Airlines such as American Airlines and Delta Airlines are sharply reducing the number of flights they are flying to Venezuela at this time.  The problem is that while they like the flying, they can’t get their money out of Venezuela.

Most recently, American Airlines has said it has over $700 million that it cannot retrieve from the greedy hands of Venezuela’s government.  $700 million is a lot of money for any company and even for an airline, that’s a lot of cash. News reports now say that nearly $4 billion (with a “b”) is being restricted by Venezuela due to currency restrictions in place.

Venezuela (and some other countries) are greatly restricting the amount of foreign currency that can leave the country at any one time.  Because of rampant inflation and hyper-inflation induced by socialist movements in such countries, these nations now have a severe problem is coming up with enough “hard” currency to pay their global bills.

That’s significant when it comes to Venezuela because this is a nation that has had a profitable oil export going on for years.  Typically that brings in more than enough foreign currency to balance outflows for most nations.

The worst of this is that as these balances grow in these countries, they look more and more attractive to hold on to.  $4.9 billion is a lot of money to a nation such as Venezuela.  In fact, it’s about 1% of Venezuela GDP.

Think about that for a moment.  For foreign airlines alone, Venezuela is intentionally restricting as much as 1% of its GDP.

How is this done?  The nation devalues its currency strongly and regularly.  An airline such as American Airlines sell a ticket for say, $200, it’s paid for (in Venezuela) in Venezuelan Bolivars at the official exchange rate.   That exchange rate is set by the government.  But the government changes that rate arbitrarily and lower before that money gets to the airline.  Here is a simplified example:

SuperStar Airlines sells tickets in Venezuela for Bs 1000.00 (One thousand Venezuelan Bolivars).  Juan Diaz purchases a ticket and pays in cash Bs 1000.00.  The exchange rate is (officially set by Venezuela) set at 4 Bolivars to $1 US.  The airline collects this money into a Venezuelan bank account in that currency.  Now, periodically, SuperStar Airlines would like to have that currency sent back to its headquarters in the United States.  But the Venezuelan government makes this very difficult to do because it’s a large sum of money.  Basically, this currency has to be sold for dollars and the only place those dollars can be purchased (legally) is the Venezuelan government.

So the Venezuelan government “sells” dollars for an exchange rate that is set at Bs 5 to $1 and suddenly the money that SuperStar Airlines has is now worth much less.

What makes this worse is that the Venezuelan government is maintaining several different exchange rates that are “official” and those are egregiously unfair to the businesses such as airlines operating to and from that nation.  In addition, the government is devaluing its currency more in the exchange rates that primarily effect foreign businesses.  Furthermore, it’s only permitting a trickle of cash to be exchanged and sent out of the country at a time.

This results in a condition where it just doesn’t make sense to fly to Venezuela.  Actually, it doesn’t make sense to do any business in Venezuela and one could be tempted to call Venezuela the Alitalia of countries at this point.  When you can’t make money and take it back home periodically at a rate that allows you to earn a reasonable profit, you just have to stop doing business in that country.

This is what many airlines are doing now.   One thing that the former President (of Venezuela) Hugo Chavez understood was that he needed foreign businesses to do business in Venezuela and he kept this game at a tolerable level.  New President Maduro and his government is not making it tolerable because to do so means they cannot throw money at their citizens to stay in power.

And staying in power is important.

This is very reminiscent of how many nations in South America operated in the 1960’s, 1970’s and 1980’s.  And it killed those economies.  Airlines had to be very creative with how they got money out of those countries legally.  Braniff was very good at this but even Braniff would find itself doing very odd things from time to time.  For instance, its leather seats came from leather from Argentina. That leather was “exported” by Braniff because they had to buy something to take “value” out of the country.  Leather was a  way to get “value” out of Argentina.   Other times, executives would travel to the Latin American country in question, buy financial instruments of various types (often bonds) and then stuff their suitcases with them and come home.  I know this because that is exactly what my father had to do at Braniff more than once.

When an airline gets to the point that it says it is untenable to continue business in a nation, that’s pretty bad.  Airlines will do business with just about anyone if there is money to be made.

I strongly suspect that Venezuela’s response will be that their airline will fly people where they need to go.  Except . . . how will that airline gets its money out of those countries when they use retaliatory measures (allowed) against Venezuela?  This is only one chapter of a multi-story chapter.  Stay tuned for more.

 

 

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Am I the only one to notice that American Airlines’ social media has suddenly become both entertaining and fun?  I used to go months without seeing posts from American Airlines on Facebook and now I see multiple posts each day and they are funny and moving and entertaining.  It sets a great tone for this airline and I hope its nurtured.

Some examples are:

• a post of an airplane wing against a sunrise backdrop in the sky with the words “O beautiful for spacious skies…” on 4th of July.
• Another sunrise photo with an AA tail at a airport gate with “The early bird gets the worm…”
• A post on a Wednesday with a photo of a 777 taking off that says “Hump Day? More like #WheelsUpWednesday!”
• A photo of an AA Captain who happens to be a woman that says:  ““Fifteen years ago, another female captain brought her 7-year-old son on a work trip. Throughout the sequence and on the layovers in the Caribbean, he took it all in. On the flight back into Miami, one of the flight attendants asked if he wanted to be a pilot when he grew up.

  He scrunched up his face and, with complete disdain, said, ‘No, that’s a GIRL’S job!’” – Capt. Kathi Durst, Fleet Captain 737”

 

These posts are fun, saucy and I hope they continue.  Great job, American Airlines

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A preview of my trip(s) on US Airways today:

Wow.

So far anyway.

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About a week ago, I received a comment posted here on FlyingColors that was both rude and offensive.  That post came from a long time Braniff fan located here in Dallas.

Sadly, Brooke Watts isn’t a nice man.

I have found his website (The Braniff Pages) and associated Facebook page to contain a wide array biased comments on Braniff over the years with a vitriol marked for former Braniff CEO Harding Lawrence that borders on rabid.  Frankly, the things said about the Harding era are bizarre and don’t actually reflect many facts.  Hey, that’s my opinion and you’re free to ignore it.

But I don’t think that Brooke is one to really rely upon facts to support arguments.

The bias tends to change the story of the airline, particularly in the Harding years, but I’ve tended to maintain an attitude that it’s his website and his opinions and he’s free to shout them out as he wants.

I regret to inform all of you that Brooke doesn’t really extend the same courtesy to anyone. else.

That’s a shame because he does have quite the collection of items and he could be a great advocate for the airline’s history.

Instead, Brooke tends to threaten and abuse people and does it with such regularity that I cannot ignore it anymore.

About a year ago, Brooke decided that he would attempt to bully me away from a comment on his Facebook page by posting my name and address publicly and demanding to know if I was that person.  Only after he did this did I find out that he’s done it to others several times.   Unfortunately, Brooke has the habit of deleting anything that disagrees with him on his Facebook page.

Fortunately, I kept a screenshot of his bullying for posterity before he deleted it since I had noticed that he had that habit some time earlier.

Still, I tend to look at people acting like that and just leave it be.  After I replied firmly to Brooke suggesting he acted inappropriately in taking that action, he banned me from his Facebook page.

This had the effect of . . . nothing.

I’ve ignored Brooke since then and I’ve counseled a number of other people that he’s attacked both privately and publicly to do the same.  Specifically, I’ve suggested that there is no arguing with someone who spews hate and its best to leave it be.

I’ll admit that the cumulative effect of his actions has upset me at several points for he seems to have a flair for attacking people who actually have nothing to do with him.

And then his latest remark came in the form of a comment made to the FlyingColors blog.  Specifically, he wrote:

“Yes, and you have NO airline experience. You are a tool and an idiot.”

I approved the comment because I’ve generally had a policy of approving all comments that didn’t include blatantly foul language.  This one was borderline but it seemed more right to approve it than not.

I’ve let this be for a period of time because I wanted some clarity before responding, if I did at all.

I think the bullying and insults needs to stop, frankly.  So I’m making it public.  As many pointed out to me when I was growing up, how you act in public really is a direct reflection on upon yourself and what you stand for.

Brooke is free to comment all he wants on his forums.  He’s free to ban people from his websites and forums.  He can send private emails and insult anyone he wishes to.  Including me.  Brooke can shout and denigrate a wide variety of people from the Braniff era if he so wishes.

But I won’t tolerate someone like him being like a low-brow and a cretin.   So his comment gets published here and any other insults he cares to push onto my site will be published as well provided they meet the guideline that I don’t care to have intentionally foul language.  However, there is one caveat:

From here on out, I shall be giving them a place of prominence so that those associating with Brooke can see his behavior clearly.

And for those of you wondering if that could have been Brooke, the IP number of the person who made the post traces back to his home address which, coincidentally, I had available due to a purchase I made on Ebay.  So, it was Brooke, his wife or his dog, I would imagine.

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It might come as a surprise that you really can’t sue an airline in a state court.  For just about anything.

Instead, you have to file your lawsuit in Federal court which means you have to have a basis of your lawsuit that is founded on Federal law.  Since Federal law generally doesn’t address nuances (that’s generally left to states) and sets a high bar (because a lower bar is what States are for), lawsuits against airlines generally lose.

Oh, it’s quite possible to do a personal injury suit against an airline in Federal court when there is a crash.  But that has as much to do with the bad publicity as it does the law.

You see, airlines managed to have most issues against them (for all practical purposes, all issues) moved to Federal court by an act of Congress back when Deregulation was occurring.

This sets the bar very, very high for winning a lawsuit against an airline.  It is a very protected place to sit as an industry.

And unfair. You can sue Exxon wherever you want but you can’t sue American Airlines wherever you want.

As a result, airlines are able to write egregious contract terms and abuse passengers on a daily basis with the clear knowledge that virtually all passengers can’t sue them.  Imagine the change in attitude and service an airline might experience when it has to face a jury of its peers in East Texas after losing luggage, holding people hostage in an airplane and then arbitrarily cancelling their flight.

I honestly struggle to find the justification for airlines to have such a protected status in 2014.  Virtually all other service oriented industries manage to do just fine without such protections.

We shouldn’t forget the purpose of a civil lawsuit:  It’s to correct a wrong *and* take punitive action against an entity when it intentionally does that harm.  By design, this is to give incentive to companies (and individuals) to Be Nice and Behave.

Wouldn’t that be a near revolution in the airline industry?

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Twas the night before Christmas, when all through the gates
Not a creature was stirring, not even FAs
The stockings were hung by the air bridge with care,
In hopes that St. Nicholas soon would be there.

The passengers were nestled all snug in their cots,
While visions of ontime flights disturbed their thoughts.
And Momma in her ‘kerchief, and I in my cap,
Had just settled onto our luggage for a long winters nap.

When out on the tarmac there arose such clatter,
I sprang from the cockpit to see what was the matter,
Away to the door I flew like a flash,
I lowered the airbridge and looked for the crash.

The moon on the breast of the new fallen snow
Gave lustre to the fuselages below.
When, what to my wondering eyes should appear,
But a quaint biplane and eight tiny reindeer.

With a little old pilot, so lively and quick,
I knew in a moment it must be St. Nick.
More rapid than turboprops his coursers they came,
And he whistled and shouted and called them by name!

”Now Dasher! now, Dancer! now, Prancer and Vixen!
On, Comet! On, Cupid! on, on Donner and Blitzen!
To the top of the gate! to the top of the terminal!
Now dash away! Dash away! Dash-8 away all!”

As dry leaves that before the wild 757 fly,
When they meet with an obstacle, mount to the sky.
So up to the terminal the coursers they flew,
With the biplane full of Toys, and St Nicholas too.

And then, in a twinkling, I heard on the roof
The prancing and pawing of each little hoof.
As I drew in my head, and was turning around,
Down the concourse St Nicholas came with a bound.

He was dressed all in fur, from his head to his foot,
And his clothes were all tarnished with oil and soot.
A bundle of Toys he had flung on his back,
And he looked like a frequent flyer, just opening his pack.

His eyes-how they twinkled! his dimples how merry!
His cheeks were like roses, his nose like a cherry!
His droll little mouth was drawn up like a bow,
And the beard of his chin was as white as the snow.

The stump of a pipe he held tight in his teeth,
And the smoke it encircled his head like a wreath.
He had a widebody face and a little round belly,
That shook when he laughed, like a bowlful of jelly!

He was chubby and plump, a right jolly old elf,
And I laughed when I saw him, in spite of myself!
A wink of his eye and a twist of his head,
Soon gave me to know I had nothing to dread.

He spoke not a word, but went straight to his work,
And filled all the stockings, then turned with a jerk.
And laying his finger aside of his nose,
And giving a nod, up the airbridge he rose!

He sprang to his biplane, to his team gave a ring,
And away they all flew like the fastest of Boeing.
But I heard him exclaim, ‘ere he banked out of sight,
“Happy Christmas to all, and to all a good-night!”

This version copyright 2011 by Gregory V Robinson

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and gets a safety video that may be the most hip ever produced. You get to see some pretty good dub step dancing. Enjoy.

 

 
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