IATA: Overcapacity hurting US-Cuba market

Success in Cuba is a “middle- to long-term” prospect for airlines, particularly for US carriers that launched service to Cuba after the market was reopened to US commercial flights last year, according to IATA regional VP-Americas Peter Cerda. Nine US airlines launched flights to Cuba last year and early this year, but three—Frontier Airlines, Silver Airways and Spirit Airlines—have already dropped service to the island nation, citing difficult market conditions. “You had a huge hunger from the airline industry” to launch flights to Cuba once the Obama administration allowed a resumption of commercial flights, Cerda said. “And what happened is there was overcapacity.” He noted that the Cuban destinations outside of Havana served by US airlines have been especially poor performers “because there was an oversaturation” of airline seats going to those smaller cities. Those markets outside Havana are hurt by the fact that the US still disallows travellers to go to Cuba purely for a vacation. Even in Havana, infrastructure “is a major issue,” Cerda said. “They need to build that infrastructure quite quickly.” The US-Cuba market also remains almost entirely a one-way market, with few Cubans traveling to the US, Cerda said.<br/>