* Venezuelans take advantage of currency distortions
* Airline chaos latest example of economic imbalances
By Girish Gupta and Andrew Cawthorne
CARACAS, Sept 24 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.
"It's like you're trapped here," said travel agent Doris
Gaal, telling a customer he would be better off taking a boat to
a Caribbean island because the daily flights are fully booked.
"It's all because of these stupid dollars!"
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 travelers. With a valid airline ticket,
Venezuelans may exchange up to $3,000 at the government rate.
Some are not even flying, leaving many planes half empty.
"It is possible to travel abroad for free due to this
exchange rate magic," said local economist Angel Garcia Banchs.
The profit is realized 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.
"I've been able to buy new clothes and give some cash to all
my closest family members!" said one delighted Venezuelan lady,
just back from a trip to Europe.
"It was really easy. There was a guy in a hotel room with 10
point-of-sale machines who swiped my card for $1,000 each day,"
said a Venezuelan pensioner, also asking not to be named as he
described his trip to a Caribbean island.
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, told
Reuters, saying the government should cross-reference flight
lists with those requesting foreign exchange to outwit the
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.
The nation's leading satirical website, Chiguire Bipolar
(Bipolar Capybara, a Venezuelan version of U.S. comic website
The Onion), ran a tongue-in-cheek story of a new airline route:
from Caracas to Caracas.
The spoof round-trip flight would let passengers nibble on
snacks as they leave Venezuelan airspace, swipe their cards to
obtain "illicit dollars quickly and securely," and make even
more profit by buying duty-free goods to sell at home.
"Raspao" was now the "most dynamic sector" of the country's
economy, the story added.
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
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.
Maduro recently set up a new telephone hotline,
0-800-SABOTAGE, for Venezuelans to report illegal economic
Adding to the frenetic demand for plane tickets is the low
cost of flights - when they are available - for those with hard
currency that they have changed on the black market.
This has turned Caracas into an informal hub for frequent
fliers across the region.
"People from all over Latin America come here to buy flights
using black market money," said Gaal, the travel agent.
Given the high demand, at least one foreign airline is
looking to expand in Venezuela.
"We have requested authorization for additional services but
have not received a response," said Martha Pantin, a spokeswoman
for American Airlines, which has 48 flights every week in and
out of Venezuela.
Back at her travel agency in a wealthy Caracas neighborhood,
Gaal lamented her inability to serve customers.
"I'll see you on the boat!" she quipped.