Cuba poised to slash landing fees as commercial flights near

 

Paul Guzzo, The Tampa Tribune

 

TAMPA — For years, Cuba’s state-run airports have charged U.S.-based flights landing fees that are considered high at best and discriminatory at worst.

 

But those fees are expected to fall in line with rates paid from other nations once U.S. commercial carriers land in Cuba later this year — as early as September — for the first time in more than five decades.

 

U.S. charter flights pay Cuba landing fees of $73 to $148 per passenger today, based on age and whether they are traveling as individuals or in a tour group.

 

Cuba’s international landing fee in Havana’s José Martí International Airport is $4.89 per metric ton of aircraft. Charter flights typically use a 162-seat Boeing 737-800 with a maximum take-off weight of 79 metric tons — for a landing fee of about $390. But the same sold-out aircraft could cost nearly $24,000 in landing fees at José Martí if operated by a U.S. charter flight company.

 

In February, the U.S. and Cuban governments signed a non-binding aviation arrangement that allows U.S.-based commercial flights to land and sets certain guidelines — including one prohibiting discriminatory fees.

 

The State Department confirmed to the Tribune that this new arrangement covers charter flights but would not comment on when landing fees might drop. Charter flights continue to pay the higher rates.

 

Nor would the State Department say if the current fees are considered discriminatory.

 

Two charter operators said Cuban aviation officials told them their landing fees would align with international rates once commercial service from the U.S. begins. The two are Michael Zuccato, general manager of Cuba Travel Services, which operates charter flights out of Tampa International Airport, and Bill Hauf, president of Island Travel & Tours which plans to operate flights from Tampa starting April 25.

 

 

As part of the aviation arrangement, up to 20 U.S. commercial flights a day can land in Havana and as many as 10 a day to each of the nine other Cuban cities with international airports.

 

Silver Airways CEO Sami Teittinen predicted all but the Havana routes will be allocated within the next six to eight weeks and believes the first U.S. commercial flights will land in Cuba around September.

 

Silver Airways applied for routes with the U.S. Department of Transpiration to all 10 Cuban destinations — including two weekly flights connecting Tampa to Havana. JetBlue Airways and Southwest Airlines also applied for two daily flights between Tampa and Havana.

 

Because more than a dozen airlines requested over 50 flights to Havana, deciding flight allocations there will take the transportation department longer, Teittinen said.

 

In a recent report, Miami-based Havana Consulting Group says commercial airlines could enter the Havana market with tickets running $150 to $250.

 

By comparison, Cuba Travel Services is selling charter tickets from Tampa to Havana for $459 while ABC Charters at Tampa International and Island Travel charge $439.

 

The charter companies contacted said they could not guarantee lower ticket prices once landing fees are reduced.

 

ABC’s president Tessie Aral could not be reached.

 

“We would need to assess the other cost associated with passenger and ground handling in the destinations,” said Zuccato with Cuba Travel.

 

Currently, a U.S. traveler may visit Cuba only for one or more of 12 reasons, such as education, research and athletic competition. Taking a trip strictly for tourism is still illegal under U.S. law.

 

A United Nations convention governing international aviation forbids discriminating against individual nations in the fees that are charged.

 

One reason Cuba has gotten away with it for so many years may be the absence of an aviation agreement with the U.S.

 

“Cuba has never viewed the charters as scheduled air service, therefore not subject to the U.N. convention,” said Robert Muse, a Washington, D.C.-based attorney who specializes in legal issues arising from the Cuban embargo. “Once the commercial flights begin, the U.S. position will likely be that Cuba can no longer discriminate against the charters.”

 

 

Others say Cuba has not overcharged U.S. charter flights.

 

Landing fees cover an airport’s cost for maintenance and operations and U.S. planes are restricted to Terminal 2 at José Martí airport — for security reasons, some analysts say, out of concern people will be sent there to instigate unrest.

 

U.S. planes are the only customers at Terminal 2 so they must bear the all maintenance and operation costs.

 

But concerns about unrest are easing with the normalization of relations between the two countries and commercial airlines predict they’ll also gain access to Terminal 3 where all other international flights land.

 

Still, Terminal 2 is far from a state-of-the art center requiring high maintenance costs. It has only two baggage carousels, for example.

 

American Airlines landed 625 of its 1,200 charter flights bound for Cuba in Havana last year, said spokesman Matt Miller. Based on the weight of a Boeing 737-800, the plane American uses there, its landing fees alone generated as much as $14 million in revenue for the Cuban government.

 

By comparison, Tampa International collected $15.2 million from all passenger planes in 2015.

 

The Cuba fees may also cover airplane parking and aviation navigation. But for a typical Boeing-737 paying Cuba’s international rates, those charges plus landing fees total an estimated $4,800, or around $23 per person on a sold out flight.

 

Zuccato with Cuba Charter Services said landing fees he pays also go toward outsourcing ground services such as ticketing and baggage to state state-run companies in Cuba.

 

The average Cuban’s salary is $20 to $25 per month, said Dan Zabludowski, an international business attorney in Miami with Hinshaw & Culbertson. The current fees, he said, are “not in line. This is a punitive charge. This is just profit going to the Cuban government.”

 

John Kavulich, president of the U.S.-Cuba Trade and Economic Council, estimated the Cuban government “keeps between 40 and 50 percent of the ticket price. What they do with it is immaterial. It is gross revenue.”

 

 

This profit is not earmarked for the military, as some may fear, said Arturo Lopez Levy, a University of Texas-Rio Grande Valley lecturer and former Cuban government economic analyst.

 

Besides sustaining Cuba’s airports, he said, it is used to develop a tourism sector already burdened with a rising number of visitors.

 

Higher volumes of travel with the lower rates will keep money flowing to the island nation, said Antonio C Martinez II, chief operating officer of New York-based Cuban Strategic Partnerships Inc.

 

“Cuba will increase revenue even with lower landing fees because there will be more flights from the U.S. and it is easier to travel there for Americans than it has been in years,” Martinez said.

 

Under the arrangement, once U.S. commercial flights to Cuba begin, up to 7,300 could land in Havana over the course of a year.

 

If they are charged the standard $4,800 in total international fees based on the weight of a Boeing 737-800, the total would be about $35 million in revenue annually for the Cuban government from flights to Havana alone.

 

Misty Pinson, Silver Airways spokeswoman, told the Tribune that she believes Cuban aviation fees are standard at all its nine international airports.

 

“Yet until we get the scheduled operations going and contract negotiated we won’t know for sure,” she said.

 

It remains unclear how much revenue charter flights will bring to Cuba. Currently, there are 12 flights a day connecting the U.S. and Cuba.

 

Island Tour and Travel adds four weekly from Tampa International starting April 25, bringing Tampa’s weekly total to 11. But it is unclear if charter flights flying from other U.S. cities will increase, decrease or remain the same once commercial service to Cuba begins.

 

Still, commercial flights to the other Cuban destinations and the charter services will add to that $35 million total.

 

And commercial airlines will likely have to outsource ground handling services to Cuba’s state-run companies, as charters do now, said Colorado-based aviation analyst Michael Boyd, adding more money to Cuba’s economy.

 

Silver Airways confirmed to the Tribune it would use state-run companies for ground services.

 

“Cubans will handle it and Americans will have very little say about how they do the handling,” Boyd said. “The fees that will be charged are not going to be based on a $20 a month wage rate.”

 

 

Cubanálisis - El Think-Tank

IN ENGLISH LANGUAGE

FOR PEOPLE WHO READ IN ENGLISH: ORIGINAL DOCUMENTS IN ENGLISH  OR TRANSLATED. PUBLICATION DOES NOT MEAN WE ENDORSE OR REJECT CONCLUSIONS OR STATEMENTS OF AUTHORS