The New Rules on Cuba – How Will They Impact Air Travel?
The New Rules on Cuba: How Will They Impact Air Travel?
AIRLINES & AIRPORTS | JOSH LEW | JANUARY 28, 2016
Though the power to completely do away with sanctions against Cuba lies
with the U.S. Congress, the Obama administration took another step
towards normalizing relations with the Caribbean nation this week. The
President used so-called executive powers to legalize specific forms of
commerce between U.S. and Cuban companies that are not explicitly
outlawed under the current laws.
These changes took effect on Jan. 27, and as written it appears they
will make it easier for airlines to start doing business in Cuba.
READ MORE: More Cuban Travel Restrictions Eased by US Treasury Department
The much-talked-about air travel agreement was one of the first steps
that Washington and Havana took towards normalized relations. Even
though the agreement has already been signed, there is a lot of
uncertainty about how and when it will be implemented. Airlines are
pushing forward with plans to bid for slots for flights into Havana and
the nine other international airports on the island. However, as of now,
these are still only plans; they have not been put into action.
Unfortunately, for U.S. carriers, there is no roadmap for when and how
things will progress. No one knows what to expect going forward.
American Airlines is poised to gain a large share of this new market,
both because it operates a large number of charter flights to Cuba
already and because its hub in Miami will see a lion’s share of the
demand once flights finally start taking off. For the past six months,
AA has said that it is ready to start scheduling flights right away.
READ MORE: US, Cuba, Reach Deal On Commercial Flights
Do Wednesday’s new rules do anything to move the process forward?
Obama’s newest executive moves do a couple of important things for
U.S.-based airlines. First of all, they can now deal directly with Cuban
airlines to lease space on the island. This means that American and its
peers will be able to legally start negotiating directly with their
Cuban counterparts. No one is quite sure how quickly this process will
play out, so starting negotiations is an important step forward.
U.S. carriers will also be able to form code-sharing deals with Cuban
airlines. Cuban carriers will want access to the U.S. as much as their
counterparts from the States want access to Cuba (if not more). Forming
alliances will help carriers in both countries maximize their profits.
The real windfall for airlines will come after Congress does away with
the ban on regular tourism, which is still in place even though the new
rules make it even easier for people who want to travel to Cuba to find
a legal reason to do so. Everything that the airlines do now is building
towards being in the best position possible if and when that finally
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