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Monday, March 13, 2017

Airlines Drop Cuba Flights, Citing Lower Demand Than Anticipated

Airlines Drop Cuba Flights, Citing Lower Demand Than Anticipated
By FRANCES ROBLES MARCH 13, 2017

Just six months after being the first airline to sell seats on regularly
scheduled flights to Cuba, Silver Airways, a regional carrier based in
Fort Lauderdale, Fla., that specializes in smaller markets, will scrap
its service to the island next month. It is the latest industry move to
underscore that fewer Americans are traveling to Cuba than originally
anticipated.

Citing low demand and competition from major airlines, Silver said it
would cease its operations in Cuba effective April 22. The move follows
other reductions by American Airlines and JetBlue, which in recent weeks
either switched to smaller aircraft or cut back on the number of
flights. Experts say the changes in the young market illustrate not so
much a lack of passengers, but the rush of airlines into new territory
with an abundance of seats the market could not possibly fill.

"Other airlines continue to serve this market with too many flights and
oversized aircraft, which has led to an increase in capacity of
approximately 300 percent between the U.S. and Cuba," said Misty Pinson,
the director of communications for Silver. "It is not in the best
interest of Silver and its team members to behave in the same irrational
manner as other airlines."

On Monday, Denver-based Frontier Airlines said that it would cease its
daily flight to Havana from Miami on June 4. The airline said costs in
Havana significantly exceeded initial assumptions, "market conditions
failed to materialize" and too much capacity had been allocated between
Florida and Cuba.

Regularly scheduled passenger jet service to Cuba had been cut off for
more than 50 years. Americans who wanted to go there had to go through
third countries or take expensive charter flights that were notorious
for long delays and steep baggage fees.

President Barack Obama renewed diplomatic relations with Cuba in 2015,
and then brought back commercial airline travel last year. The companies
that were authorized by the Department of Transportation booked routes
not just to Havana, but also to less traveled cities such as Manzanillo
and Holguín. With no history of commercial airline traffic to judge by,
the airlines were largely guessing how many United States citizens and
Cubans would line up for tickets.

United Airlines has service from Newark and Houston, and Alaska Airlines
flies to Havana from Los Angeles. Delta offers three daily flights to
Havana from Atlanta, Miami and Kennedy International Airport in New
York. Destinations like Santa Clara proved to be less popular than the
airlines had hoped, and some were forced to scale back.

"We started pretty big in Cuba," said Laura Masvidal, a spokeswoman for
American Airlines. "We made some adjustments to adjust to the market
demand."

Until February, American Airlines offered 1,920 seats a day to Cuba. The
number dropped last month to 1,472, a nearly 25 percent reduction. The
airline cut flights to Holguín, Santa Clara and Varadero to one daily
flight from two, Ms. Masvidal said.

JetBlue Airways, which on Aug. 31 was the first to fly to Cuba, still
offers nearly 50 weekly round-trip flights between the United States and
four Cuban cities, but the airline recently switched to smaller planes.

"We have made some adjustment to aircraft types assigned to the routes,
which is common as we constantly evaluate how to best utilize our
aircraft fleet within our network," said Doug McGraw, an airline spokesman.

Silver Airways has been flying 22 flights a week with smaller aircraft
to nine Cuban destinations other than the capital, including Santa
Clara, Holguín and Cayo Coco. Demand, Ms. Pinson said, was depressed by
complications with online travel agency distribution and code-share
agreements that still have not been resolved. The airline had already
tried reducing its offerings.

The airline's decision comes even as passenger traffic to Cuba is
actually increasing at a brisk pace.

"The market is exploding," said Chad Olin, the president of Cuba
Candela, which specializes in booking trips to Cuba for the millennial
traveler. "There is some demand adjustment happening as well, but net
outcome is still one of the fastest growing markets in global tourism
history."

Mr. Olin said restaurants, bars and private home rentals are now much
more crowded with Americans than even just a few months ago. "You hear
American English spoken everywhere," he said in an email.

And to hear the Cuban government media tell it, Americans interested in
visiting Cuba were triggered by a message that told everyone to "travel
now."

The number of Americans who visited Cuba was up 125 percent in January,
compared with the same month last year, the government reported, calling
it a "virtual stampede." Americans, the report said, were prompted by
President Trump's administration calling for a total review of the Cuba
policies enacted by Mr. Obama.

Under the administration of George W. Bush, Cuban-Americans were limited
to how often they could visit their families, so that niche also had a
38 percent increase, the Cuban media report said.

But it was still not enough to fill the flights.

"I think that a lot of airlines thought that there would be more demand
than there is," said Paul Berry, a spokesman for Spirit airlines, which
flies twice a day to Havana from Fort Lauderdale. "Loads are not very
heavy."

Mr. Berry said there are still glitches, including not being able to
easily use American credit cards. Cuban hotels are pricey, and some
travelers are turned off by the extra costs for things like required
traveler's medical insurance and visas. The landing fees alone, Mr.
Berry said, are sometimes more expensive than the actual airfare.

American citizens are still required to report which of the 12
authorized types of travel they are undertaking, which could also be
limiting the number of potential passengers, he said. Religious and
educational trips are allowed, but tanning on the beach is not. Many
Americans are "not willing to flat-out lie" about why they are going,
Mr. Berry said.

"A lot of people are not traveling; I think that's why you see other
airlines scale back," he said. "There's just not as much demand to go
around."

Source: Airline Drops Cuba Flights, Citing Lower Demand Than Anticipated
- The New York Times -
https://www.nytimes.com/2017/03/13/travel/airlines-reduce-flights-to-cuba-and-switch-to-smaller-planes.html?_r=0
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