NEW YORK, NY – The normalization of relations between the US and Cuba will result in a higher number of travelers for Havana’s airport and will raise leisure-oriented enplanements at several US airports including Miami, Fitch Ratings says. We believe two airports in the Caribbean region, Puerto Rico and Dominican Republic, may be indicative of Havana’s enplanement growth potential.
President Obama arrived in Cuba yesterday. His visit marks the first time a sitting president has visited the nation in over 80 years. The rules precluding Americans from travelling to Cuba and use of the US dollar in Cuba have already been eased. Furthermore, US airlines began submitting their proposed routes earlier this month after a February agreement paved the way to allow 20 daily flights to Havana and 90 daily flights to nine other Cuban cities. Over time, these could grow to include more flights.
Fitch estimates Havana’s current enplanements at around a few million per year. Our uncertainty is due to lack of transparency. It could grow to be similar to that of two airports in the region. In our view, Puerto Rico’s Luis Munoz Marin International (SJU) and the Dominican Republic’s Punta Cana International Airport share some factors with Havana’s Jose Marti International Airports, aiding this comparison.
Puerto Rico’s top destinations include New York, Orlando and Miami. We believe Havana will grow to share some of these destinations. According to the Federal Aviation Administration, SJU’s enplanements in 2014 were just over 4.1 million. This may be indicative of Havana’s potential. However, Cuba’s population is approximately three times as large as Puerto Rico’s. In the long run, this could lead Havana to larger enplanement rates. Furthermore, strong cultural ties may keep demand strong for years to come even after the initial period of flight services.
The Dominican Republic has a similar population to Cuba. Punta Cana’s top destinations could be informative as they are likely similar to Havana’s current list of major airports in Canada and the EU. Punta Cana’s top two destinations are Toronto and Paris. According to the Banco Central de La Republica Dominicana, Punta Cana saw approximately 783,000 enplanements in 1993, rising to 5.2 million enplanements in 2013.
Pending the outcome of the decision over which routes will be granted, Fitch believes the normalization of relations between the US and Cuba will result in a modest rise in travel, particularly in Miami, which served over 44 million total passengers in 2015. According to the 2010 Census, the vast majority of Cuban-Americans live in the Miami-Fort Lauderdale-Pompano Beach, FL MSA. While meaningfully smaller, New York-Northern New Jersey-Long Island has the second-largest community of Cuban-Americans.