VARADERO, CUBA — A fully loaded Southwest Airlines Boeing 737-700 (N7725A • MSN 32671 • LN 1925) touched down for the first time on Cuban soil shortly after noon local time on Sunday, marking the Dallas-based carrier’s entry into the rapidly opening island nation.
The Ft Lauderdale – Varadero flight 3914 lasted a brief 36 minutes in the air, but it represented a historical milestone for Southwest as Cuba became the carrier’s ninth country and Juan Gualberto Gomez Airport the 99th destination on its route map.
This was a day for a fiesta! Renowned bandleader Tito Puente, Jr. and his mambo band exuberantly entertained passengers and onlookers in the gate area who weren’t afraid to get their salsa on. The ramp tug was festooned with both Cuban and American flags.
Passengers were sporting Cuban fedoras rimmed with the Cuban flag. Gate B5 at Ft. Lauderdale/Hollywood International Airport was transformed into something akin to Havana’s famous Tropicana and Bar Floridita night club. Havana Club Rum was substituted for Cuban cafecitos and pastelitos but no matter, spirits were flying high.
And little wonder why. The LUV Airline has ambitious plans for Cuba beginning with two daily flights between Ft. Lauderdale and Varadero, Cuba’s second busiest airport. Varadero is a bit of a dress rehearsal with links between Havana and key Southwest markets Ft. Lauderdale in the South Florida region and Tampa Bay set to commence December 12, 2016 with two and one daily non-stops respectively.
Havana is especially significant in that it will be Southwest’s 100th destination. Southwest used the occasion to announce it intends to begin once-daily service from Ft. Lauderdale to Santa Clara on December 15, 2016 subject to approval from the Cuban government.
After JetBlue, Silver Airways, and American Airlines, Southwest becomes the fourth US carrier to launch scheduled commercial service to Cuba, with Delta, United, Spirit, Frontier, and Alaska next in the cue.
But as is the modus operandi in Cuba, things are complicated. With the flurry of route awards and new service to Cuba, there has been evidence of over-capacity with many flights operating at load factors below fifty percent. In fairness, the scheduled flights up to now have been to the secondary, lesser known markets Varadero, Camagüey, Holguín, and Santa Clara.
According to Airways Senior Business Analyst Vinay Bhaskara, there are currently 150,000 one-way seats available in the U.S. – Cuba market per year with 1.1 million projected by early 2017. Havana boasts twenty daily flights to the U.S., with another approximately twenty flights distributed to other secondary Cuban gateways.
In addition, an incoming administration and congress with a contentious position toward Cuba plus a challenging tourist infrastructure are casting some clouds on an otherwise bright horizon.
“Airlines are rushing to plant their flags, digging in for a lengthy period of cash losses, watching each other to see whose aspirations for ‘investment spending’ last longest. Cuba has limited leisure hotel and rental property built to western standards (and what there is is commanded by visitors who have had normalized access for decades), we don’t have fully relaxed travel restrictions, and it’s not clear a new Republican administration will relax them, which further depresses demand,” says airline analyst Bob Mann, Jr.
Bhaskara remains optimistic: “By no means is there too much capacity to and from Havana given that the number of frequencies applied for outweighed the number available, particularly to Havana. To non-Havana cities, anything from South Florida will be fine due to origin and destination demand. The only open question is whether the vacation flights from non-Florida US hubs will have enough demand. That will depend on the development of the infrastructure (hotels, tour packages, etc) that develop in second and third tier Cuban metropolitan areas.”
Manuel de Oyarzabal, an advisor in Southwest’s International Planning doesn’t dispute the competitive and existential challenges of flying to Cuba reporting “Load factors between Tampa and Havana are very good while Ft. Lauderdale to Havana and Varadero are building. We are all taking an educated bet but we do see the long-term potential. The three markets we are serving are very important to South Florida where we have connectivity.”
By all accounts however, the inaugural flight boded well for Southwest. With 143 customers and a crew of five, the first flight was nearly full. Even in a market that has over-capacity, the so called “Southwest Effect” was clearly stimulating demand. “Of all the carriers starting service, we offer the highest value proposition for our Customers (beginning with the $59 sale) who check two bags for free and will never face a punitive fee just for changing their plans; with the reach of our network and our strong ontime performance, Southwest iss – by far – the most reliably cost-effective way to travel between the US and Cuba,” said corporate spokesman Brad Hawkins.
Southwest’s “Bags Fly Free” value proposition is very important to visiting friends and relatives traffic (VFR) who travel home with gifts and goods for their relatives who live on the island. The airline’s policy of allowing two bags to fly free, weighing up to fifty pounds apiece is considered a huge advantage over the charter and competing carriers who charge substantially for checked-luggage with the exception of jetBlue, which does not charge for the first checked bag. On competing airlines, often the luggage fees cost exceeds that of the ticket.
Southwest clearly has big plans for the Cuban, Mexican, Caribbean, and Central American markets, especially from Ft. Lauderdale, where Terminal One’s five-gate international concourse is due to open in June 2017. Southwest only began international service just over two years ago, and just over two months ago from Ft Lauderdale when it commenced flight to Nassau, Bahamas.
Southwest is the second largest airline in terms of market share at Ft. Lauderdale, where it has flown for 20 years. Nevertheless, the airline is not nearly as well known for international service in the South Florida market, where American Airlines dominates via Miami and JetBlue is ramping up to 140 domestic and international flights per day at Ft. Lauderdale. And locally based ULCC, Spirit Airlines is no slouch either. Ft. Lauderdale Airport is unique in being a ULCC/LCC battleground with Southwest, jetBlue, and Spirit waging a spirited battle.
Even though Southwest will only offer six international flights per day by the end of 2016, it remains undaunted. The airline is not releasing numbers but plans a “significant international buildup to the Caribbean, Mexico, and Central America.” Construction at Ft. Lauderdale Airport is the cornerstone to this plan. “The new five gate international terminal with its own customs facility will make a difference but we had to start now due to competitive dynamics.”
Once the flights were awarded, the clock was ticking to begin. We are marketing heavily in South Florida and the Tampa Bay area to make sure people know international value proposition.” says Oyarzabal. Southwest at present is only able to sell tickets in Cuba over the internet which itself is a rare and expensive commodity there. As with other airlines its marketing outreach abilities are limited there for the time being.
Southwest has been working diligently over the last few months with Commercial Take Off ECSA, Cuba’s state owned aviation group. Seven to ten Southwest team members have been dispatched to Cuba over the last few months training 130 employees in security, ramp, and customer service. Once complete, Southwest will completely out-source all ground operations to the Cuban company with no Southwest personnel domiciled in Cuba.
As is the case with his airline, Oyarzabal is un-phased by establishing operations in a country that has been largely cut off from America and American business practices. “The challenges are learning how to operate in Cuba. We have been very respectful of customs and habits. There are some equipment and infrastructure limitations, but the local Cuban operations teams are very good and well trained. They average 15 years in the industry”, observes Oyarzabal.
“Our Employees have worked hard to open this route and a new chapter for people who want to connect with Cuba in ways that matter most to them,” said Steve Goldberg, Southwest Airlines’ Vice President of Ground Operations who is also Southwest’s executive ambassador to Florida.
Following an on-time arrival into Varadero and yet another round of thunderous applause from enthusiastic passengers, the Southwest and Cuban partnership was on full display as the disembarking and turn was fast, efficient, and friendly. The airline known for its heart had itself bought a little corazón to Cuba.