Sunday, November 23, 2014

Fees for Americans a sore spot in Cuba travel

TAMPA — The battle for the Cuban charter flight business out of Tampa International Airport has landed in federal court, exposing what U.S. citizens must pay the secretive Cuban government for use of Havana’s José Martí International Airport.

The annual total is somewhere between $31 million and $62 million — more than any other nation pays, said one Cuba analyst — enough to make critics question whether the fee is covering actual costs or going to support Cuba’s ruling Castro regime.

Tampa International Airport, by comparison, received $14.6 million in landing fees during 2014 for flights from airlines based in every nation that lands here.

On a per-flight basis, the same U.S. plane that pays $275 for landing fees at Tampa International pays up to $24,000 in Havana.

The cost estimates on U.S.-Cuba flights is based on two factors: the revelation in court documents that landing fees range as high as $148 for each U.S. passenger, coupled with the projection that two-thirds of the 635,000 Americans traveling to the island nation in 2014 are destined for the capital city of Havana.

“It is a way to get more money off the U.S. since the U.S. government blocks it from making money in other ways,” said Arturo Lopez-Levy, a policy analyst for the Cuban government from 1992-94 who now is an academic in Denver and an advocate for better relations between Cuba and the U.S.

Lopez-Levy said the U.S. is the only nation in the world that pays such high fees to land in Havana.

The $148 figure is included in a lawsuit filed in U.S. District Court in Miami pitting one company that offered flights between Tampa and Cuba against another.

Miami-based Island Travel & Tours alleges in the suit that Cypress, California-based Cuba Travel Services sets ticket prices artificially low to drive out competition, in violation of the Sherman Antitrust Act.

Island Travel Tours began offering charter flights to Cuba from Tampa in October 2011. Cuba Travel Services entered the market in December.

In May, Island Travel Tours ceased flights out of Tampa. It continues to fly to Havana out of Miami.

At that time, in an interview with the Tribune, company President Bill Hauf blamed saturation of the charter flight industry from Tampa International Airport to Cuba coupled with predatory pricing by his competitor.

Now the court will take up the allegations.

In its lawsuit, Island Travel Tours lays out all fees charged to U.S. citizens traveling to Cuba in an attempt to demonstrate that Cuba Charter Services undercut prices:

♦$58.90 per passenger in United States passenger fees;

♦$148 per passenger for a José Martí International Airport landing fee;

♦$46 per passenger for a Cuba required medical insurance fee.

The suit says the airplane typically used for such flights is a Boeing 737-800, with a capacity of 162 seats. The rental fee for travel companies using the aircraft, according to the lawsuit, is $25,608 — for a per-passenger cost of about $158 on a sold-out flight.

Costs alone, then, adding the Cuban government fees and airplane rental, amount to about $411 per person, the suit says, not counting an commission of $30 to $50 per ticket sold through authorized travel agents.

Yet Cuba Charter Services was charging $399 to $529 for round-trip tickets from Tampa to Havana, according to a survey of prices in December, the suit says.

For flights next month, Cuba Travel Services is selling tickets at $469 to $529, which includes a travel agent commission of $30 per child and $50 per adult ticket, according to a check by the Tribune last week.

“Island Travel welcomes fair competition in the marketplace as this ultimately benefits the flying public,” company attorney Richard L. Richards says in an email to the Tribune.

“Cuba Travel Services is blatantly charging below cost in an unfair attempt to put competitors out of business. This action is against the law and public policy for obvious reasons — i.e. once all the competitors are out of business — then Cuba Travel is free to charge uncompetitive rates to the detriment of the flying public.”

Lisa Zuccato, president of Cuba Charter Services, also responded via email, saying, “We have always endeavored to provide the best service to our customers at the lowest possible price.”

Zuccato said prices are set based on seasonal demand, competitors’ prices, assigned routes, customer demand and “other economic factors.”

“To think that we have engaged in monopolistic activity is absurd,” she wrote.

Cuba Travel Services would not comment on the fees charged by the Cuban government.

Another company offering flights from Tampa to Havana, ABC Charters Inc., was selling tickets for as low as $399, including a $50 commission, according to a price list from April, before the lawsuit was filed. ABC Charters is not listed in the lawsuit and did not respond to requests for comment.

ABC is selling tickets to Havana for $449 to $549, which includes commissions of $30 for children and $50 for adults.

Cuba Travel Services and ABC Charters also offer services to Cienfuegos, Camaguey, Santa Clara, Holguin and Santiago.

The $148 figure listed in the lawsuit is consistent with a U.S. charter company contract for landing rights in Havana obtained by the Tribune.

That is the price charged for adults. The fee for children, according to the contract, is $100, and the price is lower for group rates — $94 for adults and $73 for children.

Group rates are charged to those traveling on educational tours under what are called people-to-people licenses.

Each charter plane must pay fees for a minimum of 60 passengers, the contract says. Any empty seats needed to reach the minimum of 60 are charged at the $148 rate.

“All that money goes to the government, who then decides where it is spent, including military and security forces for surveillance,” said Jim Cason, mayor of Coral Gables, who was chief of the U.S. Interests Section in Havana from 2002 to 2005. “Anyone who believes otherwise is very naive.”

Landing fees are supposed to help cover the cost to an airport for maintenance and operations of the runways and terminals, said David Plavin, a member of the board of directors for Eno Center for Transportation, an industry think tank based in Washington.

Airports around the world follow a United Nations recommendation to set fees based on each 1,000 pounds of an aircraft’s landing weight.

Tampa International charges $1.49 to $1.577 per 1,000 pounds, depending on each airline’s specific deal.

And Cuba follows that standard for companies from other nations. Canada’s Sunwing Airlines, for example, confirmed it is charged per 1,000 pounds for Havana landings, but CEO Mark Williams would not say how much.

A Boeing 737-800 has a maximum takeoff weight of 174,200 pounds, according to the manufacturer’s website. At Tampa International, the plane’s landing fee is a maximum of about $275.

That compares with at least $4,380 for same-plane landing in Havana carrying 60 passengers. A full plane, with $162 passengers, would pay as much as $23,976.

Cuba Travel Services, defendant in the federal lawsuit, would not reveal the fees it pays but said they are justified. The reason: The the travel and trade embargo the U.S. has imposed against Cuba for more than 50 years prevents U.S. companies from placing their own employees in the Havana airport.

Jobs such as ticketing and baggage must be performed by Cuban citizens, who are paid by the airport, said Michael Zuccato, general manager of Cuba Travel Services, husband of CEO Lisa Zuccato.

This doesn’t explain the high fees, though, said Mauricio Claver-Carone, director of the Washington-based U.S.-Cuba Democracy PAC, which advocates stopping travel between the U.S. and Cuba.

The average Cuban, Claver-Carone said, receives pay of just $20 a month — a number confirmed by Cuba’s National Statistics and Information Bureau website.

“It doesn’t take an economist to see that Cuba doesn’t need a lot of money to pay those employees,” he said.

But Cuba must also charge extra so it can operate a separate terminal serving U.S. travelers for security reasons, said Albert A. Fox Jr., founder of the Tampa-based Alliance for Responsible Cuba Policy Foundation.

The U.S., Fox said, has a history of sending people to Cuba to inspire unrest.

“The U.S. lands in Terminal 2,” he said. “We are the only ones who use it. All the staff there is designed to screen people coming from the United States. It costs more money to maintain that type of terminal.”

Even this falls short of explaining the high fees for U.S. travelers, said Lopez-Levy, the former policy analyst for the Cuban government.

“The quality of the service is in fact lower than for the rest of the world in the other terminals,” Lopez-Levy said. “I don’t find convincing the official reasons for the higher landing fee costs charged to the U.S.-based flights.”

One component of the fee Cuba charges U.S. travelers is health insurance — $46 per passenger, good for the 30-day limit of a travel visa, according to the contract obtained by the Tribune.

Because of the U.S. embargo, no U.S. health insurance is accepted in Cuba.

The Cuban policy covers up to $25,000 in medical fees for emergencies, according to a copy provided the Tribune by Suzanne Carlson, president of Tarpon Springs-based Carlson Maritime Travel, which arranges trips to Cuba.

Governments other than Cuba’s charge higher fees to passengers from certain nations, said Plavin of the travel industry’s Eno Center.

“It happens in the Middle East and other parts of Latin America,” he said. “Typically a fee that has nothing to do with operational costs of an airport and everything to do with politics would be buried in ticket prices, and usually no one notices unless it is leaked publicly.”

Cuba might even charge different fees to different U.S. charter companies, said Cason, the former chief of the U.S. Interests Section in Havana.

“There is a tremendous amount of bribery in all of this,” Cason said. “If someone offered Cuba money for lower rates, they would take it. The system is totally open to corruption.”

Cuba needs to rethink its fees to encourage more travel between the countries, said Lopez-Levy, the former policy analyst for the Cuban government.

“I am a believer, for the relations to improve between the countries we need more Americans to visit Cuba,” he said. “Lower ticket prices would mean more could afford to go.”

Story and video:

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.