Airlines Rev Up for Flights to Cuba

BUSINESS - OCTOBER 24, 2011

Airlines Rev Up for Flights to Cuba

As Travel Limits Ease, Carriers Boost Charter Service in Hopes That
Full-Scale Tourism Will Return
By JACK NICAS

U.S. airlines are wading deeper into the charter business to Cuba as
travel restrictions have loosened, hoping one day to haul American
tourists to the island's unspoiled beaches.

By year-end, four of the largest U.S. airlines will operate about 25
weekly flights to Cuba for charter companies. AMR Corp.'s American
Airlines has been flying to Cuba for two decades, and JetBlue Airways
Corp. arrived last month. The world's two biggest carriers by traffic,
United Continental Holdings Inc. and Delta Air Lines Inc., are resuming
weekly service to Cuba after a seven-year hiatus.

Charter companies estimate that they will fly 400,000 people between
Cuba and the U.S. this year, up from 250,000 last year.

The surge follows President Barack Obama's January order to make travel
to the communist country easier for students, journalists and religious
groups, among others. That helped clear the way for future direct
charter flights to Cuba from Chicago, Baltimore, Dallas and 12 other
cities. Until this year, Miami International Airport, Los Angeles
International Airport and New York's JFK International Airport were the
only U.S. gateways to the island for many years.

Tourism by Americans is still barred. But under the new rules some U.S.
citizens—for example, under the auspices of news organizations or
universities—now can get permission for travel to Cuba from licensed
charter companies instead of just through the U.S. government. Others,
such as performers, humanitarians or individuals planning direct
educational exchanges with Cuban citizens, still must apply case-by-case
to the U.S. Treasury Department. As before, Cuban-Americans can make
unlimited trips to visit family.

Bobby Caballero, manager of the Tropicana Café, a Cuban eatery in Tampa,
Fla., says that with flights from Tampa to Cuba, he no longer has to
take the annual four-hour drive to Miami when he flies to visit family
on the island. "Think about it: That costs at least $120 in gas" round
trip, he says. "I'm very, very happy, brother."

The airlines provide the aircraft, crew and insurance to operate the
flights. The charter companies sell the tickets, vet travelers and run
the trips. The charter companies say they pay the airlines about $16,000
to $25,000 per round-trip flight between Miami and Havana, enough to
make the short hops over the Gulf of Mexico profitable for the airlines
but hardly gold mines.

"Carriers can't be looking at this as a money maker," says Vivian
Mannerud, president of charter operator Airline Brokers Co., who has
been selling flights to Cuba since 1982. "They have to look at this as
an investment."

Cuba is a big tourist destination for Canadians, Mexicans and Europeans
and one of the few markets with untapped potential among Americans.

Some U.S. citizens illegally vacation on the island via Canada or
Mexico. Airlines appear to be getting ready in case U.S. travel
restrictions are lifted more in coming years.

JetBlue began flying between Cuba and Fort Lauderdale, Fla., for Airline
Brokers last month. "Cuba has huge market potential and the only way we
can fly there right now is through charters," says JetBlue spokesman
Mateo Lleras. "As a side bonus, we're also gaining experience and
exposure in that market."

Before the Cuban revolution, the country was home to a thriving hotel
and casino industry. Travel by U.S. citizens has been restricted since
1963, except for five years under Presidents Jimmy Carter and Ronald Reagan.

Several major U.S. airlines flew to the island for charter companies
through the 1980s and '90s. A Delta flight carried the Baltimore Orioles
to play a Cuban all-star baseball team in 1999. When the administration
of President George W. Bush tightened the rules in 2004, Delta and
Continental halted service.

Meanwhile, AMR has expanded its market share. For several years after
2004, its regional carrier, American Eagle, operated an estimated 80% of
the flights from Miami to Cuba, charter companies say. Since 2009,
American Airlines' presence in Cuba has grown with demand, say Tessie
Aral, president of ABC Charters Inc. ABC uses American for eight flights
a week to Cuba, including the first regular flights from Tampa since
1959. "American has stuck it through thick and thin for a very, very
long time," says Ms. Mannerud, of Airline Brokers. "I think in the end
it's going to pay off."

AMR confirms it flies to Cuba for charter companies but declines to
comment further.

United Continental declines to discuss in detail its weekly flights to
Cuba from Los Angeles and Miami, which will start Dec. 6. It will run
the flights for Cuba Travel Services Inc. The charter company says it
will use the airline for charters from Houston and might add service
from Oakland, Calif.

Delta's return to Cuba, on behalf of Marazul Charters Inc., will make
the carrier one of the most frequent fliers between the island and the
U.S. By December, Delta will fly to Cuba nine times a week, including
the first-ever flights from the carrier's hub, Hartsfield-Jackson
Atlanta International Airport, the world's busiest.

Corrections & Amplifications
By December, Delta will fly to Cuba nine times a week. An earlier
version of this article reported an incorrect number of weekly flights.

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