American Airlines Accused of “Insidious” Attacks on Argentina
Jeff Edwards September 19, 2014
After an Argentinian newspaper exposed American Airlines’ new booking policy in the South American nation, the carrier endured the brunt of government’s frustration with the U.S.
Responding to reports from the Buenos Aires newspaper Clarín that American Airlines placed restrictions on air travel reservations made in Argentina, the country’s Cabinet Chief Jorge Capitanich lashed out at the carrier in his daily televised news conference on Thursday. “They are insidious, permanently launching speculative attacks against the country with no basis whatsoever,” Capitanich said.
Clarín reported on Wednesday that American Airlines’ move to stop allowing ticket sales in Argentina for flights booked more than three months in advance is motivated by the airline’s attempt to limit its exposure to the country’s dramatic currency fluctuations.
The government in Argentina, however, sees a more sinister motive. Capitanich went on to level several accusations against the largest airline in the U.S., declaring, “This forms part of a permanent agenda of schemes from companies that intend to generate uncertainty about the currency in Argentina.”
Argentinian President Cristina Fernandez de Kirchner took things a step further, labeling American “jet-propelled vultures” on her official website.
When asked by Bloomberg News to confirm that the airline is restricting ticket sales in Argentina, American spokeswoman Martha Pantin only said, “Currently there is limited inventory available for purchase in Argentina.”
The country’s frustration with U.S.-based companies is not solely focused on American. Argentina has been locked in a struggle to restructure portions of its debt held by firms based in the U.S. In recent months, the rhetoric surrounding this issue has heated up.
A statement issued earlier this month by Argentina’s Ministry of Economy and Public Finances, referencing the country’s setbacks in U.S. courts, said in part, “We will not allow any other country or its justice system to jeopardize what Argentines have achieved with so much effort.” The statement went on to call U.S. hedge funds “vulture funds.”
Many officials in Argentina believe that U.S. firms’ unwillingness to restructure the country’s debt, coupled with U.S. court decisions backing those firms, is at least partially to blame for the current inflation and currency devaluation woes.
For its part, American seems to be taking precautionary steps to avoid a repeat of the situation the airline faced earlier this year in Venezuela, where flights were sold out months in advance. Bloomberg Businessweek reported in January that airlines had more than $3 billion in revenue trapped in Venezuela after the government imposed strict currency controls to limit “the scrap,” a scheme in which passengers took advantage of out-of-control inflation to “exploit the difference between the official exchange rate and the black market rate by buying airline tickets in the local currency and exchanging up to $3,000.”
[Photo: iStock]
milohoss, the problem is caused by defaulted Argentine debt. The Peronist government over-regulated and over-spent. Now they expect their lenders to eat the result of their irresponsibility. Nothing new, unfortunately, in Argentina. It has been like this for years.
For the person who doesn't understand why AA doesn't want to sell tickets in Argentina, here is a very oversimplified answer: When AA sells a ticket for $1000 in Argentina, the official exchange rate applies and the customer pays 8500 pesos. So now AA has 8500 pesos. The only people who claim 8500 pesos are worth $1000 is the Argentine government. Everyone else will only give AA $560 for 8500 pesos - it's called the 'blue market' rate. So if the Argentine government suddenly says to AA, "We're running low on cash reserves, we're not going to exchange money at the official rate," then AA is out of luck. That's basically what happened in Venezuela.
Argentina could as their only recourse prevent AA from flying there. Not going to happen as they cut big tourist dollars from the already ailing economy.
The government began levying an additional 35% tax on tickets purchased in pesos to feed off the Argentine people's efforts by sucking up for itself the difference between the official and black market rates of its currency. I'm sure the airlines could use that tax to help defer the difference in having to pay in dollars and collecting devalued pesos.
@justageek: "But they had not publicized their policy — it was uncovered by an investigative report in a newspaper" Here are the facts: Argentina's mainstream anti government media (Clarín Group, La Nación, etc) and its allies (Argentine oligarchy, big farm producers, foreign lobbying entities such as AFTA and vulture funds), have a huge economic interests for this government to fail or backtrack on its policies. Furthermore these media groups have a primary interest in getting the Audiovisual media law (which affects their monopolistic business) overturned. 100% of their coverage is negative, and they have been proven to have published outrageous libelous news pieces many times (yet, it is the current Argentine government that made it so you can't sue them for lying). It is also a fact that both the Clarín Group and La Nación are under current active investigation for tax evasion and being complicit in human rights violations during the last dictatorship in Argentina. All of these things are facts that nobody can deny. If you believe what a news organization publishes 100% because of supposed values like "freedom of the press", "investigative reporting" and so on, then you are naive. Now, from these facts one can speculate that there in fact there is absolutely no "investigative reporting" going on in these organizations, but an orchestrated global conspiracy involving the vulture funds (which are connected to AA and have a huge lobbying effort going on worldwide). The President layed out the connection between the vulture funds and AA. News stories don't just get "discovered", the Argentine government claims that this is the latest strike in a media/financial war that is getting uglier. The fact that AA has published no official policy and that it has not responded at all gives more credence to the Argentine government's claim at this point. Anybody can believe what they want, but the supposed "free press", in reality is not free at all, and its primary interest is not journalism, but power, control and money. There is a lot of money behind this current administration going away. In the billions of dollars, both foreign and Argentine.