The Christian Science Monitor covers JetBlue’s desire to expand into Cuba now that many legal restrictions on doing business have been lifted, and US citizens can go with a wink and a nod.
It’s got a good start – the low-cost carrier will begin weekly flights from New York to Havana in July, and it operates two routes out of Tampa and Fort Lauderdale, Fla., in partnership with a Cuban charter operator. …JetBlue wants to be ready to expand beyond the weekly flights.
The ‘Cuba boom’ may be a bit overhyped — some might think that Cuba is just a Caribbean destination that doesn’t yet have the infrastructure to support many visitors — but proximity to the US and precisely that it doesn’t yet have this infrastructure is what makes it an exciting destination for US businesses and US airlines.
JetBlue is well-positioned to benefit from this — with a strong presence in New York for financing and tourism, plus South Florida for its proximity and historical ties. American is equally positioned in this market.
People Want to Go “Before It’s Ruined”
This is actually a pretty offensive idea I think, to want to go see ‘the natives’ before they have a chance to reap the advantages of economic development, while they’re still stuck living and working in many ways in the 1950s.
Even before it becomes a potential resort locale, “people will be going now to see what it once looked like” under Castro, Mr. Leff says – the 1950s cars, the crumbling buildings.
But there’s a curiosity factor, a rush to be first as though it’s visiting uncharted territory (hint: there have been regular scheduled flights from Canada, Mexico, and the Caribbean for years).
So there will be a tourist boom at first. And Cuba is undeniably close to the U.S. Ultimately tourism isn’t likely to exceed that of the Bahamas for US visitors, but getting to the level of a major Caribbean destination means it has tremendous headroom.
There Needs to Be Changes in Cuba’s Government and Infrastructure Before There’s a Boom
Much of the world has traded with Cuba, the US hasn’t but there hasn’t been a blockade since the 1960s.
Cuba needs hotels and transportation — they need modern cars! — and to get capital investment they need an environment where that investment is safe to make. You aren’t going to invest $500 million in a hotel unless you’re confident that once you’ve built it, it’s going to stay yours.
They need a system with limited corruption to transfer title or provide long-term certainty in use of land, to allow for building in a relatively streamlined process, and for basic utilities to service new development.
Still, US businesses are making what inroads they can in the hopes of being in a position to capitalize on 60 years of delayed economic development. Netflix launched in Cuba earlier this year, despite the fact that just 5 percent of Cubans have Internet access strong enough to use the streaming subscription service. Venture capitalists are starting to raise funds for direct investment in Cuba, and in April Wharton Business School held a “Cuban Opportunity Summit,” bringing together industries that could benefit from a US-Cuba thaw.
Long-term, “there’s a lot to be done, precisely because they’re so backward,” says Gary Leff, author of ViewFromTheWing, a blog for the frequent flyer community, in a phone interview.
This isn’t the quote I would have liked to see make the piece, it’s certainly the least eloquent way I put it in the conversation, but the point remains that there’s a catch-up growth opportunity provided that Cuba can overcome regime uncertainty and its history of expropriating private property.
Catch-up Growth – Business – as Much as Tourism Presents Huge Potential in the Near Term
It’s precisely all of the building and investment in technology that will need to happen to bring Cuba up to the infrastructure levels even of the Caribbean, let alone nearby South Florida, that presents a huge opportunity — for growth and for growth in travel.
Initially there will be quite a bit of business travel in order to get there, Cuba isn’t just a tourist destination it will be a business destination in order to build it into a tourist destination.
It’s far from a certainty that Cuba follows a path of development, that’s an opportunity for its people and that would be wisely followed by the travel and tourism industry. But enough time may have passed since the 1950s that in Argentina at least there’s a saying, “Tengo una remera del Che y no sé por qué,” or “I have a Che T-shirt and I don’t know why.”