U.S. airlines battling to fly to Cuba

U.S. airlines battling to fly to Cuba
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U.S. airlines are in vicious competition for the chance to provide direct service to Cuba, even as the impact of the new business on their bottom lines is unclear. 

Last month, the Department of Transportation opened bidding from airlines to operate 20 daily round-trip flights to Havana, and 10 flights to nine smaller airports on the island. 

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It prompted quick response from the nation’s largest carriers, including Delta, United Airlines, Southwest and American Airlines, and smaller companies including JetBlue, Spirit and Seattle-based Alaska Airlines.

The DOT expects to decide who will have those routes this summer, and airlines hope to begin service by the end of the year.

“For U.S. airlines this will be completely incremental business,” said Henry Harteveldt, a travel industry analyst with the Atmosphere Research Group. 

One reason the opening to Cuba may not be a huge boon to carriers is that, while President Obama has eased travel restrictions to the island, tourism is still prohibited. The vast majority of travelers continue to be Cuban Americans allowed to freely visit family.

Making it easier for U.S. travelers to visit Cuba is also expected to hurt vacation spots in the Caribbean and Mexico that are big money makers for U.S. airlines.

“Cuba will pose an enormous challenge to other destinations in the Caribbean,” Harteveldt said. 

“It may be a case of robbing Peter to pay Paul.” 

American Airlines provides many of the airplanes used by charter companies that currently provide the only flights from the United States to Cuba.

American Airlines spokesman Matt Miller said that business “certainly will be impacted” if airlines compete for their business, reducing a stream of revenue for his company.

Delta spokesman Anthony Black said “it’s premature to talk” about profits. “It’s going to evolve over time,” he said of the Cuban market.

One drawback for the airlines is that few want slots outside of Havana --to Varadero Beach, Santiago and other places. Another is that their passengers will largely be Americans and Cuban Americans traveling from the United States to Cuba and back . Cuban nationals often don’t have the money or the approval of their homeland and/or the United States, to visit the United States.

Unrestricted travel between Cuba and the United States may have to wait for an end to the embargo and for political changes in Havana, yet U.S. airlines are determined to stake their claims on the island.

They have flooded the DOT with brutal criticism of their rivals. New York-based JetBlue Airways, said "JetBlue, not Delta, is the leading domestic airline at (John F. Kennedy)” airport in New York.

Delta retorted that “JetBlue's claim that it offered more seats and flights from JFK than any other airline in 2015 is demonstrably false."

Delta, which wants to fly to Cuba from its hub in Atlanta as well as New York City, also took a swipe at another competitor. 

“American’s request for ten (10!) of the 20 flights is also out of proportion to its existing service to other Caribbean destinations,” Delta told the DOT. “While American may wish to corner the market of Cuba frequency allocations, its levels of existing service to points in the Caribbean demonstrates American’s attempted overreach in this proceeding.”

American shot back that it is the “undisputed leader” flying out of Miami, the heart of the Cuban-American community in the United States.

American also said JetBlue seeks to fly out of cities that “simply will not generate demand to Havana in the foreseeable future,” and Southwest’s application uses a “self-serving traffic forecast” that is “seriously flawed.”

John Kavulich, president of the U.S.-Cuba Trade and Economic Council, said the fight is more about making sure the DOT decision does not result in regulations that could hurt other parts of their businesses than about the prospective Cuba routes.

“Nobody wants to cede any ground to anybody on this,” Kavulich said. 

In a flurry of correspondence, airports, lawmakers and local officials are also lobbying the DOT. The New York Yankees, for instance, have gone to bat for Delta and the U.S. Chamber of Commerce has promoted the application of American Airlines.

The airlines also have tapped Latino leaders for help. Former Commerce Secretary Carlos Gutierrez, now the chairman of the U.S.-Cuba Business Council, lobbied on behalf of American Airlines, while Juan Andrade Jr., president of the U.S. Hispanic Leadership Institute, threw his support to Southwest.

The establishment of regular U.S. airline service to the island has been long sought by the U.S. government, which argued it is necessary to reestablish regular postal service to Cuba. 

Cuba insisted it would only agree if the service was reciprocal – allowing the Cuban state airline, Cubana de Aviación, to fly to American cities.

The standoff ended when Cuba accepted that for the time being at least, Cuban airliners will still not be able fly to the United States. One explanation for the Cubans backing off is the concern that Cubana's planes could be seized to satisfy millions of dollars in civil judgments against the Cuban government, Kavulich said.

Since the revolution, there have been a number of multimillion-dollar judgments against the Cuban government, the result of lawsuits in U.S. courts by U.S. citizens, including family members of the “Brothers to the Rescue” pilots who were shot down by Cuban forces in 1996.

“The civil actions mean that if the (plaintiffs) can find a judge or find a sheriff who can put a lien on a (Cuban asset) they can do so,” Kavulich said.