Now that Cuba is open, Americans aren’t going
America, did you miss the travel industry’s memo declaring Cuba the hottest new destination?
Apparently. Service to the long-time U.S. foe began in September, but after just five months the largest carrier to the island, American Airlines Group Inc., cut daily flights by 25 percent and switched to smaller jets on some routes. Meanwhile, Silver Airways Corp. reduced weekly flights to six Cuban cities and JetBlue Airways Corp. downsized its planes so as to match lower-than-expected demand.
“It’s going to take a really, really long time for [Cuba] to become a Caribbean destination that’s as popular as some of the other ones,” Andrew Levy, the chief financial officer for United Continental Holdings Inc., told Bloomberg News in November.
While the rest of the Caribbean is hopping with the U.S. winter break crowd, Cuba has some unique problems. The big one is that airlines, with no real idea about demand, were overly ambitious when they jousted for the limited routes allowed by U.S. regulators. With a mandate for only 110 daily U.S. flights — 20 into Havana, the most popular destination — the carriers tumbled over each other last year to get a piece of the pie, leaving the island oversubscribed.
The air rush into Cuba “wasn’t based on demand but speculation. They had no history to look at,” said Karen Esposito, general manager of Cuba Travel Network, which specializes in tours to the island. Now they do.
Silver Airways described additional obstacles, pointing to the complications accompanying U.S. travel arrangements to Cuba, along with too much capacity from larger carriers. Still, spokeswoman Misty Pinson said, the Fort Lauderdale, Fla.based airline “is optimistic about the future growth potential in Cuba.”
Former President Barack Obama announced an opening of relations with Cuba in December 2014, calling previous U.S. policy, which sought to isolate the communist government, a failure.
Despite Mr. Obama’s efforts to spur U.S. engagement with the country, including a state visit in March, the 54-year-old U.S. embargo remains in place. The law prohibits tourism to the island by Americans and makes financial transactions burdensome.
Today, most people traveling to Cuba individually classify themselves as participants in “people-to-people” exchanges, one of the dozen categories authorizing travel under U.S. Treasury regulations.
The policy thaw led to an immediate surge by “early adopters” who wanted to see the tropical island, said Tom Popper, president of Insight Cuba, a tour operator in New Rochelle, N.Y. “The number of passengers we were sending tripled in very short order, and it lasted all of 2015 and most of 2016,” he said. “And much of that was just the extraordinary level of awareness” of the Cuba policy changes.
But with liberalization has come a painful lesson in capitalism-for tourists, anyway. The new interest in Cuba led to rapid price inflation (as much as 400 percent) for state-run hotels, taxis, and other traveler servicesbefore any U.S. commercial flights had begun. Some rooms now cost as much as $650 per night, serving as a major deterrent to Americans hunting for novel warm-weather destinations.