Lebanon’s national airline will require payment for tickets in US dollars based on the central bank’s latest exchange rate from June 1, Chairman Mohamad El-Hout said on Sunday, a step that will make tickets much more expensive.
Middle East Airlines (MEA) chairman El-Hout said the move was necessary to ensure the financial well being of the state airline that is majority owned by the central bank.
“If we don’t take (this measure) the company will be hit financially,” Hout told Reuters.
The change, which applies only to tickets bought inside Lebanon, means ticket payments can no longer be based on a lower controlled dollar exchange rate.
Tickets bought in Lebanon would now be based on a central bank benchmark launched this month, which is currently 12,000 Lebanese pounds to the dollar, a rate that is closer to the unofficial market rate rather than an official rate of about 3,900 Lebanese pounds for dollar account holders in the country. This move effectively more than triples the prices of tickets for the Lebanese people .
Lebanese authorities had limited dollar withdrawals, with a few exceptions under that exchange rate, effectively cutting the value of those deposits as the unofficial dollar market rate is now more than 12,800 pounds to the dollar.
Buying airline tickets was one way people could spend dollars held in local banks.
Before Lebanon’s economic crisis that virtually locked depositors out of their dollar accounts in late 2019, the exchange rate widely used was 1,500 to the dollar.
Hout said the state carrier, like other airlines, had been hit hard by the coronavirus pandemic with a sharp drop in revenues but did not elaborate.
“We will continue to make losses this year,” Hout added.