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Latin America
Related: About this forumAirlines begin to shun Venezuela cash
http://www.bloomberg.com/news/2013-12-18/mom-can-t-visit-daughter-as-airlines-shun-venezuela-s-bolivar.htmlTickets from American Airlines (AAL) Inc., Grupo Aeromexico SAB and Avianca Holdings SA (AVH) among others have become harder to buy in Venezuela since September, as tighter currency controls make it more difficult for companies to convert bolivars into dollars. The shortage of greenbacks to fund imports of goods and services led the bolivar to decline 73 percent this year in the black market.
Airlines have the equivalent of $2.6 billion locked in the country at the official exchange rate of 6.3 bolivars per dollar, according to the International Air Transport Association. They dont want to increase exposure to a currency that investment banks from Bank of America Corp. to Goldman Sachs Group Inc. say will be devalued for the eighth time in 11 years, said Helane Becker, airlines analyst at Cowen & Co LLC.
I went to 10 air companies and agents all over town and everywhere I received the same answer that no tickets were available, said Varela, who works at a beauty salon in Caracas. Looks like I wont see my daughter this year.
Photographer: Susana Gonzalez/Bloomberg
Tickets from American Airlines Inc., Grupo Aeromexico SAB and Avianca Holdings SA among... Read More
Like the 59-year-old mom, a reporter for Bloomberg News unsuccessfully tried six times from Nov. 14 to Nov 25 to buy tickets with local currency from American Airlines, Aeromexico and Avianca.
Failed Attempts
At an Aeromexico office in Caracas, the Bloomberg reporter was told on Nov. 21 that sales were suspended until Jan. 7 because of a software update. On that same day in Bogota, a reporter was able to book a ticket quoted in Colombian pesos for an Aeromexico flight leaving Caracas the next day.
Aeromexico spokesman Carlos Torres in Mexico City declined to comment when asked whether the company was withholding sales of tickets in bolivars.
On Nov. 19, a Bloomberg reporter at an Avianca office in Bogota was offered to reserve a ticket leaving Caracas, while the reporter in Venezuela was told in an office there werent tickets available.
Avianca is restricting sales to flights leaving within 30 days of purchase to avoid currency speculation by travelers, a spokeswoman who cant be identified because of company policy, said in an e-mail when asked if the company was reducing sales in Venezuela.
American Airlines
American Airlines, Venezuelas largest international carrier by capacity, said they have stopped selling tickets from Venezuela in any currency until further notice.
Because of the very limited inventory available, we are unable to sell or accommodate requests from passengers at this time, spokeswoman Martha Pantin said in an e-mailed response to a question on if the company was selling tickets in any currency. We will continue to work to improve our availability in the Venezuelan market and will update our inventory with more information as soon as its available.
Companies selling products in Venezuela and other countries, such as airplane seats, are obliged by law to make them equally available to all their customers in local currencies, Hermann Escarra, legal adviser to President Nicolas Maduros government, said by phone from Caracas Dec. 17.
Its like the borders are closing down without anybody putting a travel ban, Susana Garcia, owner of Margarita Island-based Chill Out Travel Tours, said in phone interview. We are becoming trapped in our own country because of government policies.
Currency Controls
The late President Hugo Chavez created currency controls in 2003 that allow the central bank to handpick companies and citizens that have access to dollars at the government-set exchange rate. As international reserves fall, his successor Maduro has reduced the supply of dollars, crimping imports and making it harder for international companies to exchange their bolivars into greenbacks, said Francisco Rodriguez, chief Andean economist at Bank of America.
Venezuelas economic growth slowed to 1.1 percent in the third quarter from 5.5 percent a year earlier. The inflation rate has more than doubled since Maduro took office in April, reaching 54 percent in October. The yield on the countrys benchmark dollar bond due in 2027 rose 7 basis points to 12.70 percent at 3:17 p.m. in New York today.
The delay in repatriating funds from Venezuela doubled to 12 months in the third quarter of 2013 from a year ago, Pedro Heilbron, chief executive officer of Panamanian airline Copa Holdings SA (CPA), said in a conference call Nov. 13. Copa, Venezuelas second largest international carrier, has $392 million in Venezuela, according to its third quarter report.
Trapped
Airlines have made it clear they dont think about leaving Venezuela, said Humberto Figuera, head of the Venezuela Airline Association. But without a doubt this is always a possibility should the approval process to have access to foreign currency become even slower.
Bogota-based Avianca has $270 million, or half of its cash holdings, in Venezuela, according to the companys third quarter report. American Airlines parent AMR Corp. had $608 million at the end of the quarter, according to a U.S. filing.
The money is trapped there and cant be expatriated, Becker said by phone from New York Nov. 20. Its a lot of money and a lot of concern.
Avianca cut its sales in Venezuela to $17 million in September from as much as $50 million monthly average this year, Vice President of Treasury Maria Cecilia Escallon said in a conference call Nov. 18. The company bought offices in Venezuela to invest revenue it didnt expatriate, Escallon said.
Up Early
As companies withhold sales, travel agents get up at 3 a.m. to search for tickets that may be available after cancellations, Chill Out Travel Tours Garcia said. Two travel agents who asked not to be identified because of company policy said it has been progressively harder to book tickets since September.
Venezuelas consumer ombudsman Indepabis said in October its building a lawsuit against international airlines for allegedly restricting ticket supply. Indepabis President Eduardo Saman declined to comment on the investigation when contacted Dec. 4.
Demand for international tickets in Venezuela will rise 16 percent this year, Francisco Paz, the then President of the National Civil Aeronautics Institute said Oct. 9. Pazs successor Pedro Gonzalez declined to be interviewed.
Zulay Rosas, a spokeswoman for Venezuelas currency commission Cadivi, and Ilse Valera, a spokeswoman for the Aquatic and Air Transport Ministry, didnt respond to e-mails and phone calls asking about dollar repatriation delays and ticket shortages. Spokesmen for the Information Ministry and Maduros office declined to comment on the governments strategy to reduce the shortage of tickets.
Diapers to Flour
The lack of dollars isnt restricting only air travel. Its causing shortages of everything from diapers to flour, fueling the devaluation of the bolivar in the black market. The gap between the official and the illegal, parallel exchange rates has turned international traveling into an opportunity to make money.
The government grants Venezuelans going abroad a dollar stipend of as much as $3,500 a year at the official exchange rate of 6.3, which can be converted back into bolivars on the streets of Caracas at the black market rate of 64.
Varela says she was not planning to make any profit in her trip to Ciudad de Carmen in southern Mexico to visit her 33-year-old daughter, Calina Cabrera, during Christmas. The scheme of making money through travel, known as raspao or big scrape, works when tourists save part of the dollars bought from the government to be resold back home.
This is not fair, Varela said. I want to travel to see my daughter, not to make money.
Airlines have the equivalent of $2.6 billion locked in the country at the official exchange rate of 6.3 bolivars per dollar, according to the International Air Transport Association. They dont want to increase exposure to a currency that investment banks from Bank of America Corp. to Goldman Sachs Group Inc. say will be devalued for the eighth time in 11 years, said Helane Becker, airlines analyst at Cowen & Co LLC.
I went to 10 air companies and agents all over town and everywhere I received the same answer that no tickets were available, said Varela, who works at a beauty salon in Caracas. Looks like I wont see my daughter this year.
Photographer: Susana Gonzalez/Bloomberg
Tickets from American Airlines Inc., Grupo Aeromexico SAB and Avianca Holdings SA among... Read More
Like the 59-year-old mom, a reporter for Bloomberg News unsuccessfully tried six times from Nov. 14 to Nov 25 to buy tickets with local currency from American Airlines, Aeromexico and Avianca.
Failed Attempts
At an Aeromexico office in Caracas, the Bloomberg reporter was told on Nov. 21 that sales were suspended until Jan. 7 because of a software update. On that same day in Bogota, a reporter was able to book a ticket quoted in Colombian pesos for an Aeromexico flight leaving Caracas the next day.
Aeromexico spokesman Carlos Torres in Mexico City declined to comment when asked whether the company was withholding sales of tickets in bolivars.
On Nov. 19, a Bloomberg reporter at an Avianca office in Bogota was offered to reserve a ticket leaving Caracas, while the reporter in Venezuela was told in an office there werent tickets available.
Avianca is restricting sales to flights leaving within 30 days of purchase to avoid currency speculation by travelers, a spokeswoman who cant be identified because of company policy, said in an e-mail when asked if the company was reducing sales in Venezuela.
American Airlines
American Airlines, Venezuelas largest international carrier by capacity, said they have stopped selling tickets from Venezuela in any currency until further notice.
Because of the very limited inventory available, we are unable to sell or accommodate requests from passengers at this time, spokeswoman Martha Pantin said in an e-mailed response to a question on if the company was selling tickets in any currency. We will continue to work to improve our availability in the Venezuelan market and will update our inventory with more information as soon as its available.
Companies selling products in Venezuela and other countries, such as airplane seats, are obliged by law to make them equally available to all their customers in local currencies, Hermann Escarra, legal adviser to President Nicolas Maduros government, said by phone from Caracas Dec. 17.
Its like the borders are closing down without anybody putting a travel ban, Susana Garcia, owner of Margarita Island-based Chill Out Travel Tours, said in phone interview. We are becoming trapped in our own country because of government policies.
Currency Controls
The late President Hugo Chavez created currency controls in 2003 that allow the central bank to handpick companies and citizens that have access to dollars at the government-set exchange rate. As international reserves fall, his successor Maduro has reduced the supply of dollars, crimping imports and making it harder for international companies to exchange their bolivars into greenbacks, said Francisco Rodriguez, chief Andean economist at Bank of America.
Venezuelas economic growth slowed to 1.1 percent in the third quarter from 5.5 percent a year earlier. The inflation rate has more than doubled since Maduro took office in April, reaching 54 percent in October. The yield on the countrys benchmark dollar bond due in 2027 rose 7 basis points to 12.70 percent at 3:17 p.m. in New York today.
The delay in repatriating funds from Venezuela doubled to 12 months in the third quarter of 2013 from a year ago, Pedro Heilbron, chief executive officer of Panamanian airline Copa Holdings SA (CPA), said in a conference call Nov. 13. Copa, Venezuelas second largest international carrier, has $392 million in Venezuela, according to its third quarter report.
Trapped
Airlines have made it clear they dont think about leaving Venezuela, said Humberto Figuera, head of the Venezuela Airline Association. But without a doubt this is always a possibility should the approval process to have access to foreign currency become even slower.
Bogota-based Avianca has $270 million, or half of its cash holdings, in Venezuela, according to the companys third quarter report. American Airlines parent AMR Corp. had $608 million at the end of the quarter, according to a U.S. filing.
The money is trapped there and cant be expatriated, Becker said by phone from New York Nov. 20. Its a lot of money and a lot of concern.
Avianca cut its sales in Venezuela to $17 million in September from as much as $50 million monthly average this year, Vice President of Treasury Maria Cecilia Escallon said in a conference call Nov. 18. The company bought offices in Venezuela to invest revenue it didnt expatriate, Escallon said.
Up Early
As companies withhold sales, travel agents get up at 3 a.m. to search for tickets that may be available after cancellations, Chill Out Travel Tours Garcia said. Two travel agents who asked not to be identified because of company policy said it has been progressively harder to book tickets since September.
Venezuelas consumer ombudsman Indepabis said in October its building a lawsuit against international airlines for allegedly restricting ticket supply. Indepabis President Eduardo Saman declined to comment on the investigation when contacted Dec. 4.
Demand for international tickets in Venezuela will rise 16 percent this year, Francisco Paz, the then President of the National Civil Aeronautics Institute said Oct. 9. Pazs successor Pedro Gonzalez declined to be interviewed.
Zulay Rosas, a spokeswoman for Venezuelas currency commission Cadivi, and Ilse Valera, a spokeswoman for the Aquatic and Air Transport Ministry, didnt respond to e-mails and phone calls asking about dollar repatriation delays and ticket shortages. Spokesmen for the Information Ministry and Maduros office declined to comment on the governments strategy to reduce the shortage of tickets.
Diapers to Flour
The lack of dollars isnt restricting only air travel. Its causing shortages of everything from diapers to flour, fueling the devaluation of the bolivar in the black market. The gap between the official and the illegal, parallel exchange rates has turned international traveling into an opportunity to make money.
The government grants Venezuelans going abroad a dollar stipend of as much as $3,500 a year at the official exchange rate of 6.3, which can be converted back into bolivars on the streets of Caracas at the black market rate of 64.
Varela says she was not planning to make any profit in her trip to Ciudad de Carmen in southern Mexico to visit her 33-year-old daughter, Calina Cabrera, during Christmas. The scheme of making money through travel, known as raspao or big scrape, works when tourists save part of the dollars bought from the government to be resold back home.
This is not fair, Varela said. I want to travel to see my daughter, not to make money.
Damn... if airlines themselves are starting to cancel flights to your country, you know shit's fucked up.
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