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Boyd Group Aviation Summit: Airlines Going to Cuba Face Opportunities and Challenges

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Boyd Group Aviation Summit: Airlines Going to Cuba Face Opportunities and Challenges

Boyd Group Aviation Summit: Airlines Going to Cuba Face Opportunities and Challenges
September 22
05:53 2016

SQUAW VALLEY, CALIFORNIA — As airlines start flying to Cuba, Mike Boyd of Boyd Group International says that they will face challenges in the beginning, but opportunities are there when the island nation becomes the next big thing.

“There’s a lot of talk about Cuba opening up, and people see it as the next gold mine, with lots of pent-up demand,” said Boyd in a presentation at his 21st Annual International Aviation Forecast Summit here.  “You hear travel agents talking about it, but are there opportunities in Cuba?”

Boyd cited a study he did 10 years ago, and when he looked at it again when President Obama opened up Cuba last year, he found not much had changed since January 1, 1959. “Did you know that right before the Castro revolution there was a democratic government for about six months? Ever since then, we’ve had a unique situation. It’s the last Marxist society.”

Everyone is so excited about opening it up and lifting the embargo, said Boyd. “What is the real opportunity out there? Who really wants to go? What’s the current state of U.S,-Cuba travel? Anybody can travel to Cuba from France and China.”

What does this mean for airports in the United States? “Will it be another set of flows from the U.S. like the Caribbean is,” he asked. “When you look at the country from west to east, it’s a bonanza. In western Cuba you have rock climbing, mountains, beaches, resorts and plantations. If Disney could have taken this, he would have.”

It’s tremendous opportunity, the biggest one for U.S. airlines since deregulation, said Boyd. “But in the near term, it will be expensive to go there because right now, there’s not a lot of opportunities,” he said. “U.S. travel organizations say there’s a potential to have more than 850,000 annual visitors.”

Only one city has a population of more than two million — Havana, said Boyd. “Santiago de Cuba is next at 25,000, so there are not a lot of huge population centers,” he said. “American Airlines flies to Santa Clara, but how many people want to go there right now?”

The country currently has 62,000 hotel rooms available, around the same number as what’s available on the Vegas strip, said Boyd. “The country has been closed for more than 50 years, so there’s no historic data to read,” he said. “Right now, the biggest chunk of people going to Cuba is visiting friends and relatives, and travel will be entirely directional from the U.S.”

The traffic for airlines will be all one way, said Boyd. “No one can fly out because they aren’t allowed to travel and can’t afford to travel,” he said. “When the pressure grows, Cuba will change like China did. But until Fidel and Raul [Castro] go away, there won’t be a change.”

Most of the traffic will come from South Florida, said Boyd. “In the near term, it will be hard for the airlines to make any money, but in the long term, it’s the biggest opportunity they’ve ever had,” he said. “But the key market reality today is that there is not a lot of business travel today. Cuba is not interested in doing business with us right now.”

The country is not ready for prime time yet, said Boyd. “But Cuba will explode. It will eventually have more opportunities than China. It will be big, but we don’t know when,” he said. “But there will be a lot of money to be made  on both sides.”

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About Author

Benét J. Wilson

Benét J. Wilson

Mother, Aviation Queen, Veteran Aviation Journalist, AVgeek since age six, number one fan of the Boeing 747 and Student pilot (can't stick my landings). I would actually pay rent to live in an airport. bwilson@airwaysmag.com @AVQueenBenet

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