America, did you miss the travel industry’s memo declaring Cuba the hottest new vacation destination?
Apparently. Service to the longtime U.S. foe began in September, but after just five months the largest carrier to the island, American Airlines, cut daily flights by 25 percent and switched to smaller jets on some routes. Meanwhile, Silver Airways reduced weekly flights to six Cuban cities and JetBlue Airways downsized its planes 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., said 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 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 more obstacles, pointing to the complications accompanying U.S. travel arrangements to Cuba, along with too much capacity from large carriers.
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 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 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 Treasury regulations.
The policy thaw led to an immediate surge by “early adopters,” 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 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 services — before any U.S. commercial flights had begun. Some rooms now cost as much as $650 per night.
Even the costs of classic car rides and dinners at popular paladares, private restaurants run by families, have in some cases tripled, Insight Cuba says. Prices have begun to moderate this year for the first time since 2014. But beyond the high prices lie additional difficulties for U.S. tourists.
“The airlines are also competing with limited hotel availability,” Popper said. And “you cannot pay for a room with a U.S. credit card, so you have to actually bring the cash.”
Cuba-curious Americans must also compete for winter lodging with sun-seekers from Canada and Britain, who face no bureaucratic hurdles.
The average round-trip airfare from the U.S. to Cuba did drop from $399 in September 2016 to $310 last month, according to data from Airlines Reporting Corp. That compares with an average $486 for Cancun. But still, there are few Yankees heading to Havana.
Some may worry that a trip would fall under a murky area of the U.S. law, unsure how much latitude is afforded by “people-to-people exchanges,” or cowed by the well-publicized aggressiveness of U.S. customs employees.
Barring a radical policy change by the new administration, such concerns are probably unwarranted, Cuba travel experts said, adding that the traveler counts this year are likely to top 2016.
Airlines aren’t pushing Cuba as a destination because of the legal uncertainties, said Michael Zuccato, general manager of Cuba Travel Services, a Los Angeles-area company. While airlines bear no liability if customers fib about the real reason they’re visiting Cuba, in-house lawyers may not want to push their luck.
“Because of the U.S. restrictions,” Zuccato said, “you really don’t see any advertising from the airlines promoting Cuba.”