Skift Take

Most big U.S. airlines see Cuba as a long-term play, so they're willing to fly empty planes and lose money in the short term. But not Silver Airways and Frontier Airlines. They decided that several months of losses is enough.

At the end of 2015, Silver Airways — a south Florida airline with a small turboprop fleet — settled on a new strategy. It would capitalize on “tremendous opportunities” in Cuba and start as many new routes as the United States government allowed.

But less than eight months after its first flight from Fort Lauderdale to Santa Clara, Silver Airways is calling off its Cuba strategy. It will suspend Cuba flying on April 22, and focus on routes within Florida and from Florida to the Bahamas.

Silver Airways has rights to more Cuba routes than any other U.S. airline. Last year, the U.S. Department of Transportation gave it authority to serve nine cities, all from Fort Lauderdale, including Camagüey, Cayo Coco, Holguin, and Cienfuegos. It did not, however, win the rights to fly to Havana, with all those frequencies going to airlines promising to fly larger jets. Silver Airways has only 34-seat Saab 340B Plus aircraft.

Silver, which in December had reduced some Cuba flights, citing less demand than expected, is not the first airline to find Cuba less enticing than expected, but it is first to pull out completely. Also in December, American Airlines trimmed some flights, and in February JetBlue said it would start using smaller aircraft on some routes in May, a move that will reduce its Cuba capacity by 300 seats per day.

More Supply Than Demand

Still, in an email, Silver spokeswoman Misty Pinson said there is still a supply-and-demand imbalance on flights to secondary Cuban cities.

She said Silver executives still believe these smaller markets are best served by turboprops, but she noted many of Silver’s competitors are flooding markets with cheap seats. JetBlue Airways for now flies Airbus A320s with 150 seats from Fort Lauderdale to Camagüey, Holguin, and Santa Clara, while Southwest Airlines flies 143-seat Boeing 737-700s to Matanzas and Santa Clara. Even when JetBlue moves to smaller aircraft on some routes, it will still be using 100-seat Embraer E190s.

“Other airlines continue to serve this market with too many flights and oversized aircraft, which has led to an increase in capacity of approximately 300 percent between the U.S. and Cuba,” Pinson said. “It is not in the best interest of Silver and its team members to behave in the same irrational manner as other airlines.”

In her email, Pinson said Silver Airways will monitor that market and might jump back in if conditions warrant. But she noted that, for now, Cuban routes are not viable. “[A] lack of demand coupled with overcapacity by the larger airlines has made the Cuban routes unprofitable for all carriers,” she said.

OTA and Codeshare Issues

One thing that could help is a deal that would allow Silver and other airlines to list their Cuba flights with the largest online travel agencies, including Expedia, Orbitz, and Priceline. Bloomberg reported last year that most online travel agencies plan to offer Cuba flights, but Pinson said it became clear that they would not do so quickly.

Silver also might have been stronger in Cuba if it had codeshare agreements with other airlines, Pinson said. On many routes, Silver codeshares with United Airlines and JetBlue Airways, but Cuban flights have not been covered, Pinson said.

Because Silver Airways is not well-known among consumers, especially outside of Florida, it is more reliant on codeshare revenue than other carriers.

“In addition to overcapacity, distribution through online travel agencies and codeshare agreements have been unavailable since airlines began servicing Cuba last fall,” Pinson said. “Now, six months later, this issue is still not fully resolved, resulting in depressed demand.”

Frontier also cancels flight

Also on Monday, Frontier Airlines said it was canceling its lone flight to Cuba for similar reasons. After June 4, Frontier no longer will fly from Miami to Havana. American flies the route four times most days, while Delta flies it once per day.

In an email, Frontier spokesman Jim Faulker said the U.S.-Cuba market was suffering from excess capacity. He also said Frontier’s costs in Cuba were significantly higher than the airline had expected.



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Tags: cuba, silver airways

Photo credit: Silver Airways had hoped to make big profits in Cuba, but it did not work out. Silver Airways

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