Canadian carriers face increased competition in Cuba

Cuban tour packages from Canada have been competitively priced, but increased demand from the U.S. and Europe will mean that cheap vacations to the island are likely to be a thing of the past. Eric Dumigan Photo
Improved relations between Cuba and the United States have cleared the way for American carriers to introduce scheduled flights this year into the Caribbean country.
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In February, several U.S. airlines applied for the right to operate daily round-trips, with the focus on Havana and nine other Cuban airports. The U.S. Department of Transportation (DOT) said it “recognizes the eagerness of U.S. carriers to take advantage of these new Cuba opportunities.”
The announcement came weeks before President Barack Obama’s historic visit to Cuba in March, signalling a thawing of tensions that date back to 1960, when the United States launched its trade embargo against the island.
“Charter flights can continue as before,” the DOT said, noting that upcoming scheduled service will make it easier for American travellers to fly to Cuba. There could eventually be up to 110 round-trips a day scheduled between the two countries.
Restrictions on general tourism remain because American visitors must fall under one of a dozen categories authorized to travel to Cuba. Still, tourism industry observers are expecting an influx of Americans in the years ahead.
Already, there has been a spike in tourism to the island, which attracted 3.52 million foreign visitors last year, up from three million in 2014. Obama said in late 2014 that restrictions on trade and travel would be gradually loosened between the two countries.
During his speech this past March, the President called on the U.S. Congress to lift the trade embargo. “I have come here to bury the last remnant of the Cold War in the Americas,” he said in Havana.
There were an estimated 1.3 million Canadian visitors to Cuba last year, up from nearly 1.2 million in 2014, according to Cuban authorities. Roughly 145,000 visitors were from the United States last year, representing a 79-per-cent gain from 2014.
The largest Canadian-based tourism operator in Cuba is Sunwing Travel Group, which accounts for more than half the tourists from Canada. Transat and its Nolitours division trail Sunwing, but the Transat-Nolitours brands have a market share in Cuba larger than that held by Air Canada and WestJet Airlines Ltd.
The Canadian firms will be competing in an environment where demand for hotel rooms exceed supply, said Claire Newell, a Vancouver-based travel consultant. “You’ve got this pent-up demand but there isn’t a lot of infrastructure already built. It will take years to build hotels. The airports will need to be overhauled,” she said.
Many Canadian consumers want to see Cuba for the first time or revisit before the rush of Americans. Online travel trade publication OpenJaw.com points out that Air Canada Vacations plans increased summer service from Montreal to Cayo Coco, Santa Clara and Varadero, as well as from Toronto to Holguin and Santa Clara.
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Newell said tour packages from Canada to Cuba have been competitively priced in the past, but with increased demand from the United States and Europe, the deep discounts have disappeared. Many Cuban packages jumped in price by at least 10 per cent this past winter season compared with the same period one year earlier.
“All those Canadians who haven’t knocked Cuba off their bucket list now want to go,” Newell said. “Prices will stay the same or creep up next year because people want to visit before the Americans go in bigger droves.”
Booking.com announced in March that it will offer qualified U.S. residents the chance to make hotel reservations online for Cuba, starting with Havana. As more Americans descend on Cuba over the long term, Canadian firms will need to work hard to maintain ties with hotel operators and nurture new relationships.
Newell said Cuba will inevitably change with the new U.S. influences. “Part of the unique charm of Cuba is the fact there isn’t a Starbucks and McDonald’s on every corner,” she said. “There will be parts of Cuba that remain very traditional, but the main Varadero beach will eventually be very commercialized.”

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