Using Currency Arbitrage to Travel Hack Pt II
In my last post, I mentioned the currency arbitrage trick that enables anyone to get a 50% discount on all items purchased in Argentina. However, for those that either weren't planning a trip there or aren't big enthusiasts of South America, I'm sure the general consensus was, "Yeah, so what?" And to that, I reply, "What if I told you could get half off of all your plane tickets? I have a feeling you'd be a bit more interested.
Just to recap: if you bring US dollars into Argentina, you can exchange 1 US Dollar for 8.8 Argentine Pesos on the "blue market". This is a much higher ratio than the government sanctioned 5.7 Pesos to 1 US Dollar. Due to various interbank and intergovernmental agreements, many financial transactions in Argentina are required to adhere to the standard 5.7 Peso to 1 US Dollar rate. This allows for an amazing arbitrage opportunity which I'll discuss in more detail below. There are many airlines that maintain brick and mortar airline desks in Argentina. Here, you are able to pay for plane fares with credit cards or cash. As stated in Part I of this article, this is one of the few times that you don't want to use your points/miles credit card, but hard currency to get a 50% discount on your flights! Exchange your money at a reputable money changer or cueva (community bank), take these pesos to the airline desk and pay for any future flights you see yourself taking in the near future.
For example, a US $500 transcontinental flight from LAX to JFK would be 2850 Pesos at the airline desk according to the government sanctioned Peso to Dollar exchange. However, you just received 4400 Pesos for the same US $500 from the money changer. The 1550 Pesos ($272) left over is the amount of money you saved. Essentially, you just bought a somewhat expensive $500 transcontinental flight for a smoking hot deal of $228. This is not limited to domestic US airlines, as you can essentially buy whatever airline tickets you wish as long as they have a brick and mortar presence in Argentina and you can pay with Pesos. I've found that this situation is ideal for those who have their travel plans dialed in, or for those who normally fly in premium cabins as the 50%+ discount adds up to thousands of dollars. In fact, I know several people that specifically flew down to Buenos Aires just to leverage their buying power on plane fares by over 100%.
Although this deal won't be everyone's cup of tea, I think it's highly indicative of the global nature of travel, and a reminder to really think outside the box when travel hacking.