Caracas (Reuters) – If you live in Venezuela and want to fly abroad, get in line.
Flights are booked solid months in advance, not from a new interest in exotic destinations but because locals are profiting from a play on the nation’s tightly controlled currency market.
The airline scramble has added to shortages, power cuts and runaway prices as another symbol of the Byzantine economic challenges facing the new government of President Nicolas Maduro in the South American OPEC nation.
After a decade of currency controls set up by late socialist leader Hugo Chavez in 2003, the disparity between the official and black-market rates for the local bolivar currency is higher than ever. Greenbacks now sell on the illegal market at about seven times the government price of 6.3 to the dollar.
There are strict limits on the availability of dollars at the 6.3 rate, but Venezuelans are cashing in on a special currency provision for travellers. With a valid airline ticket, Venezuelans may exchange up to $US3000 at the government rate.
Some are not even flying, leaving many planes half empty.
The profit is realised from an arbitrage process known locally as “el raspao,” or “the scrape.”
Credit cards are used abroad to get a cash advance – rather than buying merchandise. The dollars are then carried back into Venezuela and sold on the black market for some seven times the original exchange rate.
The large profit margin easily absorbs the cost of flights and accommodation for a trip.
Some Venezuelans do not even bother leaving the country, but merely send their credit cards to friends overseas, who swipe the cards and send the cash back to Venezuela.
“This is the reason many airlines are sending half-empty planes,” Ricardo Cusanno, head of a local tourism council, said, saying the government should cross-reference flight lists with those requesting foreign exchange to outwit the no-shows.
As a result of the high level of unused seats, some airlines are beginning to overbook at much higher rates than usual.
As well as perplexing the industry, the scramble for tickets has become a hot topic of conversation and humor on the street. But not everyone sees the humor in the situation.
The currency controls that Chavez implemented have exacerbated some of the very problems they were meant to address: inflation and capital flight from the country. The lack of dollars has left importers struggling to pay for basic items that range from toilet paper to bread and wine for church masses. It is also fueling the highest price rises in the Americas, 45 percent in the last year.
For critics of the government, the phenomenon of sold-out flights is a symbol of excessive interference and economic mismanagement during the last 14 years of socialist rule. For Maduro and his team, it is symptomatic of unscrupulous and greedy capitalist opponents who are “sabotaging” Venezuela’s economy in order to sink him.