South America’s Largest Low Cost Airline Suspends Operations in Venezuela Due to Currency Dispute

South America's largest low cost airline has shut down its operations in Venezuela due to a currency dispute.

According to a PanAm Post's translated report originally from Folha de São Paulo, Gol Airlines has attempted to repatriate R$351 million (US$90 million) that are blocked in Venezuela. The efforts, however, are futile, and so the airline decided to halt the São Paulo-Caracas route it has been running since 2007.

Since the decision came into effect, the flight scheduled to leave São Paulo's Guarulhos Airport for Caracas, Venezuela's capital, has been cancelled, the news outlet further reported. Passengers that are affected are being assisted to fly through other companies.

Gol Airlines, Brazil's second largest airline, is the third one to leave Venezuela as the nation's economic condition continues to downgrade. The first two are Italy's Alitalia Airlines and Air Canada, PanAm Post wrote.

Gol Airlines lessened the frequency of 28 flights per week to Caracas to only two in 2014, Folha de São Paulo noted. In its meetings with Venezuela's officials, the airline attempted to arrive at a solution to transfer accumulated profits back home at a more ideal exchange rate. The Brazilian Embassy and the International Air Transport Association (IATA) even mediated with the proceedings, but the effort proved to be insufficient to fix the issue.

The IATA said that the Venezuelan government owes about $4 billion to airlines providing the country with flights back and forth, EFE reported (via Fox News Latino).

Back in 2014, American Airlines, one of the airlines that have conducted the most operations between Venezuela and the United States, slashed its 48 flights each week to 10, Folha de São Paulo added. Delta Air Lines also cut down its operations in Venezuela by 85 percent.

TAM Airlines, Brazil's largest airline and one of the biggest in the Latin American region, might also shut down its operations in Venezuela, the news outlet reported. The airline has already cut flights to the country to one per week and has R$161 million (US$41 million) blocked in there.

Venezuela is currently plagued with product shortages, severe recession, and annualized inflation that soared up to 141 percent in the first nine months of 2015, Reuters listed. Critics said that majority of the problems are caused by currency and price controls, unproductive firms run by the state, and a huge expansion of the money supply. Exchange controls have been in effect in the country for 13 years.