Airfares, convenience emerge as fault line in Cuba flight applications

U.S. airlines hoping to get a few of the limited number of flights to Cuba filed regulatory papers on Monday in response to rivals’ applications laying out their best arguments for consumer travel to the Caribbean island.

The United States and Cuba signed an agreement a month ago restoring commercial air service between the former Cold War foes for the first time in decades. Under the agreement, 20 daily round-trip flights will be allowed to Havana but 13 U.S. carriers already have requested at least 52 flights per day, far exceeding the limit.

Airlines submitted responses to rivals’ applications by the Monday deadline set by the U.S. Transportation Department for travel to the capital of Havana.

The filings come just before a trip to Cuba next week by President Barack Obama, the first by a U.S. president in nearly 90 years.

The arguments that emerged from the airline’s filings contrasted low airfares and the convenience.

American Airlines Group Inc (AAL.O) said nearly half of the entire Cuban-American population lives near its Miami hub, from which it applied for 10 daily flights to Havana. It said this gives it an advantage because a not-yet-lifted ban on tourism to Cuba means traffic must come from authorized travelers, such as people visiting family on the island.

“The frequencies proposed by JetBlue have no relation to demand,” said American in its filing, claiming its rival to the Caribbean ran half-empty charters from nearby Fort Lauderdale to Havana.

American said 58 convenient connections via Miami would help it sell seats and serve more travelers globally, compared with JetBlue’s alleged 15 connections via Fort Lauderdale.

JetBlue Airways Corp (JBLU.O) did not have additional comments beyond its own filing, which focused on the importance of competition and lower fares.

“There is no possible justification for one legacy carrier to have 50 percent of available frequencies for use on one route,” JetBlue said. “American thrives, for example, in offering service in markets where it dominates with high fares and disappointing service.”

Southwest Airlines Co (LUV.N), in turn, argued for Florida-Cuba service, saying it was the true low-fare leader, reducing average one-way prices $41.46 when entering legacy markets, compared with fares falling $28.91 when JetBlue entered.

And United Continental Holdings Inc (UAL.N), whose application focused on daily Newark flights, questioned the need for extensive Florida schedules altogether.

“Why would you disproportionately allocate frequencies to Florida, when (unlimited charter flights there) can pick up the slack?” said Steve Morrissey, United’s regulatory and policy vice president, in an interview.

(Reporting By Jeffrey Dastin in New York; Editing by Diane Craft)

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