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mozart
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Impact of Lebanon currency crisis on MEA operations

Thu Aug 12, 2021 4:44 am

The country has fallen into the abyss, there is no more electricity, no more fuel, medicaments are not available anymore, people are not allowed to withdraw their money from the banks, inflation is four digit now. Also, the country lacks foreign currency and cannot even pay for the oil needed to run the power stations.

With all of that, how does a company like MEA pay for instance for spare parts, for fuel, etc.? How do power cuts affect it (sure they have generators, but there isn't enough fuel in the country to run them all the time)?

Any impact? I wonder whether they'll be running out of spare parts at one point and start using duct tape and other shortcuts.
 
debonair
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Re: Impact of Lebanon currency crisis on MEA operations

Thu Aug 12, 2021 12:51 pm

Believe me, sometimes it helps to search google...

Starting June 8th, Lebanon’s national carrier Middle East Airlines (MEA) will only accept payment in fresh dollars (USD) as opposed to settling payment in local checks of LBP.


https://www.the961.com/mea-only-usd-payment/
https://www.the961.com/middle-east-airl ... h-dollars/
 
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usdcaguy
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Re: Impact of Lebanon currency crisis on MEA operations

Thu Aug 12, 2021 4:07 pm

debonair wrote:
Believe me, sometimes it helps to search google.
Starting June 8th, Lebanon’s national carrier Middle East Airlines (MEA) will only accept payment in fresh dollars (USD) as opposed to settling payment in local checks of LBP.


https://www.the961.com/mea-only-usd-payment/
https://www.the961.com/middle-east-airl ... h-dollars/


You really have to sympathize with the Lebanese people on this. Many of them do not have access to fresh dollars. You do have to wonder though, if it would be possible to buy a ticket from an agency in the US, for example, to get around the currency requirements. That would include the many online agencies that are available for bookings.
 
ScottB
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Re: Impact of Lebanon currency crisis on MEA operations

Thu Aug 12, 2021 4:35 pm

usdcaguy wrote:
You do have to wonder though, if it would be possible to buy a ticket from an agency in the US, for example, to get around the currency requirements. That would include the many online agencies that are available for bookings.


How exactly would this solve the currency requirements? A US agency isn't going to accept payment in LBP; they're going to charge dollars and leave it up to the card issuer to settle the exchange to LBP. Given that banks have restricted the amount of dollars they will sell customers in exchange for LBP at the "bank rate" I expect the transaction would be declined.
 
oceanvikram
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Re: Impact of Lebanon currency crisis on MEA operations

Thu Aug 12, 2021 5:04 pm

MEA ... if they could operate through the middle of a civil war ... this should be a piece of cake.
 
LatinPlane
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Re: Impact of Lebanon currency crisis on MEA operations

Fri Aug 13, 2021 6:10 pm

oceanvikram wrote:
MEA ... if they could operate through the middle of a civil war ... this should be a piece of cake.


Read recent article below.

https://www.key.aero/article/cedarjet-goes-war

Image

A 707 bombed in 1982 by Israeli invasion of Beirut airport.
 
usflyer msp
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Re: Impact of Lebanon currency crisis on MEA operations

Sat Aug 14, 2021 1:17 am

This would be a great time for MEA to focus on transit traffic. Accept payment in stable foreign currency while most of your local costs are in the freefalling Lebanese pound. They could be the first full service LCC.
 
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zeke
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Re: Impact of Lebanon currency crisis on MEA operations

Sat Aug 14, 2021 1:51 am

ScottB wrote:
How exactly would this solve the currency requirements? A US agency isn't going to accept payment in LBP; they're going to charge dollars and leave it up to the card issuer to settle the exchange to LBP. Given that banks have restricted the amount of dollars they will sell customers in exchange for LBP at the "bank rate" I expect the transaction would be declined.


MEA is an IATA member airline, I suspect payments are settled via the IATA clearing house (ICH).
 
davidjohnson6
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Re: Impact of Lebanon currency crisis on MEA operations

Sat Aug 14, 2021 2:32 am

usflyer msp wrote:
This would be a great time for MEA to focus on transit traffic. Accept payment in stable foreign currency while most of your local costs are in the freefalling Lebanese pound. They could be the first full service LCC.


People with easy access to US dollars and with enough money to fly long haul, tend to prefer not to fly via airports in unstable countries. That means transfer passengers who fly via Beirut will be heavily biased towards those seeking the absolute cheapest fares - ie unprofitable for airlines whose costs are heavily based around hard currencies
 
AsoRock
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Re: Impact of Lebanon currency crisis on MEA operations

Sat Aug 14, 2021 6:40 am

Besides accepting USD only, the second biggest factor helping MEA here is that Lebanon’s huge diaspora will always travel back home for VFR, paying in the stable currencies or dollars of their country of origin. Those who live IN Lebanon without access to USD will struggle to afford air fares. I suppose once summer is over it’ll hurt them a little more.
 
ScottB
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Re: Impact of Lebanon currency crisis on MEA operations

Sat Aug 14, 2021 4:23 pm

zeke wrote:
MEA is an IATA member airline, I suspect payments are settled via the IATA clearing house (ICH).


Transactions between individual consumers and travel agencies don't go through the IATA clearing house; they go through payment networks like Visa and MasterCard.
 
debonair
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Re: Impact of Lebanon currency crisis on MEA operations

Sat Aug 14, 2021 10:47 pm

AsoRock wrote:
Besides accepting USD only, the second biggest factor helping MEA here is that Lebanon’s huge diaspora will always travel back home for VFR, paying in the stable currencies or dollars of their country of origin.


True! From Germany Lufthansa even sends nowadays the A340 to BEY and Sundair the A330 albeit op. by WAMOS.
 
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zeke
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Re: Impact of Lebanon currency crisis on MEA operations

Sun Aug 15, 2021 12:10 am

ScottB wrote:
Transactions between individual consumers and travel agencies don't go through the IATA clearing house; they go through payment networks like Visa and MasterCard.


The discussion is how the airline is going to get paid given the collapse of the economy, and the airline only accepting USD (i.e ICH "Currency of Settlement"), not how the travel agency is going to get paid. The travel agent could use any method of payment if chooses from chicken eggs, recycled cans, bitcoin etc, however to pay for the coupon the ICH will require USD for settlement.
 
ScottB
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Re: Impact of Lebanon currency crisis on MEA operations

Sun Aug 15, 2021 4:27 pm

zeke wrote:
The discussion is how the airline is going to get paid given the collapse of the economy, and the airline only accepting USD (i.e ICH "Currency of Settlement"), not how the travel agency is going to get paid.


No, this is the statement which I quoted:

usdcaguy wrote:
You do have to wonder though, if it would be possible to buy a ticket from an agency in the US, for example, to get around the currency requirements. That would include the many online agencies that are available for bookings.


An agency in the U.S. is obviously going to operate in USD and of course if one has access to dollars it all works out (but MEA will also accept dollars for bookings). If one does not have access to dollars, trying to book through a U.S. agency won't work.
 
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zeke
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Re: Impact of Lebanon currency crisis on MEA operations

Sun Aug 15, 2021 10:01 pm

ScottB wrote:
An agency in the U.S. is obviously going to operate in USD and of course if one has access to dollars it all works out (but MEA will also accept dollars for bookings). If one does not have access to dollars, trying to book through a U.S. agency won't work.


There is no legal requirement for an agency to use any particular payment method/barter/gift to a retail client, the back end settlement of the funds through the ICH for the coupon will be in USD. That is what the airline will receive.
 
ScottB
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 12:49 am

zeke wrote:
There is no legal requirement for an agency to use any particular payment method/barter/gift to a retail client


Um, duh, but why don't you find me a travel agent in the USA which will accept payment in LBP since you seem really insistent on being right.
 
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usdcaguy
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 3:40 am

[threeid][/threeid]
ScottB wrote:
zeke wrote:
There is no legal requirement for an agency to use any particular payment method/barter/gift to a retail client


Um, duh, but why don't you find me a travel agent in the USA which will accept payment in LBP since you seem really insistent on being right.


If an agency in Lebanon has dollars, they could simply accept LBP in return for the ticket, which could be purchased with an agency check to bypass the use of the customer’s LBP. Or it may be possible to work with an agency in the US using hawala. If, say, someone wanted to get money to someone like a relative in Beirut, they would give an American agency USD. That agent would work with a Lebanese agent who would in turn give the name of a Lebanese customer wanting to purchase a ticket in LBP. The US agent would then issue an e-ticket for that customer using USD. The agent in Beirut would then collect the equivalent in LBP from their customer and give that money to the recipient of the funds transfer from the US. It would be complicated to start, but with enough volume, the system would work.
 
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spinkid
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 4:06 am

usdcaguy wrote:
[threeid][/threeid]
ScottB wrote:
zeke wrote:
There is no legal requirement for an agency to use any particular payment method/barter/gift to a retail client


Um, duh, but why don't you find me a travel agent in the USA which will accept payment in LBP since you seem really insistent on being right.


If an agency in Lebanon has dollars, they could simply accept LBP in return for the ticket, which could be purchased with an agency check to bypass the use of the customer’s LBP. Or it may be possible to work with an agency in the US using hawala. If, say, someone wanted to get money to someone like a relative in Beirut, they would give an American agency USD. That agent would work with a Lebanese agent who would in turn give the name of a Lebanese customer wanting to purchase a ticket in LBP. The US agent would then issue an e-ticket for that customer using USD. The agent in Beirut would then collect the equivalent in LBP from their customer and give that money to the recipient of the funds transfer from the US. It would be complicated to start, but with enough volume, the system would work.


While you may be technically correct here. Its not practical. People are struggling to feed themselves. If you wanted to fly out of the country, most likely someone would buy you the ticket, or send U.S. Dollars to the person. Nobody wants Lebanese Pounds. They lose value each day.
I hope MEA can continue on and the Lebanese People are able to get a government that can support them with basic needs.
 
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Phosphorus
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 5:25 am

usdcaguy wrote:
[threeid][/threeid]
ScottB wrote:
zeke wrote:
There is no legal requirement for an agency to use any particular payment method/barter/gift to a retail client


Um, duh, but why don't you find me a travel agent in the USA which will accept payment in LBP since you seem really insistent on being right.


If an agency in Lebanon has dollars, they could simply accept LBP in return for the ticket, which could be purchased with an agency check to bypass the use of the customer’s LBP. Or it may be possible to work with an agency in the US using hawala. If, say, someone wanted to get money to someone like a relative in Beirut, they would give an American agency USD. That agent would work with a Lebanese agent who would in turn give the name of a Lebanese customer wanting to purchase a ticket in LBP. The US agent would then issue an e-ticket for that customer using USD. The agent in Beirut would then collect the equivalent in LBP from their customer and give that money to the recipient of the funds transfer from the US. It would be complicated to start, but with enough volume, the system would work.

Possible, but that's not how folks behave in a hyperinflation... If you know your relatives are sending you USD, and you are told you'll be given some local currency instead... Basically, there is a limited potential for a agreement there, minuscule even.

Regarding overall workings of "just buy via travel agent" -- MEA says "fresh dollars". I guess it means it will not necessarily write a ticket to an agency and accept a clearinghouse settlement of a previous debt. They need "fresh dollars" and print this openly. So good luck trying to write tickets vs. "old debts".
 
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zeke
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 5:33 am

ScottB wrote:

Um, duh, but why don't you find me a travel agent in the USA which will accept payment in LBP since you seem really insistent on being right.


Scott I don’t know who takes LBP, I know of agencies that accept Bitcoin (eg Expedia)
 
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Polot
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 12:17 pm

zeke wrote:
ScottB wrote:

Um, duh, but why don't you find me a travel agent in the USA which will accept payment in LBP since you seem really insistent on being right.


Scott I don’t know who takes LBP, I know of agencies that accept Bitcoin (eg Expedia)

Unless they are already sitting on a lot of Bitcoin I’m not sure getting enough to pay for a flight is any easier for your average Lebanese.
 
ScottB
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 1:42 pm

zeke wrote:
Scott I don’t know who takes LBP, I know of agencies that accept Bitcoin (eg Expedia)


It's a little tough to mine Bitcoin in a country where many homes are lucky to get a couple of hours of electricity each day.
 
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zeke
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Re: Impact of Lebanon currency crisis on MEA operations

Mon Aug 16, 2021 7:55 pm

ScottB wrote:

It's a little tough to mine Bitcoin in a country where many homes are lucky to get a couple of hours of electricity each day.


Nothing to do with mining, when faced with hyperinflation people look at ways to protect their savings with a reserve, traditionally that was done with precious metals like gold or stable foreign currencies, these day many people do it with crypto to bypass central banks. This trend has started in Venezuela.
 
jumpjets
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 10:39 am

oceanvikram wrote:
MEA ... if they could operate through the middle of a civil war ... this should be a piece of cake.


Well according to FR24 they are still sending two flights a day to LHR on a regular basis. Today it was an A321 and an A332 so they are getting enough money for fuel from somewhere.
 
smi0006
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 12:35 pm

LatinPlane wrote:
oceanvikram wrote:
MEA ... if they could operate through the middle of a civil war ... this should be a piece of cake.


Read recent article below.

https://www.key.aero/article/cedarjet-goes-war

Image

A 707 bombed in 1982 by Israeli invasion of Beirut airport.


They certainly do deserve recognition as one resilient business especially for an airline!! Few that join those ranks, be good for another thread!
 
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eta unknown
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 2:43 pm

Pax in theory can just purchase a ticket from a foreign website and pay in dollars/pounds/euros and this amount will be converted into Lebanese pounds by the pax's credit card company.
 
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Phosphorus
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 2:59 pm

eta unknown wrote:
Pax in theory can just purchase a ticket from a foreign website and pay in dollars/pounds/euros and this amount will be converted into Lebanese pounds by the pax's credit card company.

Hyperinflations are tricky that way -- because credit evaporates. And the fact that you have a modern symbol of functioning credit system, like a credit card, doesn't mean underlying system supports credit.
I wouldn't be surprised, if you try to pay with a Lebanese credit card, denominated in LBP, a USD or EUR transaction, any of the following could happen:
1) transaction refused, for a variety of reasons
2) you are billed, immediately, an arbitrary amount, at an elevated exchange rate (to protect the merchant)
2a) you have later a debit note/withdrawal to compensate "conversion loss"

Not to say that what you suggest doesn't work. But IF it does, there'll be a stampede into fully flex tickets, as these would become a savings mechanism, vs. quickly depreciating currency.
Trust me, I saw hyperinflation. People use unusual methods to protect their money, if necessary.
 
ScottB
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 3:44 pm

eta unknown wrote:
Pax in theory can just purchase a ticket from a foreign website and pay in dollars/pounds/euros and this amount will be converted into Lebanese pounds by the pax's credit card company.


It's converted by the credit card issuer -- which is generally a bank -- and not the credit card network. If one has a credit card which bills in LBP, it is almost certainly issued by a Lebanese bank. As such, that Lebanese bank must be willing to pay the merchant (MEA/agency/website) for the transaction in USD/GBP/EUR and bill the cardholder in Lebanese pounds -- and that is the problematic step you are missing. Because of the currency crisis, the banks themselves don't necessarily have access to easily convertible currencies on reasonable/legal (i.e. non-black-market) terms so they're likely to refuse the transaction (and all transactions not in LBP).

This is precisely why MEA is only accepting payment in "fresh dollars" -- lack of access to relatively stable currencies on terms which are reasonable and/or compliant with local laws.
 
fraspotter
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 4:16 pm

LatinPlane wrote:
oceanvikram wrote:
MEA ... if they could operate through the middle of a civil war ... this should be a piece of cake.


Read recent article below.

https://www.key.aero/article/cedarjet-goes-war

Image

A 707 bombed in 1982 by Israeli invasion of Beirut airport.


I read that article in the July issue of Airliner World and that is one of the best articles of theirs I've read in a while. It's insane what the airline went through during the civil war and still ran a semblance of a service. It seemed like every other sentence was about another one of their 707s getting destroyed by bombing, gun fire or artillery.
 
MEA-707
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 5:47 pm

usflyer msp wrote:
This would be a great time for MEA to focus on transit traffic. Accept payment in stable foreign currency while most of your local costs are in the freefalling Lebanese pound. They could be the first full service LCC.

I'd love MEA to become a transit airline, a bit like a small THY, EK or Qatar Airways, opening up some typical routes like Tokyo and Manila. But the reason they are not interested is that their seat mile costs are quite high, think of the relative high leasing and insurance rates of their new fleet (all A321s are just a year old) and safety costs to secure the airport which is in the middle of an unsafe outskirt of Beirut. Fuel and catering is also more expensive to get there. So that's why they don't want to bother for the Y pax who look for a cheap ticket from Amsterdam to Dubai, London to Cairo or Frankfurt to Manila. It seems to work for them to offer a premium O/D product for the big Lebanese diaspora, government and business traveller and locals.
 
usflyer msp
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 6:34 pm

MEA-707 wrote:
usflyer msp wrote:
This would be a great time for MEA to focus on transit traffic. Accept payment in stable foreign currency while most of your local costs are in the freefalling Lebanese pound. They could be the first full service LCC.

I'd love MEA to become a transit airline, a bit like a small THY, EK or Qatar Airways, opening up some typical routes like Tokyo and Manila. But the reason they are not interested is that their seat mile costs are quite high, think of the relative high leasing and insurance rates of their new fleet (all A321s are just a year old) and safety costs to secure the airport which is in the middle of an unsafe outskirt of Beirut. Fuel and catering is also more expensive to get there. So that's why they don't want to bother for the Y pax who look for a cheap ticket from Amsterdam to Dubai, London to Cairo or Frankfurt to Manila. It seems to work for them to offer a premium O/D product for the big Lebanese diaspora, government and business traveller and locals.


I would agree with you long term but I was thinking more short term while MEA needs hard currency and many regional routes have restricted competition. I was thinking more like focusing on pax that need to fly ESB-BEY-JED Or BAH-BEY-TUN.
 
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usdcaguy
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Re: Impact of Lebanon currency crisis on MEA operations

Wed Aug 18, 2021 8:12 pm

usflyer msp wrote:
MEA-707 wrote:
usflyer msp wrote:
This would be a great time for MEA to focus on transit traffic. Accept payment in stable foreign currency while most of your local costs are in the freefalling Lebanese pound. They could be the first full service LCC.

I'd love MEA to become a transit airline, a bit like a small THY, EK or Qatar Airways, opening up some typical routes like Tokyo and Manila. But the reason they are not interested is that their seat mile costs are quite high, think of the relative high leasing and insurance rates of their new fleet (all A321s are just a year old) and safety costs to secure the airport which is in the middle of an unsafe outskirt of Beirut. Fuel and catering is also more expensive to get there. So that's why they don't want to bother for the Y pax who look for a cheap ticket from Amsterdam to Dubai, London to Cairo or Frankfurt to Manila. It seems to work for them to offer a premium O/D product for the big Lebanese diaspora, government and business traveller and locals.


I would agree with you long term but I was thinking more short term while MEA needs hard currency and many regional routes have restricted competition. I was thinking more like focusing on pax that need to fly ESB-BEY-JED Or BAH-BEY-TUN.


Neither ME nor RJ competes effectively against the ME4 given their lack of frequency and scheduled markets. There is also no nonstop service between BEY and ESB and BAH. Both of those airlines are centered around their home countries to a large extent.

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