Airlines expect gradual payout from U.S.-Cuba flight deal

Fri Dec 18, 2015 2:10pm EST
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By Jeffrey Dastin

(Reuters) - U.S. airlines, set to resume scheduled service to Cuba for the first time in decades, will be allowed just 20 round-trip flights a day to Havana.

That compares with some 15 flights by JetBlue Airways Corp (JBLU.O: Quote) alone to nearby Santo Domingo in the Dominican Republic. The carrier and larger rivals such as American Airlines Group Inc (AAL.O: Quote) are betting that the modest beginning in Cuba will let them gain traction in a market with potential far beyond the typical Caribbean vacation destination.

Strong demand is likely to come from Cuban-Americans visiting relatives, leisure travelers desiring an experience that was once off-limits for U.S. citizens, and executives paying for business class fares to evaluate commercial opportunities.

"That's a huge difference from the Bahamas," said Henry Harteveldt, founder of travel consultancy Atmosphere Research Group.

A ban on tourism to Cuba remains part of U.S. law, although President Barack Obama has authorized new exceptions allowing special travel and business operations there since the Cold War foes agreed to restore diplomatic relations a year ago.

Even with the ban, Cuba is forecast to have the largest growth in worldwide visitors of any Caribbean state through 2024, according to David Goodger, a director at travel analysis firm Tourism Economics.

Cuba's three million visitors in 2014 accounted for 13 percent of travel to the region, Goodger said. Removing the U.S. tourism embargo could raise that to more than 20 percent.

"Not going to Cuba is sort of like a grocery store that doesn't sell milk," Scott Laurence, JetBlue's senior vice president for airline planning, said in an interview. "There's this huge country right in the middle of our route map that we don't serve."   Continued...

An American Airlines airplane prepares to land at the Jose Marti International Airport in Havana September 19, 2015.  REUTERS/Carlos Garcia Rawlins