Cuban cargo crisis?
In mid-February, the United States and Cuba moved to resume scheduled air carrier services between the two countries, with the Department of Transportation calling for proposals from domestic airlines.
American Airlines, Alaska Airlines, Southwest, JetBlue and others took up the call, hoping to win daily slots in Havana and nine other airports around the country during the U.S.-Cuba Frequency Allocation Proceeding.
At the time, U.S. Transportation Secretary Anthony Foxx said he was excited to unveil these new opportunities and the department would “conduct this proceeding in a manner designed to maximize public benefits.” In a press release, DOT said it was looking for proposals from carriers that would offer the best service both for passengers and shippers, also hoping to identify those carriers that would be able to maintain a high level of service. DOT promised an expeditious decision.
Service to shippers seems to be important to DOT, but FedEx recently alleged that none of the 12 passenger carriers that submitted proposals mentioned air cargo services in great detail, only giving cursory information about cargo capacity to fit the proposal guidelines. A simple search of the documents proves this to be the case.
FedEx previously underlined the importance of air cargo to the Cuban economy, mentioning that many shippers want to take advantage of this new market. These shippers, it said, will welcome the new market, but will be playing catchup because of the relationships that foreign shippers have already established with Cuban suppliers. FedEx feels it is best positioned to help these domestic shippers get into the game quickly.
Allowing that airlines which applied for Cuban frequencies will no doubt provide some belly cargo capacity to domestic shippers, FedEx said express, all-cargo space is desperately needed to jumpstart the trade partnership.
“FedEx has reviewed the applications of the 12 other carriers in this proceeding and cannot discern any benefit their services would provide to U.S. shippers and U.S. commerce. While the passenger carriers propose a wide variety of ways to take U.S. business people to and from the island, they have ignored the necessity of moving the U.S. goods that their passengers and U.S. businesses would deal in.”
The all-cargo carrier presented a detailed takedown of each carrier’s proposal, explaining the amount of belly capacity that could be offered if the airlines’ were granted approval.
Citing Silver Airways, one of the applicants, FedEx said it claimed “no space at all for cargo.”
When asking for a proposal, allowing comments, and then letting the airlines comment on those comments, sparks will no doubt fly. Enter Silver Airways, a party that doesn’t think FedEx needs the slot at all. Silver Airways shot back at FedEx, stating the all-cargo carrier’s less-than-daily service wouldn’t be a good service to shippers.
“FedEx’s service proposal provides, at best, marginal public benefits to the shipping public,” Silver Airways said. “Indeed, as several other applicants have properly observed, there will be ample cargo capacity provided by a number of the large passenger combination carriers… which will easily accommodate the modest volume of authorized cargo that can be shipped in the U.S.-Cuba air services market.”
The airline also noted that FedEx wants to prop up its cargo route by routing from the United States to Havana and back through Mexico to make sure its planes are properly filled with cargo.
“If demand for U.S.-Cuba cargo capacity was truly as robust as FedEx claims, an intermediary stop… would obviously be unnecessary,” Silver Airways added. “The limited cargo demand, thus, is best accommodated through charter service which may be operated without limitation under the MoU (memorandum of understanding).”
Alaska Airlines fought back as well, saying in its consolidated reply to commenters that cargo would be a significant portion of its Havana offerings. The carrier said it would have strong cargo demand, particularly on the inbound side of things, on a routing that began in Seattle/Portland, and stopped in Los Angeles on its way to Havana.
In its comments, however, the city of Houston told the department that giving air carriers daily frequencies would limit competition, adding that FedEx’s approach is exactly what is needed.
“The very fact that some carriers are seeking less-than-daily frequencies enables an allocation that will ensure competition on various fronts, including among gateways, carriers and types of service,” it said. “For example, FedEx notes that United’s proposal for Saturday-only service in the IAH-HAV market would mesh well with FedEx’s proposal for weekday-only all-cargo service… and various carriers have indicated interest in the Sunday-only frequency that would be available were such an award to be made.”
DOT needs to sift through numerous comments before it starts making decisions. Whether or not Cuban air cargo will be a huge boon for U.S. shippers, FedEx comments have made sure that domestic carriers applying for frequencies into Cuban airports keep freight at least in the back of their minds.
Ross, a former American Shipper editor, writes about air transport and freight issues. He can be reached by email at email@example.com.
Cuban cargo crisis?