While Caracas prevaricates over how to re-allocate Viasa's international routes, foreign airlines are racing to fill the vacuum left by the flag carrier's demise. This leaves any Venezuelan carrier eventually granted the dormant route authorities with the daunting challenge of having to establish itself in a market dominated chiefly by US carriers.

The rush for Viasa's old route authorities was prompted by the government's decision to abandon efforts to revive Viasa in favour of re-allocating the routes among the remaining domestic incumbents.

The government was due to meet with Venezuela's three largest airlines in July for talks on how to allocate routes. But those faltered because of personal animosity and legal rows at two of the carriers.

Avensa, which on paper is the most qualified of the three airlines as it already operates to the US, has run up against a major stumbling block - Venezuela's president. One aviation source in Caracas explains that Rafael Caldera is no fan of Avensa's owner, Henry Lord Boulton. 'The Venezuelan president detests the Boulton group,' claims the source. Part of that animosity may stem from cut-throat pricing by subsidiary Servivensa, a major factor in Viasa's demise.

At Aeropostal, the other main contender, internal rows have kept the airline's management preoccupied. The reborn carrier's shareholders are suing the carrier's president, Nelson Ramiz, alleging fraud and misappropriation of funds (see Airline Business, July 1997).

The third carrier, Aserca (Aeroservicios Carabobo), has none of the unwanted baggage, but as the smallest of the three it is also the least prepared for global operations. It currently operates a small fleet of DC-9s on regional routes out of its Valencia hub.

All in all, Caracas is making little progress. 'It's a real aeropolitical mess,' notes one observer, who predicts no early end to the problems at the leading two contenders and hence no early agreement on re-allocating Viasa's routes.

Foreign airlines are wasting no time exploiting Venezuela's travails. Aerolineas Argentinas, which enjoys fifth freedom rights beyond Caracas, has added new flights between Caracas and Bogota to fill Viasa's vacuum, and its proposed linkup with American Airlines will strengthen the Argentine carrier's position even further. Indeed, the US 'invasion' continues in its own right. Even before Viasa's collapse, US airlines carried 60 per cent of US-Venezuela traffic. More recently, Washington has awarded further route authorities to the two incumbents, American and Continental Airlines, and opened the market to a third US major, Delta Air Lines.

Just to rub salt in the wound, even if Venezuela's carriers had the rights and capacity to respond, their frequencies to the US are frozen at Viasa's pre-bankruptcy level, as the US FAA rates the country's safety oversight in Category II.

David Knibb

Source: Airline Business