American Airlines Group (AAL) Shows Interest in Cuba

Major US commercial air carriers have their sights set on new daily routes for U.S flights to Cuba. Among various airlines, American Airlines (AAL), Delta Air Lines, United Airlines, and JetBlue Airways have submitted applications to the US Department of Justice, to launch commercial flights between U.S. and Cuba. The U.S. department of transportation has taken in application from at least five airlines in the U.S. competing for limited routes for Havana, Cuba’s most popular spot for tourists.

The airlines have been scrambling to get their hands on these new routes. The deadline for airlines to apply for new routes to Cuba was earlier this week. The review process is now underway. The deal between the U.S. and Cuba allows for twenty daily flights to Havana, the number one destination in Cuba. In addition there will be ten daily flights to the other nine international airports that are in Cuba. This is great news for Americans who are trying to go to Cuba. It will allow Cuban Americans to easily visit their families from back home.

Currently flights from the U.S. to Cuba are only available through chartered planes. Technically American tourists are not yet able to travel to Cuba. However there are travel authorization opportunities that makes it easier for some Americans to go there. Once commercial aviation starts to open up between Cuba and the U.S. it will be highly beneficial for Cuba’s tourism industry.

It appears bidding for these routes have been highly competitive. One of the most prepared airlines out of the bidding carriers is American Airlines Group Inc (AAL.) It has requested for more than half of the U.S. flights that are headed to Havana. Miami is one of American Airlines largest hubs. It has been operating chartered flights out of Florida for the last twenty-five years so it is already in a strong position to send commercial planes to Cuba. In its application American Airlines stated that it had operated 1084 chartered flights to Cuba in 2015.

The company’s Chairman and Chief Executive Office, Doug Parker put out a statement on Tuesday ahead of the application deadline which says that American Airlines “is the undisputed leader in serving the people and businesses of Miami-Dade County, which is the heart and soul of the Cuban-American community. American’s proposed service – from Miami and four other hubs – will provide a strong foundation for the sustained future growth of commercial and cultural ties between the U.S. and Cuba.”

It’s clear that American Airlines is very optimistic and excited about these new potential routes. From what we know right now it has the most experience with flights to Cuba and will most likely be a strong contender for the limited amount of available routes to Cuba.

The first review process of the application for the airlines is expected to end on march 21st. But then there’s another review by the federal government that is expected to take a couple more months. What this means is by the beginning of summer we should have a pretty good understanding of which carrier will be serving the routes. But airlines still have to create flight schedules, and obtain flight permits with Cuba’s aviation authority. As the US has lifted travel sanctions on Cuba passenger traffic to Havana and other Cuban destinations is expected to grow. This is good news not just for American Airlines, but also for the entire airline industry because it gives the entire sector access to a brand new commercial market.

This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.