Southwest ripped American's proposed rule change that would alter how U.S. airlines handle their routes to Cuba, calling the idea "unprecedented" in an Oct. 10 regulatory filing.
The U.S. opened up the Cuban market a few years ago and allowed airlines to apply for routes. Only 20 daily routes to Havana were allocated to U.S. airlines.
Both American Airlines Group, Inc. (NASDAQ: AAL) and Southwest Airlines Co. (NYSE: LUV) were granted routes. When an airline is awarded a route, it's tied to that specific city. So, an airline can't shift its route allocations to different U.S. cities to match demand.
In a Sept. 28 filing, American said that shouldn't be the case. It wants to stop its Charlotte-Havana route where it's load factor is under 55 percent for the first half of this year. Instead of Charlotte, it wants to add another Miami-Havana route.
Under current rules, American would have to give up its Charlotte-Havana route. Then, it would compete with other airlines to add another Miami-Havana route. It doesn't want to take the chance that another airline swoops in and takes that route, because only 20 are allotted to all U.S. carriers.
So, it petitioned the U.S. Department of Transportation for a rule change that would allow airlines to determine which U.S. cities they service Cuba from. Under this proposal, American could simply shift its Charlotte route to Miami and not run the chance of losing a Cuba route.
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"This flexibility would allow American to bring additional benefits to the traveling public, while ensuring that all carriers can respond efficiently to further shifts in demand in the U.S.-Cuba market," American said in a statement to the Dallas Business Journal.
Southwest does not like American's idea. The Dallas-based airline asked the DoT to deny American's proposed rule change in a regulatory filing of its own.
Southwest argued that if American wants to change its Cuba offerings, it should follow current DoT stipulations. It added that the DoT's current process enables several cities to have the chance to fly to Cuba, and not just Miami where the nation's largest Cuban-American population lives.
"In essence, American’s Motion would substitute its own self-interest for the Department’s public interest decisions," Southwest said in its filing.
The process played out a few months ago when Delta Air Lines, Inc. (NYSE: DAL) said it didn't want to continue flying its JFK-Havana route. The two North Texas airlines were among those who bid for the route, as American wanted to beef up its Miami-Havana service and Southwest wanted to add a Tampa-Havana route.
The DoT announced in early September it had tentatively chosen Southwest in part because it "would best serve the public interest."
The DoT added that another Miami route "would not promote competition or diversify our frequency allocations to the same degree as would a second Saturday flight at Tampa, a city that currently has just one daily flight."
Photos by Anthony Bolante | PSBJ
