US carriers in uproar over Icelandair US-Cuba charter plans
Icelandair (FI, Reykjavik Keflavik) has applied to the US Department of Transportation (DOT) for authority to operate 170 round-trip charter flights between the United States and Havana Int’l, Cuba prompting a flurry of objections from US carriers active in the market. The Icelandic carrier is planning to operate 136 round-trips from Miami Int’l and 17 each from Orlando Int’l and Houston Intc’l between February 1 and May 31, 2022, on behalf of Anmart Air tour operator using B757-200 aircraft. Shortly after the application, iAero Airways (SWQ, Greensboro) objected to Icelandair’s request on the grounds that granting the application would be detrimental to US carriers as they would be crowded out of the gradually reopening Cuban market. iAero pointed out that while it and other US carriers have resources allocated to the Cuban market and are “putting them back to work” as demand returns, Icelandair is acting opportunistically without a comparable long-term investment. iAero underlined that it has aircraft available to operate on behalf of Anmart Air, and thus the market would not suffer if Icelandair was denied the rights.
The US-based charter and leisure specialist added that Icelandair was becoming “unduly reliant” on seventh-freedom operations from the US to markets other than Iceland. iAero said, based on Icelandair’s own data, that last year, the carrier operated 1,601 round-trips from Reykjavik Keflavik to the US. “By comparison, Icelandair proposes to operate 170 seventh-freedom round trip flights over a 119-day period, which is an annualized rate of 521 round trip flights. More than 20% of Icelandair’s US operations will be seventh freedom operations.
In these circumstances, this is undue reliance… The Applications appear to reflect Icelandair’s intent to establish a year-round seventh-freedom operation between the United States and Cuba,” iAero pointed out. GLOBALX (GXA, Miami Int’l) and World Atlantic Airlines (WL, Miami Int’l) echoed iAero Airways’ concerns.
“Icelandair’s primary reason for seeking approval on an additional 170 flights over a four-month period is to impose an economic hardship on the current US air carriers. Icelandair has not provided any data that indicates that the current air carriers are incapable of handling the current and future passenger demand,” the former said. World Atlantic Airways further alleged that Icelandair’s ability to serve Cuba on a long-term basis was “less certain” due to the carrier’s lack of previous investment in the market.
The Icelandic carrier swiftly refuted iAero Airways’ and GLOBALX’s allegations. The former’s criticism of “undue reliance” on seventh-freedom operations was misplaced, it said, as the calculation was based on a severely reduced number of flights from Iceland operated during the pandemic. Icelandair stressed that usually, its presence in the US is far greater than just the 1,601 yearly round-trips.
It added that iAero Airways’ allegation of a lack of reciprocity was equally misplaced as it was impossible to compare the size of demand from/to the US and Iceland. Icelandair further argued that iAero Airways does not have aircraft available to meet Anmart Air’s needs. “It is Icelandair’s understanding that Swift’s [iAero Airways’] fleet consists of B737-400s [the airline also operates B737-800s, the ch-aviation fleets advanced module shows].
The Department will observe that the agreement executed between Icelandair and Anmart is for a B757-223. As the Department knows, the B757 has far larger baggage holds than the B737-400s. Maximum baggage capacity is critical to the proposed charter application.
This is so because Anmart’s clientele on this route are primarily Cuban-Americans visiting family. As such, they routinely and reliably travel with as many as five bags each,” Icelandair pointed out. The carrier rejected claims that it was depriving US carriers of opportunities since “there [were] presently no other pending applications before the Department for allotment from the pool (by GLOBALX or any other carrier)”.
Icelandair admitted that it did not provide any data indicating that US carriers could not meet market demand but stressed that it had no regulatory or statutory obligation to do so. The airline “vehemently” rejected claims that it was seeking to establish a year-round presence on the US-Cuba charter market. The US-Cuba charter market is currently capped at 3,600 round-trips per year.
Icelandair also applied for the allocation of charter traffic rights from Miami to Quito Int’l, Guayaquil, and Punta Cana, with 34 round-trips planned to each of the destinations in the same period (February 1-May 31, 2022), also on behalf of Anmart Air.
However, traffic rights to Ecuador and the Dominican Republic are less restricted, and these applications did not prompt any objections.
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