Constant Crisis: AVENSA 1994-2004

​Nowadays Venezuela is in a sorry state, wracked by economic collapse, hyper-inflation and a dictatorial regime. The pathway to this has been long and complex and has gradually taken a toll of the airline’s once rich aviation scene, so that only a handful of airlines survive and connections with international destinations are sporadic. One of the highest profile failures was that of AVENSA who had started operations in 1943.

Aeroclassics AVENSA 727-200 and DC-9-51

​Venezuela was already in trouble during the 1990s with serious economic pressure leading in turn to political crises and several coup attempts. AVENSA was one of the nation’s largest airlines and had been promisingly beginning a fleet renewal programme as the 90s dawned.

​A single 737-300 was leased, as were a pair of 757s, but as financial pressures mounted the airline instead settled on second-hand Douglas DC-9-51s and a pair of 737-200s, allowing it to replace older DC-9s and 727-100s. Unlike VIASA and Aeropostal AVENSA was only partially owned by the Venezuelan government (20%) with 43% owned by the Boulton Group and the rest by employees.

By Torsten Maiwald [GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html) or GFDL 1.2 (http://www.gnu.org/licenses/old-licenses/fdl-1.2.html)], via Wikimedia Commons

​AVENSA was especially badly hit by the banking crisis that began in January 1994. By October the government had been forced to take control of ten banks and bailout the financial sector to the tune of around 6 billion dollars (approximately 75% of the national budget). As further banks failed currency controls were introduced which seriously impacted AVENSA’s liquidity. The fleet contracted accordingly with the single 737-300 returned to the lessor in April 1996 and a pair of DC-9s sold to Ghana Airways in late 1997. 

---

LIVERY NOTE: The tail logo of AVENSA changed several times during the 1990s. Initially it featured just South America. The 757s at least gained the USA, Central America and South America. Lastly by the end of the 90s it included Southern Europe in addition as well.

---

The AVENSA route map in 1990 was extensive and included Miami and New York

​AVENSA also suffered from being out of tune with the incumbent administration. The President, Rafael Caldera, was anti-AVENSA due to its owner Henry Lord Boulton. The President apparently detested the Boulton group who not only used AVENSA’s low cost subsidiary Servivensa to wage a fare war, which hurt the flag carrier VIASA, but had perhaps more damagingly backed an opposing candidate in the earlier elections. Since Caldera had got into power the transport ministry had attempted to retake AVENSA routes and targeted it with the currency controls. 

One of the older 727-100s at Miami in 1990. By Aero Icarus from Zürich, Switzerland (AVENSA Boeing 727-22; YV-87C@MIA, March 1990) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

​AVENSA was forced to cannibalise aircraft to remain in operation but at least it did survive unlike VIASA, which failed in January 1997. Attempts by the then transport minister, Moises Orozco, to sell VIASA assets, mainly its route authorities, failed in the face of lawsuits from Venezuela’s airlines against attempts by a VASP led consortium to take them on. AVENSA even went as far as the Supreme Court to acquire European routes and in theory at least won the case.

​Then the 1998 elections threw AVENSA, and Venezuela’s other two major airlines Aeropostal and Aserca, a lifeline when the former coup plotter Hugo Chavez unexpectedly won the election and began his Bolivarian revolution. AVENSA had for once backed the correct side and initially things looked up.

​A new transport minister, Julio Marti, reversed the government’s course and split VIASA’s routes amongst the three Venezuelan airlines. AVENSA acquired the permission to fly to Portugal, Spain and Italy, however other European services were allotted to Aeropostal. This was a somewhat unusual thing to do since AVENSA had experience of operating international services (it had been flying to New York and Miami since the 1980s) whilst Aeropostal had primarily been a domestic airline. The suspicion was that the government still harboured a grudge about AVENSA’s supreme court case. 

In December 1998 AVENSA began services to Lisbon, Madrid, Rome and Milan with a leased DC-10. The arrival of a second DC-10 in March 1998 allowed additional services to Oporto and Santiago de Compostale. Both DC-10s were formerly with VARIG and were leased from Pegasus Aviation. The schedule was a little thin with frequencies only of weekly to thrice weekly.

​Unfortunately, the splitting of VIASA’s routes between three airlines worked against any of them being able to really build a decent network, as none had the critical mass to build Caracas into a meaningful hub. The alternative was alliances but AVENSA struggled to build them. By this time only Servivensa served the USA, which impeded AVENSA, whereas Aserca was able to sign a marketing agreement with Continental and Aeropostal code-shared with Delta and signed an agreement with American too. 

YV-820C was the last AVENSA DC-9. Here she is in October 2001. She had left the fleet by the end of the year. Photo by Aero Icarus from Wikipedia

​Another issue was access to the all-important USA, which had frozen Venezuela’s rights to those previously enjoyed by VIASA. Aeropostal got around this by using its Delta codeshare and wet-leasing aircraft from airlines allowed to operate to the US, whilst Aserca purchased 70% of Air Aruba. AVENSA seemed to have no such way around the regulations.

​Boulton apparently conferred with Chavez on aviation matters and seemingly expected assistance in his infighting with Aserca and Aeropostal however it doesn’t appear that it was forthcoming. At the same time historically low oil prices, caused by the 1997 Asian Financial crisis, caused a further economic crisis which no doubt did not help the airline’s profitability. 

​In December 1999 Venezuela was hit by floods and mudslides killing thousands. Caracas airport was closed for weeks and the airlines lost millions. Already vulnerable AVENSA was forced to seek government assistance. The government had a 20% stake in the airline already and was willing to assist but presumably not in the way Boulton wanted. It removed him from his position and replaced him with Wilmer Castro in March 2000. This was opposed by AVENSA’s unions who filed for a legal occupation of the airline’s premises to safeguard wages.

By Aero Icarus from Zürich, Switzerland (152au - AVENSA DC-9-51; YV-820C@PMV;10.10.2001) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

​By this time the AVENSA fleet had shrunk to only a single DC-9-51, a pair of 737-200s and a trio of 727s. The DC-10s both went to Brazil for maintenance and failed to return, presumably due to lack of payment.

YV-74C was still going strong in February 2002. By Aero Icarus from Zürich, Switzerland [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

​The airline’s situation continued to worsen as debt mounted – reaching $59 million. Attempts to merge with Aserca were unsuccessful after the IATA suspended AVENSA from its ticket clearing house due to non-payment. With $52 million in short term debt the carrier started to sell off remaining assets such as its headquarters and tried to convince the government to capitalize its debts. A government commission would however only support the restructuring in proportion to its 20% stake.

YV-50C still in service in late 2001. By Pedro Aragão [CC BY-SA 3.0 GFDL, CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons

​Somehow AVENSA was able to restart services to Europe in November with the two previous DC-10s now overhauled and returned. The routing was four times weekly to Madrid. By June 2001 only two domestic services were left between AVENSA and its subsidiary Servivensa although Miami, Quito, Bogota and Madrid were still being served. 

​In the end AVENSA went out with a whisper rather than a bang. The DC-10s operated until at least October 2002 with the airline entering bankruptcy soon after. Barely anything of the original airline was left and by 2003 services consisted only of a single Embraer EMB-120 Brasilia operating between Caracas and Merida. Although technically the airline was restructuring it owed so much money that this was never going to happen and sometime during 2004 the Brasilia operations ceased as well.

Much of AVENSA's remaining network was taken over by Santa Barbara Airlines (SBA), but the crisis in Venezuela has only worsened since AVENSA's collapse. Indeed the continuing economic collapse has taken almost every other established airline along with it including SBA, Aeropostal and Aserca. Even so Venezuela still has several smaller carriers providing a semblance of service in Avior, Conviasa, Laser, Rutaca and Venezolana. 

References
 
1997. Caracas fails to fill vacuum. FlightGlobal
1999. No flag in its future. FlightGlobal
2000. Avensa adrift. FlightGlobal