Analysis: Spirit Airlines Pulls Out of Cuba
MIAMI – Spirit Airlines is pulling out of the Cuban market, as it will drop its twice daily flights between Fort Lauderdale and Havana on June 1, 2017.
The decision comes just four months after Spirit won the approval to serve Havana in July, 2016. The twice daily flights to Fort Lauderdale will be cut back to one flight per day between May 3-23, before returning to a twice daily schedule for its last week in operation (May 24-31).
“We really wanted (Fort Lauderdale-to-Havana) to work, especially being South Florida’s hometown airline and the ultra-low cost leader to the Caribbean, but the costs of serving Havana continue to outweigh the demand for service,” said Bob Fornaro, Spirit’s president and CEO, in a statement to the Sun Sentinel. “Due to overcapacity and the additional costs associated with flying to Cuba, we don’t find it sustainable to continue this service while maintaining our commitment to pass along ultra-low fares to our customers.”
Spirit becomes the third US low-cost carrier to pull out of the Cuban market, joining rival ultra-low cost carrier (ULCC) Frontier Airlines, which will drop its daily Miami – Havana flight on June 4.
The other carrier to drop service entirely is Fort Lauderdale-based regional carrier Silver Airways, who will stop flights from Fort Lauderdale to Camaguey, Cayo Coco, Cienfuegos, Holguin, Manzanillo, Santa Clara, Santiago de Cuba, and Varadero on April 16.
In addition to the three carriers that dropped service entirely, JetBlue Airways and American Airlines have both reduced service sharply to Cuba. American announced back in November that it would pare back frequencies from Miami to Holguin and Varadero from two daily flights apiece to one.
Meanwhile, JetBlue has shifted to the smaller Embraer E190 on routes from Fort Lauderdale to Havana, Santa Clara, Holguin, and Camaguey, cutting daily capacity by more than 40%.
The weakness in the Havana market is a bit surprising, only insofar as the earlier weakness in this market at large was focused on secondary cities.
There are numerous reasons for weak Cuban demand, most notably geopolitical uncertainty surrounding the presidency of Donald Trump and the status of Cuba, lack of available hotel room capacity, and a poorly planned dual-currency system that prevents US travelers from taking advantage of low natural costs in the Cuban economy (one of the drivers of tourism to the Caribbean at large).
It is unclear if rivals JetBlue or Southwest will bid for Spirit’s vacated Havana flights. Frontier’s Miami – Havana flight may have at least one taker in the form of hubbed carrier American Airlines.
While American isn’t immune to the challenges of the Cuban market at large, it at least has the most origin and destination (O&D) traffic to draw upon and a massive hub to draw connections from all across the United States.
Beyond the existing carriers who have dropped service, further cuts are likely. In particular, Southwest has seen poor performance on its Fort Lauderdale routes, and unlike JetBlue, it has no smaller aircraft to shift capacity to; and if Fort Lauderdale isn’t working well, then Tampa on Southwest and Charlotte on American are likely poor performers, to say nothing of Los Angeles on Alaska Airlines. More cuts are coming.