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Sunday, April 30, 2017

Direct flights from Minnesota to Cuba are stuck at the gate, and may be for quite a while

Direct flights from Minnesota to Cuba are stuck at the gate, and may be
for quite a while
Sun Country plays a waiting game while President Trump's Cuba policy
unfurls.
By Kristen Leigh Painter Star Tribune APRIL 29, 2017 — 5:25PM

Nonstop flights between Minneapolis-St. Paul and Cuba are stalled — and
becoming less likely.

Sun Country Airlines, which was granted the right to fly from Minnesota
to two small Cuban cities last year, has asked the U.S. Department of
Transportation for more time before it begins the routes. Some of its
competitors who were granted other routes to Cuba last year are dropping
them altogether.

Too many flights with too few passengers have already started, turning
the Cuban market into a financial sinkhole for airlines. Complicating
matters, President Donald Trump has said he opposes looser trade and
travel restrictions for Cuba, reversing the Obama administration's
efforts to extend its diplomatic opening by encouraging American tourism
there.

None of this bodes well for a small airline like Sun Country, which
relies on ease of travel for its largely leisure passenger base. But
some experts say Sun Country's delay strategy may work in its favor over
the long run — if the right puzzle pieces fall into place.

It's been nearly a year since the DOT approved Sun Country's request to
fly nonstop from Minneapolis-St. Paul to two Cuban cities: Santa Clara
and Matanzas. The agency denied the airline's request to fly to Havana,
the island nation's cultural and political capital, instead giving those
slots to larger airlines or those offering flights from the southeastern
U.S. where a large percentage of Cuban-Americans live.

Sun Country originally planned to begin service last month but filed for
an extension to exercise the right through December 2017.

Sun Country is based at Minneapolis-St. Paul International Airport.
"We remain optimistic and continue to work through logistics for
dedicated Cuba service, but our priority is ensuring an easy and
enjoyable travel experience for our customers upon arrival," the airline
said in a statement last week.

While President Barack Obama normalized diplomatic relations, travel and
trade embargos remain, making Cuba a challenging vacation destination.
All U.S. citizens must prove they are visiting the communist nation for
a reason other than tourism. Airlines can't sell traditional vacation
packages without helping its customers fit one of the 12 approved
reasons, such as humanitarian projects, family visits, journalistic
activity or religious activities.

Airlines ferried more passengers from the U.S. to Cuba in 2016 than in
previous years. More than 576,000 people made the trek last year
compared to more than 463,000 the year before, according to the U.S.
Bureau of Transportation Statistics. Still, the initial bump wasn't
enough to sustain all of the additional flights.

"It's not an unrestricted market situation and the airline has to go
through a fair amount of rigmarole to make sure you have a valid reason
to travel," said Robert Mann, an airline industry analyst based in Port
Washington, N.Y. "So it's both restricting the demand for Cuba and
imposing significant costs on the airline."

The industry's gold-rush mentality toward Cuba has subsided since last
year. Many airlines, knowing there would be stiff competition for
passengers, had hoped to hold on long enough for the U.S. government to
lift the travel restrictions on U.S. citizens. But Trump has said he
would like to tighten U.S. relations with Cuba again, though he has not
yet acted. This has led many to throw in the towel.

"It's natural. Some players will move out of the market," said John
Brawley, owner and president of Plymouth-based Premier Travel Service,
who has traveled to Cuba on multiple occasions. "It's a whole new world
down there for the airline business."

Several airlines have already canceled or scaled back their existing
flights to Cuba. Silver Airways, which was given authority to fly to
nine Cuba cities, has ended all of its flights. Frontier Airlines
canceled its only flight from Miami to Havana, and American Airlines cut
flights to Holguín, Santa Clara and Varadero from twice to once a day.
JetBlue Airways, which was the first to fly to Cuba on Aug. 31, recently
switched all of its Cuba-bound flights to smaller aircraft.

"We are in a situation where airlines are reluctantly saying, 'We aren't
going to invest in this forever if there's no prospect of having a
regular, open market in Cuba," Mann said. "Even the big guys are pulling
back."

The DOT designed these flight allocations as "use it or lose," Mann
said. "But with so many [airlines] handing them back, it's kind of a
toothless threat."

As a result, Sun Country's long game just might work. "If you haven't
started yet, there's really no rush," Mann said. "I think it shows
prudence on their part."

The airline is hoping to push back the start date as long as possible,
citing "the continued travel, trade and infrastructure constraints," in
hope that policies might eventually change in their favor.

Even if the travel restrictions are lifted, Sun Country would have to
build relationships and contracts with the few hotel and transportation
operators in those Cuban cities, and there aren't a lot of them to go
around.

"There's really not a lot of infrastructure for travel and hospitality
there. What is there is largely consumed by European, Canadian and Latin
American travelers who have been visiting for years," Mann said.
"Ultimately if you are going to be an airline down there and you don't
have access to rooms and hotel nights and other ground arrangements, you
are just not going to be successful there."

Source: Direct flights from Minnesota to Cuba are stuck at the gate -
StarTribune.com -
http://www.startribune.com/direct-flights-from-minnesota-to-cuba-are-stuck-at-the-gate-and-may-be-for-quite-awhile/420774443/
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