January 16, 2014 
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Argentine Monetary Issues

Economic chaos, high inflation, and political uncertainty have created a growing hunger for the U.S. dollar and other hard currencies in Argentina. That means a flourishing black market

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that's easy to access. 

 

By Mark Holston 

 

As Diego (not his real name) thumbs through a stack of crisp 100 peso notes, he comments about his brisk and growing business as a currency trader in Argentina's shadowy black market. His tiny shop is located at the entrance to the pedestrian-only portion of Lavalle, a primary shopping street in the heart of Buenos Aires. Ostensibly a travel agency, it is decorated with posters promoting tours and other tourism services.

 

But it's the value of his country's battered currency, not packaged excursions to Punta Del Este, that's on the owner's mind. "I can take in up to 10,000 U.S. dollars a day," he says of his operation. "Euros, maybe 3,000 or so. And, we are even trading for the Brazilian real. It's holding its value, and if people can't get dollars, they are very interested in the real."

 

Next door at a call center, the same kind of discrete transactions take place literally on a minute-to-minute basis. On the street, as a Policia Federal officer lingers nearby, other traders mill about, chanting "Cambio, d�lares, Euros" ("Change, dollars, Euros") to everyone within earshot - although all of the players know that what they are involved in is technically illegal. Foreign visitors want the bargains their discounted pesos can pay for and Argentines are desperate to convert their pesos to dollars and other safer currencies, knowing that tomorrow, the peso will be worth less than it is today.

 

A Growing Gap Between Official and Black-Market Exchange Rates

Money changer at work

A year ago, the U.S. dollar was worth seven pesos on the black market. Today, the unofficial rate has surged past 10 pesos. As the value of the peso continues to erode, the difference between the sanctioned and black market, or the d�lar azul (blue dollar), as it is known in Argentina, grows. Today, it amounts to more than 60%.

 

A golden opportunity for visitors willing to trade on the black currency market has turned into a financial nightmare for most Argentines. "Having two dollars is complex," says Daniel Hirsch, owner of a firm that produces industrial cutlery. "If you export, you get the official rate, which is only around P$6. But, if you have to purchase some items, you'll have to pay for them with a dollar that's worth P$10. As in all crises, some people do well but others lose."

 

"If a foreign friend is coming," says Jorge Cazenave, a tourism consultant, "I would advise them to bring cash and would help them exchange it in the black market. We cannot do this with groups or for a large hotel bill, for instance, because that would have an invoice and that is controlled. But the black market for dollars will continue as long as the official rate is the only legal one."

 

Official Policies Have Little Effect

Argentine President Cristina Fern�ndez de Kirchner recently appointed new officials to revamp the country's fiscal policies. Capital flight has been a major issue, and the hording of U.S. dollars has taken hundreds of millions out of circulation, diminishing the country's foreign reserves. At the same time, inflation is out of control. While the government pegs it at about 25% annually, qualified unofficial observers put it as high as 35%. Among the government's recent moves to stabilize the economy and increase revenues: A 35% federal tax on all credit card purchases made abroad, a 50% tax on vehicles of a certain value, and a price freeze on 200 supermarket staples to lessen the effect of inflation on the poor.

 

"The government has no idea how to stop the inflation," Cazenave told LBT. "All of the new initiatives, in my opinion will fail, and the black market will still be the refuge for our buying power." Although the government plans to establish an official "tourist dollar" rate, Cazenave believes the black market will continue to flourish.

  

The Bottom Line for Travelers

Buenos Aires

The search for an unoficial "tourism rate," meanwhile, extends even to the city's most expensive hotels, where there's a thirst among well-heeled guests for access to the black market. "Yes," says a concierge at one such elite address, "even the wealthy are looking for a bargain. When they ask, we don't provide specifics, as it is unlawful. But we do direct them to where they can get dependable information."

 

Visitors should also ask waiters in restaurants and clerks in retail shops if they accept dollars. In many cases they will, although the rate offered will be somewhat less than the black market, where the relative value of the peso and other currencies fluctuate constantly.

 

It's best, however, not to count on spur-of-the-moment transaction opportunities. When asked if he accepts dollars for the trip from downtown Buenos Aires to the international airport, one entrepreneurial taxi driver quickly produces a laminated sign that reads "Dollars only at the official rate." With the coveted greenbacks for the fare in hand, the savvy driver has pocketed a nice 60% profit.

 

News kiosk by Mark Holston; Money changer at work by Mark Holston; Buenos Aires, Argentina by Mark Holston

 

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Delta introduces full-flat bed seats in BusinessElite flights between Lima and Atlanta: Service upgrade also includes oversized personal entertainment screens, audio video on-demand entertainment, Westin Heavenly InFlight bedding and more. 

 

Two new daily seasonal flights from New York to the Dominican Republic: Delta will add two additional daily flights each between New York's John F. Kennedy International Airport and Santo Domingo and Santiago, running June 5-October 29, making five daily Delta flights between New York and each of the nation's two largest cities  

 

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Travel News
Guayaquil, Ecuador

New Airline Routes and Route Changes

Andean Region

TAME Ecuador started service between Guayaquil, Ecuador and New York's John F. Kennedy International Airport, flying six round trips per week through May 31.

 

Central America

Costa Rica-based LACSA will add more flights between San Jose, Costa Rica and Guatemala City beginning January 29. The Avianca Group carrier will fly 12 weekly round-trips (up from seven), and then increase to 14 weekly round-trips beginning February 17.

 

Airline Alliance News

As U.S. carriers American Airlines and US Airways move forward to integrating the two companies post-merger, they have implemented the first phase of a codeshare agreement, applicable to flights from January 23 forward. Initially, codesharing will only cover some flights on the two airlines, allowing travelers to book flights through either airline, travel seamlessly on connecting flights operated by both carriers and have their luggage transfer seamlessly on connecting itineraries. Flights covered under the initial codeshare include international flights operated by each carrier between the U.S. and Costa Rica, Germany, Japan and some European cities. It also includes flights operated within the U.S. by either of the two airlines between American's hubs in Miami, Dallas/Fort Worth, New York (JFK), Chicago and Los Angeles and US Airways' hubs in Charlotte (North Carolina), Philadelphia (Pennsylvania), Phoenix (Arizona) and Washington, D.C. Some other domestic flights also are part of the codeshare, which the two airlines plan to extend as quickly as possible. The two airlines have also co-located their ticket counters and gates at New York's JFK Airport.

 

Delta Air Lines

Other Airline News

Delta Air Lines added a line of healthy menu items from Luvo in the economy cabin of flights between New York's JFK International Airport and the U.S. cities of Los Angeles, San Francisco and Seattle, Washington. The meals are free for fliers in Economy Comfort and can be purchased by Economy fliers. The sandwich wraps are made with hormone-free and antibiotic-free meats or quinoa and edamame, and include sides such as grapes and multi-seed cookies.

 

United Airlines has introduced special-edition amenity kits, which come in collectible tins, in its United BusinessFirst cabin on long-haul international flights that originate in the U.S.

 

American Airlines subsidiary American Eagle Airlines, which is one of several companies that fly regional jets for American under the brand American Eagle, will change its name to Envoy this spring. Aircraft that the subsidiary flies for American Airlines, as well as the nine other regional carriers that provide service for American and US Airways, will continue to fly under the brand name American Eagle, and ticket counters will also continue to use the American Eagle brand.

American Airlines Boeing 737-800

 

Loyalty Program Updates

American Airlines and US Airways, the two U.S. carriers whose parent companies have merged, are offering bonus miles to frequent flier program members on flights operated by each other between January 13 and March 2. Registration is required for the program, which gives a 50% mileage bonus to AAdvantage members who earn American miles on flights operated by US Airways and US Airways Express, and to Dividend Miles members who earn US Air miles on flights operated by American and Envoy (formerly American Eagle). 

 

Members of either American's AAdvantage or US Airways' Dividend Miles programs can also now redeem miles for flights on the other carrier's network, and miles earned on the one carrier's flights count towards elite status qualification on the other carrier. In addition, members of American's Admiral's Club or the US Airways Club have reciprocal club access and American AAdvantage City Executive credit cardholders can access US Airways Clubs.

 

Airport News

U.S. Customs and Border Protection agreed to allow Miami International Airport to pay its officers overtime out of the airport's budget. The county and the airport hope that the extra hours of work will help alleviate wait times of as much as five hours for travelers entering or passing through the U.S.

 

Montreal-Pierre Elliott Trudeau International airport in Montreal, Canada introduced a new timed reservation system for security checkpoints. The free service is available on only on some international flights (although not flights to or through the U.S.) and most Canadian domestic flights. Fliers reserve a specific security checkpoint and time online, and then report to the SecurXpress priority line at that time to check in.

 

The Mexican government approved major expansions at the Cancun International and Veracruz International airports. Operator Grupo Aeroportuario del Sureste (ASUR) plans to increase capacity in Cancun by about 4 million passengers per year by 2015, and to double the size of the Veracruz airport by 2018. The government also approved smaller-scale expansion and renovation projects by ASUR at airports in Cozumel, Huatulco, Merida, Minatitlan, Oaxaca and Villahermosa, with work planned through 2028. 

 

Courtyard by Marriott and Residence Inn Central Park hotel tower

Hotel Openings

Marriott opened the dual-branded Courtyard by Marriott and Residence Inn Central Park hotel tower in New York City. The tallest hotel in the U.S., it has free Wi-Fi throughout and includes 6,000 square feet of meeting space and a fitness center. The Courtyard section includes rooms designed for business travelers with separate work and sleeping areas, while the Residence Inn has studio suites with kitchenettes (and available grocery delivery), aimed at travelers staying for five nights or longer.

 

The Westin Puntacana Resort & Club opened in the Dominican Republic. The 200-room hotel has direct beach access and access to the facilities at the Puntacana Resort & Club, as well as a 24-hour business center and 3,155 square feet of meeting space in two rooms.

 

Hotel Loyalty Program Updates

Between January 6 and April 13, members of Club Carlson can earn enough bonus points for a free night's stay after three qualifying nights at participating hotels. Carlson's brands are Radisson Blu, Radisson, Park Plaza, Park Inn and Country Inns & Suites.

 

Guayaquil, Ecuador by YoTut; Delta Air Lines by Aero Icarus; American Airlines Boeing 737-800, courtesy American Airlines; Courtyard by Marriott and Residence Inn Central Park hotel tower, courtesy Marriott International
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