Published On: Tue, Feb 4th, 2014

Insel Air requests its incentives

InselAir creates most revenue for Curacao Airport and the economy of Curacao, but is exposed to a high financial risk

Insel_Air_MD80WILLEMSTAD - Insel Air has maintained a healthy financial management since the early beginnings and has been profitable all years, including 2013. This is reflected in the audited figures (financial and traffic related) of the company which are also in the possession of the Curaçao Aviation Authorities. However, Insel Air has been suffering from the well-known issues with Cadivi (the Commission for the Administration of Currency Exchange in Venezuela) which currently holds approximately 80 million USD of InselAir. Until recently Insel Air has been able to cover the six months delay in Cadivi’s payments with its own resources, but Cadivi’s backlog has now risen to as much as 12 months. Because of this huge backlog, combined with the usual low sales of December and January, Insel Air is now forced to rely on alternative resources to resolve this situation. With sales picking up as of February and expected payments of CADIVI shortly, Insel Air expects to resolve this situation as soon as possible.

Request for incentives

To resolve the current situation Insel Air requests 'incentives'. These incentives are offered to airlines by various institutions, including Curacao Airport, to support the opening of new routes and the development of new markets. Within Curacao Airport, both Curacao Airport Partners (CAP), which is responsible for the exploitation of the airport and Curacao Airport Holding (CAH), which is the owner of the airport, provide incentives to airlines. The funds for these incentives are generated by payments from airlines to the airport, e.g. landing fees, in which Insel Air has the largest share. From CAH Insel Air has only received incentives for the destinations Charlotte and Medellin. CAP has never provided incentives to Insel Air. The amount which Insel Air is now requesting is much lower than the amount Insel Air believes it is entitled to, especially compared to the amounts other foreign airlines have received from both CAP and CAH.

Numbers don’t lie; Insel Air makes the biggest contribution and receives no support

Insel Air is the largest contributor to the tourism industry on Curacao (450,000 passengers in total per year). Partly on request of the Curaçao government Insel Air in recent months increased its capacity to Venezuela by 108,000 seats and has also managed to create 100 extra jobs. Currently, on a yearly basis, Insel Air transports a total of 160,000 tourists from Venezuela to Curacao. Through this supply of tourists the commercial sector in Curacao, such as CAP, CAH, hotels, taxis, restaurants, beaches and many other businesses, are able to directly collect US dollars for their services to Venezuelan tourists. Having said that, it is very peculiar that only Insel Air is NOT being paid in USD, but in Bolivars, and is therefore the only party in this value-chain running huge risks. This while other parties, in terms of revenues, are directly dependent on InselAir without running any risks. It is not fair that only Insel Air, as one of the key players and main supplier of money and tourists, is carrying this huge risk and therefore believes that it should receive a portion of the financial revenues generated by CAP en CAH, just as other foreign airlines have.

Incentives Air Berlin (Germany) vs. InselAir (Venezuela)

The Air Berlin case illustrates this contradictory incentive policy clearly’, explains Edward Heerenveen from Insel Air. ‘Air Berlin has received a total of 5 million ANG from CAH to support the route Dusseldorf - Curacao - Dusseldorf and besides that CAP also exempted them from landing fees for one year. The figures show that Air Berlin brings in 12,000 passengers to Curacao annually. However, InselAir, just out of Venezuela, brings 160,000 tourists annually to Curacao (12 times as much as Air Berlin brings in from Germany) where both Curacao Airport and the Curacao economy benefit from. If we do some calculation based on these figures, Insel Air would be entitled to incentives worth 60 million ANG. Insel Air is now in a situation where 5 million ANG is needed and it does not seem more than reasonable that this amount should come from ‘incentives’, where Insel Air believes it is entitled to and what is just a fraction of what Air Berlin has received, ' concludes Heerenveen.

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