UPDATE: Middle East Airlines has (wisely) scrapped this policy.
How’s this for irony? Lebanon’s Middle East Airlines is 99% government owned, but announced yesterday that it will no longer accept payment in local currency, the Lebanese Lira.
Lebanon is in the midst of severe economic upheaval. High debt and reduced remittances from Lebanese living abroad has sunk the economy. The Central Bank has responded by greatly tightening currency controls on foreign transfers. Although the Lebanese Lira is officially pegged to the U.S. Dollar, it has lost tremendous value on the black market. Currently, the official rate is 1,507 Lira to 1USD while the black market rate has risen to nearly 2,500 Lira to 1USD.
With the Lebanese Lira unstable, Middle East Airlines (MEA) has announced that starting today it will accept credit card and bank payments only “provided that the operation is in foreign currency.” Some reports suggest that MEA will only accept the USD.
Yesterday, crowds surged at Beirut–Rafic Hariri International Airport to purchase tickets in local currency. Many expressed outrage over the policy change.
Unsurprisingly, Lebanon’s President Michel Aoun was not happy about the news. He warned MEA to change course, noting that severe penalties will follow for breaking the law. Lebanese law stipulates that MEA and any other state-owned business must accept local currency or the official USD rate, as set by the central bank.
MEA has declined to comment, but promised a press conference later today to address the matter.
Let’s see what MEA has to say at its press conference. If the law really proscribes such a policy, it is hard to see how MEA can get away with it, even though it is quite understandable that it does not want to lose money each day on a currency that is rapidly depreciating.