MEA Wants Passengers To Pay For Flights With ‘New Dollars’

Travel could be about to become entirely unaffordable for Lebanese citizens without any foreign income. On Sunday, Middle East Airlines’ Chairman said his company would no longer be accepting payment in “local dollars.”

MEA Wants Passengers To Pay For Flights With ‘New Dollars’
MEA’s Chairman says the airline will soon charge for tickets in “new dollars” unencumbered by restrictions. Photo: Getty Images

As a result of Lebanon’s unrivaled economic crisis, its flag-carrier, Middle East Airlines (MEA), might soon demand that tickets bought from domestic accounts be paid for with “fresh dollars.”

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“Local dollars” subject to restrictions

No, it is not newly printed cash or some variant of the currency, but the expression refers to dollars recently transferred to new Lebanese accounts in the recent months. Any dollars held on accounts in the country before that are subject to restrictions since late 2019.

These imposed limitations mean that dollar withdrawals are limited to $500 per month, with a few exceptions. The official exchange rate for these “local dollars” has been set to 3,900 Lebanese pounds, compared to the pre-crisis 1,500 which was decided in 1997. According to Reuters, the unofficial street rate has soared to over 8,000.

According to the Financial Times, the total amount of “old dollar” deposits is estimated at €87 billion, although their actual value is now uncertain. One way for Lebanese citizens to still make good use of their “old” dollars has been to purchase airline tickets. However, that is about to change, MEA Chairman Mohamad El-Hout warned on Sunday.

“If the company wants to ensure its stability, we will reach a time when we will need to have sales in ‘fresh dollars’,”  Mr Hout told Reuters. The MEA Chairman further added that this was a necessary step as the airline needs to pay for fuel and other expenses in dollars.

Middle East Airlines
Lebanon is suffering an unprecedented economic crisis. Photo: Getty Images

“This is not bread”

The looming decision could make travel unaffordable for Lebanese people lacking foreign income or help from relatives abroad. The Financial Times also quoted Mr Hout as saying that,

“If I continue . . . I will have all of these [local] dollars in our bank, and I’m not able to use them or to transfer them outside. This is not bread. This is travel . . . you pay for your hotel in fresh dollars.”

MEA first intended to stop accepting Lebanese pounds as payment in February this year but immediately reversed its decision following a massive backlash. 

MEA A321neo
MEA previously retracted a decision to only accept foreign currency. Photo: Airbus

Many are dependant on remittances from abroad

Lebanon is a small country with a population of only five million. However, it has a diaspora estimated to be about three times the size. The remittance from many of these ex-pats has become increasingly important to daily life in the country as many families have seen the value of their savings drop to virtually nothing. It is estimated that such remittances equal 12.5% of Lebanon’s GDP.

From the combined forces of a corrupt Ponzi-like scheme from the Central Bank – a majority shareholder in MEA, and sanctions imposed by the US on banks allegedly helping to fund Hezbollah, the country’s financial system where the US dollar and the Lebanese pound had been used interchangeably in everyday life, has all but crumbled. The Lebanese pound has itself lost over 80% of its value over the past year.