The introduction of scheduled flights between the U.S. and Cuba for the first time in more than 50 years is not expected to have a negative impact on Cayman Airways in the short term, according to the airline’s chief executive officer, Fabian Whorms.
Mr. Whorms said the airline, which does steady business transiting passengers between Miami and Havana through the Cayman Islands, is monitoring the situation carefully.
He said the limited introduction of scheduled flights from U.S. cities, which began last week with the inaugural JetBlue flight from Fort Lauderdale to Santa Clara, is unlikely to affect the airline immediately.
He said there would likely be a reduction in charter flights from south Florida to Havana, which currently account for around 14 daily flights, as carriers such as American Airlines and JetBlue, which typically supply the aircraft for charter routes, put their resources into scheduled routes.
The U.S. Department of Transportation has put a cap of 20 on the number of flights per day between Havana and all American cities, granting only 10 flights out of south Florida.
Mr. Whorms said the net impact of the changes could actually be a reduction in total flights between south Florida and Havana if the charter flights cease to operate.
“The charter market and schedule market generally don’t coexist very well in the same arena,” he said.
“In essence, very little has changed. The capacity has now diminished and the demand is now growing. We continue to watch what is going on, but it may not necessarily mean that there is going to be any substantial reduction in demand which could have a negative effect on us.”
He said introductory pricing on the new scheduled flights from the U.S. could have an impact on the market, affecting Cayman Airways yields.
He said the situation is more complex and fluid than people imagine, and the airline needs to be flexible over the coming years to respond to changes in supply and demand.
The Havana route is considered a “core route” for Cayman Airways, meaning it is one of its moneymakers as opposed to a route it runs for government for the benefit of tourism.
If it ceases to be profitable in the long term, Mr. Whorms said the airline would drop it.
“If it starts to be a situation where we would lose money, we are not in a position to apply government output payments to support those losses. It would mean a contraction or discontinuation of that service to avoid losing money,” he told legislators at last week’s Public Accounts Committee hearing.