posted on 17 April 2016
from the Atlanta Fed
-- this post authored by Karen Jacobs
Decades have passed since commercial planes flew between the United States and Cuba, but warming diplomatic ties have cleared the runway for flights. Given the Southeast's proximity to the island, airlines in Florida especially stand to benefit.
When commercial airline flights resume between the United States and Cuba later this year, South Florida will be a key gateway. U.S. airlines are competing to fly to the island country from Miami, Orlando, Tampa, Jacksonville, and other Florida cities.
Airport officials at Fort Lauderdale-Hollywood International Airport, from which four U.S. airlines have proposed to offer service to Havana and other Cuban cities, are excited about the prospect of gaining additional flights.
"Business might be a little slow starting out," said Steve Belleme, business development manager for the Broward County Aviation Department, which operates the Fort Lauderdale airport. "More importantly, we're on the leading edge of what could be a real boom down the road once the infrastructure [in Cuba] catches up with the tourist demand. It'll be probably one of the more popular destinations."
Anticipating a boom beyond air travel
The U.S. travel industry is getting set for a Cuba takeoff, with airlines, hotels, and cruise companies looking to offer service to the island for the first time in more than a half-century. The two countries agreed in February to allow commercial flights as part of a wider effort by the United States to reestablish diplomatic relations.
For the vast majority of U.S. businesses, getting into Cuba is difficult because of the trade embargo that has been in place since 1960, said Stephen Kay, director of the Atlanta Fed's Americas Center. "Any foreign investor faces a lot of restrictions," Kay said.
The air travel agreement between the United States and Cuba allows 110 daily flights to 10 Cuban cities, including 20 trips to Havana. The U.S. Transportation Department is reviewing airlines' applications for service and will likely award the Cuba routes this summer, with flights starting as soon as fall.
Since late March, when President Obama made a historic visit to Cuba, other travel avenues have opened up. Starwood Hotels & Resorts Worldwide announced it received U.S. consent to rebrand and operate three Havana properties, and Marriott International has said it is actively looking at hospitality deals in Cuba. Miami-based Carnival Corp has been cleared by Cuban officials to start cultural cruises from Miami in May.
The resumption of travel paves the way for other business opportunities in Cuba, said Carlos Alzugaray Treto, a University of Havana professor and former Cuban diplomat who recently spoke at the Atlanta Fed's Public Affairs Forum. For instance, "there are no American restaurants - that's a huge opportunity," he added.
Travel to Cuba from all areas has been rising in recent years, Cuban government figures indicate. Just over three million people visited Cuba in 2014, up 19 percent from 2010, according to Cuba's National Office of Statistics.
Geographically positioned to reap rewards
With Cuba just 90 miles from U.S. soil, southeastern airports are strategically positioned to gain passengers. South Florida is home to the largest Cuban population in the United States, with 100,000 people of Cuban descent living in Broward County alone, said Belleme, the aviation official.
At Fort Lauderdale's airport, from which Southwest Airlines, JetBlue Airways, Silver Airways, and Spirit Airlines want to launch Cuba routes, Belleme says business could increase in coming years as international service expands.
"These carriers have pretty good domestic networks, and they are able to funnel people in from Everywhere USA who might want to go to Cuba, so it's not just the local population," Belleme said. "Connecting flights could generate some pretty significant traffic as well."
Miami International Airport looks to pick up additional flights once the Transportation Department decides on the Cuba routes, said Greg Chin, a spokesman for the Miami-Dade Aviation Department. Florida's biggest airport is a major hub for American Airlines, which has applied to operate 10 daily flights to Havana from there as well as daily service to five other cities. Miami's airport currently offers an average of 12 departing charter flights to Cuba each day and is expecting the implementation of scheduled flights to bolster the 30 percent increase in total passengers it had on Cuba flights from 2014 to 2015, Chin added.
Atlanta also has its eyes on Cuba. Mayor Kasim Reed, who took a weeklong trip to the country last year, supports Delta Air Lines' bid to offer Cuba flights from Hartsfield-Jackson Atlanta International Airport. Delta has also proposed flying to Cuba from Miami, Orlando, and New York's JFK Airport.
"I believe Atlanta is perfectly positioned to be Cuba's gateway to the United States," Reed said in a statement. "Our business leaders, including those who joined me on last year's trip, must keep working to build relationships so that as relations improve between the U.S. and Cuba, Atlanta-based businesses will be able to offer their goods, services, and expertise to the Cuban people," Reed added.
About the Author
Karen Jacobs is a staff writer for Economy Matters
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