Canadian airlines fear U.S. carriers could undercut them to Cuba

Canadian airlines fear U.S. carriers could undercut them to Cuba
Airports in border cities like Burlington, Vt., are salivating at the
prospect of boosting business as U.S. airlines get set to launch flights
to a sun destination long popular with Canadians.
By: Ross Marowits The Canadian Press, Published on Fri Feb 26 2016

MONTREAL—Canadian airlines say impending U.S. travel to Cuba could spur
cross-border travelling by Canadians in search of cheaper flights from
American airports to the Communist Caribbean island.
While the low loonie has generally discouraged treks by Canadians to
border-area airports in recent months, an eventual rise could prompt
them to head once again to the U.S., especially if those hubs start
offering an array of flights to Cuba, a longtime favourite for Canada's
sun-seekers.
"Should U.S. border airports start offering services to Cuba, it
definitely has the potential to exacerbate the leakage of passengers,"
said Marc-Andre O'Rourke, executive director of the National Airlines
Council of Canada.
That would add fuel to the industry's long-standing complaint that its
competitiveness is hurt by "a Canadian policy framework that treats the
aviation industry as a source of public revenue by downloading
government taxes, fees and other charges on airfares."
Some of those concerns were addressed in a report released Thursday that
recommends the phasing out of airport rent, reducing the security fee
and working with provinces to reduce or eliminate fuel taxes on
international flights, O'Rourke added.
Gene Richards, director of aviation for the airport in Burlington, Vt.,
said he expects Canadian business and leisure traffic to Cuba will pick
up after U.S. airlines begin scheduled service through their hubs,
possibly later this year.
American carriers face a March 2 deadline to submit applications.
"I think there's going to be endless opportunities," Richards said in an
interview.

The U.S. and Cuba, longtime Cold War foes, recently signed a deal to
resume commercial air traffic for the first time in five decades. It
will eventually allow up to 110 daily flights from the U.S. to Havana
and nine other Cuban cities.
Travel purely for tourism, however, won't be allowed until U.S. Congress
lifts a long-standing embargo that also restricts most trade with Cuba.
A Cuban tourism boom ensued after U.S. President Barack Obama announced
in December 2014 that his country was going to normalize relations with
Cuba. Obama is visiting Cuba next month, the first sitting president to
travel to the island in 88 years.
In 2015, 3.5 million visitors travelled to Cuba, according to the Centre
for the Study of the Cuban Economy at the University of Havana, many of
them travellers who wanted to visit the island before an influx of
Americans changes the island too much.
Millions of additional U.S. travellers could join the millions of
foreigners who visit Cuba annually — the largest contingent from Canada.
Canadians spent $780 million in 844,000 visits in 2014, says Statistics
Canada.
Nonetheless industry observers believe an expansion of air service to
Cuba will be gradual because the island's infrastructure can't handle a
tidal wave of new visitors.
"I think the (Cuban) government's got to be very careful because it
could flop really quickly if it isn't done correctly," said Richards.
WestJet Airlines expects the influx of American tourists will make the
destination more expensive.
"We do expect to see pressure on hotel room inventory and pricing once
the market is opened up to U.S. tourist traffic," said spokeswoman
Lauren Stewart. The lower Canadian dollar caused prices to rise last
fall because hotel packages are priced in U.S. dollars.
Jury Krytiuk, head of the Cuban travel department at Toronto-area agency
A. Nash Travel Inc., said the aggressive construction of beach resorts
will support existing Canadian traffic and new U.S. travellers. However,
the situation is far more challenging in Havana, where there is a
shortage of hotels, especially the ritzy five-star offerings many
Americans crave.
Hotel prices in Havana have surged 35 per cent because of growing demand
in the past year since travel restrictions were eased for Americans, he
said.
"Everyone wants to see Havana before it changes," says Krytiuk, who's
been sending passengers to Cuba for 40 years.
The lure of Cuba is different for Canadians than Americans, he adds.
Americans will initially be attracted to the culture, old cars and
architecture of Havana while most Canadians favour all-inclusive beach
vacations.
Tour operator Transat A.T. said the impact on the company from the flood
of Americans will be limited because some restrictions on travel remain,
and many U.S. flights will be converted from charters that currently fly
mostly expats to Cuba to visit family.
"There will not be an abrupt change or nothing will happen overnight,"
said vice-president Michel Lemay, whose company manages three Ocean
Hotels in Cuba that it partially owns with a Cuban state-owned agency.
Cuba could be a springboard for Transat's ambition to become a
U.S.-based player as either a tour operator or distributor to help grow
its presence in the Americas.
Krytiuk said that makes sense since Canadian tour operators like Transat
and Sunwing can parlay their hotel ownership and deep knowledge of Cuba
to serve the U.S. market — one that isn't familiar with the Caribbean's
largest island.

Source: Canadian airlines fear U.S. carriers could undercut them to Cuba
| Toronto Star -
http://www.thestar.com/business/2016/02/26/canadian-airlines-fear-us-carriers-could-undercut-them-to-cuba.html