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US Airlines Vie for Cuban Route Permit, Approval Awaited

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After the U.S. signed an aviation deal with Cuba allowing 110 scheduled flights on a daily basis to the island, almost every airline in the U.S. applied to the Department of Transportation (DOT) for the new routes schedule to Cuba. The last date for application was set at Mar 2, 2016. The U.S. DOT will review the proposals before announcing its final verdict on Mar 21, 2016.

Cuba was a popular tourist spot for Americans prior to the embargo. The short distance, a one-hour flight from Miami, also added to the attraction. In 2014, President Obama’s announcement to restore diplomatic ties with Cuba, after more than five decades, has eased the travel restrictions between the nations.

Benefit to US Carriers

Popular tourist spots and beaches have always attracted visitors from the U.S. Moreover, a large chunk of the visitors to Cuba are from the U.S. who pays a visit to their families. It is believed that nearly 160,000 travelers from the U.S. visited Cuba in 2015. Thus, to cash in on the huge demand on this route, most U.S. carriers have applied to the DOT for the limited air network slots. However, the applications have surpassed the maximum slot limits by at least 19 flights per day, with requests even higher for certain days of the week, where some of the proposed routes went overlapping.

U.S. Carriers’ Proposal

Leading carrier in the U.S. – American Airlines Group Inc. (AAL - Free Report) – which has already been offering its charter service to Cuba over the years, proposed to operate 12 daily flights from three of its U.S. hubs to Havana. In addition, the carrier also plans to initiate a weekly service from two other hubs. Furthermore, the carrier has applied for eight daily flights to five other Cuban cities from Miami along with10 daily flights to Havana from the city.

On the other hand, Delta Air Lines Inc. (DAL - Free Report) intends to operate five daily flights to Havana, two from Miami and one each from Atlanta, JFK and Orlando. Meanwhile, United Airlines – the wholly-owned subsidiary of United Continental Holdings Inc. (UAL - Free Report) – plans to run daily flights from Newark airport to Havana, in addition to a second flight on Saturdays, and Saturday-only flights to Havana from Houston, Chicago and Washington Dulles International Airport.

One of the leading domestic carriers in the U.S., Southwest Airlines Co. (LUV - Free Report) , placed a bid for nine daily flights to Havana. The carrier also plans to operate six, two and one flight operations from the U.S. cities of Fort Lauderdale, Tampa and Orlando.

Low-cost carrier JetBlue Airways Corp. (JBLU - Free Report) , which has a strong presence in the Caribbean and Central American region, applied for 12 daily flights to Havana from Fort Lauderdale, Tampa and Orlando; New York’s John F. Kennedy International Airport; Boston; and Newark. Also, the company plans to flag-off three daily flights from Fort Lauderdale to three lesser-known Cuban destinations.

Other ultra low-cost carriers like the Frontier Airlines and Silver Airways also proposed for numerous slots. Even Alaska Airlines applied for two daily round-trip flights from Los Angeles to Havana.

Competition Intense

The availability of limited Cuban routes will be the major drawback for the overall U.S. airline operators as it may intensify competition which may in turn lead to an ugly price war. Already the applications for flight slots to Havana have surpassed the slot limit.

Except for few airlines like American Airlines and JetBlue, other carriers need to come up with a plan to initiate operations to Cuba. Moreover, airport facilities across Cuba are another matter of concern.

Despite these headwinds, the restoration of diplomatic ties with Cuba will certainly benefit the overall U.S. airline industry and also mend the ties between the nations to some extent.

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