IATA plans to start operating a Billing and Settlement Plan (BSP) banking system in Cuba in 2016, helping to facilitate ticket transactions between airlines and travel agents.
The BSP system would be an important step in the gradual opening up of Cuba’s travel and tourism business as relations between Cuba and the US thaw. Ultimately, a bilateral air agreement is expected to be formed, enabling direct scheduled air links between the two countries.
Although no timing has been set for a bilateral, IATA DG Tony Tyler announced last week during a visit to Havana the plan to operate a BSP system in Cuba next year. He also pledged the association’s support and expertise as the country adapts its aviation infrastructure to cope with the anticipated large increase in air traffic and passengers.
Tyler’s visit also marked the 70th anniversary of IATA, which was created in Havana at a meeting in the Hotel Nacional, where he hosted a celebratory dinner with the CEO of Cubana, the US and Canadian ambassadors to Cuba and the head of Cuba’s civil aviation authority.
IATA’s BSP system is a critical enabler for airlines, facilitating financial transactions through travel agents via a standardized agreement and settlement mechanism.
Cuba we has four accredited agents with over 100 branches across the country, but no BSP system.
“Direct scheduled air links are a much anticipated outcome of the thawing of relations between the US and Cuba. That will certainly create opportunities for growth. Establishing an IATA BSP in Cuba will be an important facilitator for growth in outbound ticket sales,” Tyler said at a press conference in the Hotel Nacional.
“Cuba’s air transport industry has tremendous potential. Even in my brief visit, I have come to realize that aviation could be contributing much more to Cuba. Look at tourism. Cuba welcomed a record 3 million tourists in 2014. But the Dominican Republic attracted 5 million. They are both amazing countries, but even just looking at Cuba’s size compared to the Dominican Republic indicates that it should be able to accommodate a much larger tourism industry than it does today.”
Tyler said that IATA estimates there were about 300,000 departures from Cuba in 2014—outbound travel—a relatively small number for a country with over 11 million people.
“We did a projection to 2034 and conservatively see the potential for one in four Cubans to be traveling by air at that time. Even if the population were steady—an obviously unrealistic expectation—that would see a market of 10 times the size of today in less than two decades,” Tyler said.
Tyler also pledged that IATA will assist Cuba as it tackles the major airport terminal and airfield upgrades that will be needed to cope with the increase in air and passenger traffic.
“IATA is not in the business of building or upgrading airports. But we do help airports and governments plan infrastructure developments. By bringing deep knowledge of airline and passenger needs we can ensure that the infrastructure investments deliver maximum benefit,” Tyler noted.
“Cuba has the potential to leapfrog to become a model in the region for modern air transport infrastructure.”