Airlines Make Antitrust Immunity Request to Fight Venezuela

U.S. carriers have filed a request to the DOT to work together so that airlines can get their money back from the South American country.

United States airlines are taking action against Venezuela. Bloomberg reports that carriers recently made an unusual request to the Department of Transportation: They need antitrust immunity for a full year as they discuss ways to recoup $3.8 billion that they contend is being held hostage by Venezuela’s deep economic crisis.

For the past three years, Venezuelan officials have stymied the repatriation of past sales made in bolivars, the nation’s currency. The South American country is currently experiencing an unprecedented crisis, with factors such as swelling inflation rates and the depreciation of foreign currencies exacerbating preexisting financial problems. As a result, the flow of money back to the United States has slowed considerably for many multinational business operating out of Venezuela.

“Individual airline approaches to the Venezuelan government thus far have been unavailing,” IATA’s general counsel, Jeffrey Shane, wrote in a September 22 filing with the DOT. The antitrust immunity they seek “would permit the airlines to consider approaches to the problem, which they have not been permitted to explore together before now.”

American Airlines, Delta and United each seek to 500 million dollars in late charges, and although all three carriers continue to offer service to Caracas, their flight frequency has been significantly reduced since 2014. The fares are now sold in dollars, the decreasing value of which has frozen local demand.

However, even if the DOT grants the antitrust immunity to discuss Venezuela, it remains uncertain whether the airlines would stand to gain any substantial advantage through their talks with Venezuela. The companies could threaten to reduce service even more, although many have unilaterally pulled out of the country due to financial woes. Since 2013, “airlines have shrunk capacity to Venezuela by more than 60 percent, with only nine international carriers still offering scheduled service,” Bloomberg reports.

Carriers could also take advantage of the legal system as a means of recovering losses and fight this case in a U.S. federal court.

“The relative benefit of [a] judgment is that it can disrupt access to foreign commercial capital markets,” said Mark Weidemaier, an associate professor at the University of North Carolina School of Law who has studied international dispute resolution.

IATA officials have not yet mentioned potential litigation, or other possible actions, in their DOT filings, and said that the airlines remain for the moment in the exploratory stage.

[Photo: WIKIMEDIA COMMONS]