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ATW Editor's Blog

Was DOT too fair with its Havana flight allocations?

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The US Department of Transportation’s eagerly awaited decision on which airlines get rights to Havana, Cuba, was revealed today and the result is: just about everybody. But is that a good result?

DOT, in its tentative approvals, has divvied up the scant 20 daily roundtrips between eight US airlines. All four majors – American, Delta, Southwest and United -- get something, as do independents and LCCs Alaska, Frontier, JetBlue and Spirit.

DOT had some tough calls to make. There were applications for almost 60 daily roundtrips, three times the number that are available under the historic air agreement reached between the US and Cuba in February. Everyone wants to get an early shoe in the door of this essentially new and potentially vigorous market (and not just airlines – cruise ship companies are also clamoring to add Havana to their itineraries).

In announcing its tentative approvals, DOT said it based its decisions on maximizing public benefits, and presenting travelers with a wide array of choices in type of airline, airport and direct or connecting service.

“The DOT’s proposed selections would simultaneously address service needs while promoting competition,” the agency said.

While I see the point, I wonder if DOT has fallen foul of being too fair. The allocations are so widely scattered across airlines (though more concentrated in terms of city locations with Florida winning the majority) that, at least for the foreseeable future and while Cuba builds up its infrastructure and capacity, this will remain a marginal operation for all eight carriers.

The main exception to this is American, which won four-times daily service out of Miami (plus once daily out of Charlotte, North Carolina). The majority of the other awards are once daily.

It’s laudable that DOT included four independent, LCCs in its allocations. But with availability so scant, it might have been better to have cast selections on two majors and two LCCs, thus giving each of them a stronger and more sustainable frequency base. In the longer term, that could have led to better service for the consumer while keeping competition.

With the majors controlling more than 80% of the domestic market, DOT perhaps felt under pressure to “balance” competition so this slicing and dicing, neatly divided between four majors and four independents, was inevitable. But sometimes, being “fair” doesn’t mean being “equal”.

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