New on Charter Flight Roller Coaster: Eased Cuba Restrictions

Havana Airport
Since the U.S. announced eased restrictions on travelers to Cuba, people have inundated companies that charter flights to Havana and elsewhere. Desmond Boylan/REUTERS

The people who have spent decades arranging flights between the United States and Cuba compare the history of their industry to a roller coaster. The half-dozen or so charter companies are subject to the politics of two countries, plus opposition that is at times explosive—literally.

Since President Obama announced the return of diplomatic relations with Cuba in December, and the easing of travel and trade restrictions in January, business at the charter companies has been on its way up. But those cashing in on the detente fear that once commercial airlines start regular service, charter profits will go into free fall.

The charter company names are well known in Cuban-American circles—Gulfstream, Marazul, ABC, Xael, Wilson, Cuba Travel Services and others. Most are based in Florida and fly from Miami or Tampa, though some hold headquarters in New Jersey and California. Multiple companies claim to have been the first in operation, and many of the founders have had hands in politics for decades.

Air service agreements between the two countries date to 1953. Before last month's changes, the U.S. limited air travel to Cuba to companies holding special licenses and operating non-regularly scheduled flight service. Starting in the late 1970s, when President Carter began easing travel restrictions, Cuban-Americans, exiles and other people established licensed companies to coordinate travel and charter flights. Over the years, as various administrations made it easier for Americans to visit Cuba under certain circumstances, those travel companies grew their operations to include arranging tours, booking hotels and leasing aircraft and crews from major airlines.

In the early 2000s, however, after President Bush put new restrictions in place, the charter companies scrambled to fill airplane seats.

"He hit us really hard," Tessie Aral of ABC Charters says about Bush. "We had to lay off half our staff."

Michael Zuccato of Cuba Travel Services says the company downsized to smaller aircraft at the time, and John H. Cabanas of C&T Charters, which stopped flying in 2012, says those restrictions made him go bankrupt.

Business began to improve in 2009, when President Obama eased restrictions on Cuban-Americans visiting family, and again two years later, when the president restored "people-to-people" travel categories.

Josefina Vidal
Officials such as Josefina Vidal, director of U.S. affairs at the Cuban foreign ministry, have been working towards a long-awaited detente between the two countries. Stringer/REUTERS

Last month, the U.S. announced that while regular tourism to Cuba remains banned and travelers must fit into one of 12 categories, the government would no longer require case-by-case approval for travelers. Further, Americans visiting Cuba can now use credit cards there and spend larger amounts of money.

In the two weeks since that announcement, people have flooded charter companies with requests. "We have just been inundated," says Bob Guild, vice president of Marazul, which has been around for three and a half decades and flies mostly between Miami and several Cuban cities. "I have gotten more than 1,500 requests for group travel in two weeks. That's just way above the norm for us."

In fact, Guild says he's discouraging people from packing their bags just yet. "We're telling everyone who is now licensed to travel to Cuba to postpone their travel until at least April or maybe even May," he says, "because Cuba is already filled, as far as their hotels go."

Zuccato, who runs Cuba Travel Services with his wife Lisa, says he participated in a travel show last week and, "I'm just now getting my voice back." He estimates that business has increased more than 100 percent since the 2011 changes. Responding to the rise in demand, Cuba Travel Services will begin flying weekly from New York City to Havana in March. It also flies from Miami and Tampa.

Still, major airports are waiting to see the excitement translate into hard numbers. A spokesman for Miami International Airport says its number of chartered flights to Cuba scheduled for February is actually less than the number for last year. "For now we're just waiting as everybody else is," he says.

A spokeswoman for Tampa International Airport wrote by email that it is still reviewing the January numbers, but that "charter operators have indicated that they are likely to add flights in coming weeks." The spokeswoman also wrote that traffic on the website has jumped since the government's announcements. Before those, she wrote, the site received some 50 visitors per day; now the daily average is more than 800.

The Department of Transportation issued a notice on January 15 explaining its plans to renegotiate the 62-year-old air travel agreement currently in place. "The U.S. Government will engage with the Government of Cuba to assess our aviation relations and establish a bilateral basis for further expansion of air services," the notice states, adding: "Nothing in this Notice is intended to interfere with U.S.-Cuba charter services."

But introducing regular flights could spell trouble for the mom-and-pop charters. Several major airlines have expressed interest in recent days, including American Airlines, Delta, United, JetBlue and Southwest. Many, if not all, of those carriers have flown to Cuba through the charter companies.

Travel websites are also jumping on board. Kayak, a travel search engine, added Cuba hotels and flight information to its search results last week. "There was quite a bit of interest," Chief Marketing Officer Robert Birge told Newsweek before announcing that addition.

Booking websites, however, must wait for the government negotiations to be concluded. A spokeswoman for the Priceline Group, which oversees, and Kayak, says they're eager to facilitate travel to Cuba as soon as they can. A spokesman for Orbitz, a competitor, says the same.

"We are in contact with our suppliers, airlines, hotels, cruise lines and others that are looking at getting into the Cuba market," says Chris Chiames, vice president of corporate affairs at Orbitz. "We anticipate being able to sell travel for Americans getting to Cuba by the end of this year.

"It's been a place so close, but so far," Chiames adds.

Miami to Havana
Once the U.S. and Cuba revise a decades-old air service agreement, regular commercial air travel can begin. Here, a woman arriving to Havana from Miami. Enrique De La Osa/REUTERS

When major U.S. providers make it easier to book flights and hotels, what will become of the charter companies?

"The most logical scenario," says Lillian Manzor, a University of Miami associate professor and expert on U.S.-to-Cuba travel policies, is that the influx of options will drive down ticket prices and the charters will struggle. However, Manzor says, cultural reasons may keep the major airlines from succeeding in that market. "Conducting business with Cuba is not simple. These [charter] travel agencies have a long experience and tradition of working with Cuba," she says. "They have an experiential know-how that they've already had to deal with for 20-odd years that the [major] American companies don't have."

Zuccato also says major carriers may have trouble dealing with the nuances involved with Cuba travel. "These charter flights into Cuba have operated so efficiently over the past 20 years," he says. "They're able to take kind of a complicated process and make it really simple and easy for people…. We have the system down."

Other charter executives, Aral of ABC and Guild of Marazul, concede that if necessary, they will focus on other aspects of their businesses, such as running programs and tours.

History shows that the competition could get messy. Companies have gone after one another in court; most recently, last October, Island Travel and Tours filed suit against Cuba Travel Services for setting ticket prices too low and therefore violating antitrust laws. That case is ongoing and attorneys for Cuba Travel Services have called the claim "meritless."

Politics have caused problems as well. It is suspected that Cuban exile extremists were responsible for bombing the Marazul offices twice in 1988 and once in 1996, almost gutting the store and forcing the company to install bulletproof glass.

Francisco Aruca, the founder of Marazul—"the first American company to run charter flights to Cuba"—died in 2013. When he was a young man in Cuba, according to biographies, authorities arrested him for counter-revolutionary activities and sentenced him to 30 years behind bars. He apparently escaped and fled the country, eventually settling in Miami. There, he became a popular radio show host.

The name of another high-profile former charter company owner, John H. Cabanas of the now-closed C&T Charters, elicits colorful off-the-record responses from some, and praise as a "pioneer" from others. Cabanas, 72, says his ancestors came to Florida from Cuba in the 1850s. He says he's dined with Fidel Castro, and he calls Raul Castro, whom Cabanas says once lent him 20 pesos for a haircut, "a terrific guy."

Cabanas grew up in a political family, and after an arson attack on their home around the time he was 19, they fled to Cuba. Cabanas returned to the U.S. in 1988. These days, he doesn't shy from talking about his political beliefs, and he has contributed more than $100,000 to both Democrats and Republicans over the past decade. Thanks to the renewed relations with Cuba, he says, now is a good time to be in the charter business.

"It's a very romantic industry," Cabanas says, "and I think it's going to grow into an indefinite size."