Air Transport: Cuban cargo decisions

   Earlier this year, FedEx outlined the importance of air cargo routes between the United States and Cuba in submitted documents to the U.S. Department of Transportation. As part of America’s expanding relationship with Cuba, DOT recently asked for carriers to propose flights in and out of cities on the island nation. 
   When a final list of approved domestic carriers was released, it became obvious that FedEx’s pleas fell on deaf ears. 
   In early July, DOT proposed that Delta, American and United receive the all-clear to start flights into Havana later this year. Southwest, Alaska, JetBlue, Frontier and Spirit Airlines also received tentative approval to begin routing to the island nation. In all, 12 airlines submitted applications for 60 daily flights to Havana. DOT has only made 20 spots available each day.
   The Havana decision followed the proposal in June of allowing six carriers—American, Frontier Airlines, JetBlue Airways, Silver Airways, Southwest, and Sun Country Airlines—up to 10 roundtrip flights each day to nine other Cuban cities. 
   “The department’s principal objective in making its proposed selections was to maximize public benefits, including choosing airlines that offered and could maintain the best ongoing service between the U.S. and Havana,” a DOT press release said.
   None of the winning carriers are all-cargo airlines.
   During the U.S.-Cuba Frequency Allocation Proceeding, FedEx wrote that while domestic carriers will make belly cargo space available to shippers who desire to conduct business in Cuba, the lack of substantial air freight capacity shouldn’t be overlooked. 
   “While the passenger carriers propose a wide variety of ways to take U.S. business people to and from the island,” FedEx argued, “they have ignored the necessity of moving the U.S. goods that their passengers and U.S. businesses would deal in.” 
   But passing on FedEx at this stage in the game is not entirely at the hands of DOT. Less than a month before the Havana decision was to come out, FedEx switched up its Cuban cargo strategy. FedEx had originally been fighting for the right to fly to Havana, but submitted an amended application on June 16, nearly a week after the first round of flight approvals, asking for permission to fly one daily routing, five times a week, between Miami and Juan Gualberto Gómez International Airport in Cuba. This new routing, which would begin on Jan. 15, 2017, would replace its Havana slot. FedEx would also be flying a much smaller plane into its second-choice city, downsizing from the Boeing freighter it wanted to use on the Havana flights to a Cessna 208. With the new routing, FedEx would serve Havana and two additional cities by truck. 
   “FedEx maintains its strong interest in providing all-cargo transportation services in the U.S.-Cuba market and expanding the reach of its global network, but it has determined that having Matanzas/Varadero, Cuba (VRA) as the base for its Cuba air operations would be the more optimal use of its resources under current Cuba marketplace conditions,” the company stated in its amendment. 
   DOT has said it will address FedEx’s new plans in the near future. 
   This move was quickly applauded by other airlines, many of them looking to increase their chances of nabbing Havana passenger services. In a motion filed by United, the carrier said “FedEx’s willingness to be flexible with respect to its Cuba service plans, and its appreciation for the limited availability of Havana frequencies, enables additional passenger service opportunities at Havana.” 
   FedEx noted it is the only all-cargo carrier requesting flights to Cuba and that “maximizing the public benefit for U.S. shippers and U.S. commerce overall requires FedEx’s continued participation in this proceeding and, ultimately, the granting of FedEx’s requests.” 
   FedEx is chasing what is likely a small corner of a sluggish air cargo market. According to the latest figures from the International Air Transport Association, global freight demand fell 0.9 percent, year-over-year, in May, while capacity rose 4.9 percent. Focusing specifically on North American carriers, these airlines saw a 0.2 percent decline in demand; IATA points to the strong U.S. dollar and an associated hit on exports as a likely cause. According to IATA, global trade weakness accounts for the majority of air cargo’s problems. 
   “Global trade has basically moved sideways since the end of 2014 taking air cargo with it. Hopes for a stronger 2016 are fading as economic and political uncertainty increases,” Tony Tyler, IATA’s outgoing chief executive officer and director general, said in a statement. “Air cargo is vital to the global economy. But the business environment is extremely difficult and there are few signs of any immediate relief.”
   In making its decision on flights to Cuba, DOT said it addressed “service needs while also creating a framework for a competitive market structure.” Presenting potential travelers with a number of airline choices was important. It remains to be seen if air cargo is of any significance.