VENEZUELAN AIRLINES MAY LOSE SABRE TRAVEL SERVICES

C O N F I D E N T I A L SECTION 01 OF 02 CARACAS 000625

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E.O. 12958: DECL: 04/21/2019
TAGS: ECON PGOV PREL ETRD EINV EAIR CASC CVIS KHLS
PTER, SNAR, VE
SUBJECT: VENEZUELAN AIRLINES MAY LOSE SABRE TRAVEL SERVICES

REF: A. CARACAS 614

B. CARACAS 615

Classified By: A/Economic Counselor Richard T. Yoneoka for reasons 1.4
(b) and (d).


1. (C) SUMMARY: U.S. travel services giant Sabre has sent
"disconnect letters" to two privately owned Venezuelan
carriers and has already suspended its contract with
government owned carrier Conviasa due to non-payment. Sabre
is concerned that if it discontinues its services in
Venezuela, the Government of the Bolivarian Republic of
Venezuela (GBRV) will accuse it of hampering Venezuelan
airline operations. Conviasa, acting on behalf of the
Venezuelan government, has approached Sabre about providing
service to a Venezuelan/Argentine/Bolivian airline that
President Chavez hopes to create. END SUMMARY.


2. (C) Sabre staff told Emboffs in a May 18 conference call
that Sabre sent disconnect notices with a deadline of May 22
to Santa Barbara Airlines (SBA) and Aserca. (Both privately
owned airlines are now under the same Venezuelan holding
company.) If the airlines do not pay Sabre over $3 million
in past due fees and an additional monthly service charge of
$250,000 by that date, they will be "shut off". Various
Sabre participants on the call explained that as with all
Venezuelan commercial carriers, excluding government-owned
Conviasa, SBA and Aserca rely on Sabre to distribute their
fares to travel agencies. (Note: Venezuelan airlines must
pay Sabre in dollars, which are currently in short supply in
Venezuela in part due to the currency control regime. End
Note.)


3. (C) Sabre staff added that Sabre is one of only a handful
of companies world wide able to provide commercial airline
fare distribution services. Sabre's Venezuela
Representative, Jetzabel Fernandez emphasized that 65 percent
of Venezuelan travel agencies use Sabre services and all
Venezuelan commercial airlines use Sabre's fare distribution
service. If Sabre's European competitor AMADEOUS picked up
all Venezuelan carriers' contracts, the transition to the
Spanish system "would take months", she said. Additionally,
a Sabre VP added, SBA and Aserca operations are also "hosted"
by Sabre, meaning Sabre manages the airlines' crew
scheduling, inventory, etc. Losing Sabre's services would
have a serious impact on airline operations. Sabre also
reported concern that if it discontinues some, or all of its
contracts in Venezuela for non-payment, the GBRV will accuse
it of hampering Venezuelan airline operations and travel
services.


4. (C) Fernandez added that government-owned airline Conviasa
had recently approached Sabre regarding providing service to
the new Latin American carrier President Chavez has said he
would like to create. According to the Conviasa
representative, Fernandez said, the idea would be to create
some type of airline or alliance with Bolivia's Lloyd,
Argentina's Aerolineas Argentinas and Venezuela's Conviasa.
Fernandez reported Sabre HQ was curious about the GBRV
proposal, but needed more details. (Note: Chavez has
discussed various scenarios for a regional airline or airline
alliance since 2007 and has given the hypothetical carrier
various names: "Alas del Sur" (Wings of the South) or "ALBA
Sur" appear most frequently. End Note.)


5. (C) Venezuelan carrier Aeropostal President Mustafa Flores
told Econoff May 13 that government-owned airline Conviasa is
practically bankrupt, although the government is keeping it
on life support, and privately owned Avior is hardly
operating. Additional domestic carriers, SBA and Aserca,
will likely cease operations soon due to large debts to both
the Venezuelan and U.S. governments, he asserted. (Note:
SBA and Aserca met with Econoff May 6, to discuss the $6
million in back taxes and fees they owe the USG. Domestic
airlines are unable to obtain dollars from government
currency control agency CADIVI at the official exchange rate
of 2.15 to the dollar for international taxes and fees. For
an extensive discussion of Venezuela's currency control

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regime, see Ref A.)


6. (C) Flores reported, and Sabre confirmed, that Aeropostal
has recently signed a new contract with Sabre. The
government seized Aeropostal in November 2008 due to the
arrest of its owner, Basel, and his brothers Abdala and Alex
Makled, on drug charges (Ref B). Mustafa said the GBRV
proceeded to terminate Aeropostal's Sabre contracts after the
seizure because Sabre is a "Yankee" company. However, in
March, Aeropostal paid Sabre nearly half a million dollars in
past due debt in order to get the Sabre system "turned back
on." According to Sabre staff, while Aeropostal still owes
Sabre "millions", the airline has committed to paying nearly
$500,000 a month for the foreseeable future for current and
past due amounts.

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COMMENT
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7. (C) Venezuelan airlines' inability to obtain CADIVI dollar
authorizations has made it very difficult for them to pay
Sabre contract costs. Sabre claims it is prepared to cut its
losses and suspend its contracts. Its departure would
negatively affect Venezuelan airline operations in the short
and medium term. The GBRV would likely blame the U.S. if
Sabre decides to pull the plug on Venezuela.

GENNATIEMPO