Cuba’s fees on U.S. flights may violate pact

Cuba's fees on U.S. flights may violate pact
Published: July 19, 2015 | Updated: July 19, 2015 at 09:13 PM

TAMPA — The Cuban government claims the U.S. embargo has cost the island
nation $1.1 trillion since sanctions first were imposed five decades ago.

Among the losses: More than $4 billion to Cuba's civil aviation business.

But neither country talks much about losses to U.S. civil aviation since
relations were severed.

The amount has climbed into the tens of millions of dollars, all in
extra fees the Cuban government charges U.S. charter operators beyond
what it makes other international carriers pay.

When diplomatic relations are officially restored between the two
governments today, these fees may play a role in what is sure to be an
early point of discussion: A bilateral aviation agreement allowing for
commercial airlines to travel between the countries.

"We're encouraged the governments are talking," said Howard Kass,
American Airlines' vice president of regulatory affairs. Kass said he's
confident an agreement will be in place by the end of 2016.

Still, he said, "There are so many issues that have to be untangled."

Why Cuba charges such exorbitant fees lies in the many interpretations
of a United Nations convention governing international civil aviation.

Under one interpretation, Cuba has the right to jack up prices for U.S.
carriers because no bilateral agreement between the two countries is in
place. Under another interpretation, the communist government of Cuba
willingly violates a multilateral global agreement that prohibits
discriminatory fees.

In the absence of diplomatic relations between the two countries,
charter companies don't have the U.S. government behind them to file
claims against Cuba with the United Nations.

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Even with millions of dollars at stake, it isn't certain that landing
fees will be part of any new aviation discussions.

The State Department did respond to some questions for this article but
not about landing fees.

In one way, American Airlines already is in the Cuban flight business.

The company rents out its planes and provides staff to a number of
charter flight companies offering services to Cuba, including ABC
Charters at Tampa International Airport.

In this way, Kass said, his airline provides 1,200 flights from U.S.
cities to Cuba each year.

Under the current system, Cuba earns substantially more per flight from
these 1,200 charters than it does from other international carriers.

For instance, Havana's José Martí International Airport — the top Cuban
destination for U.S. travelers — charges the U.S. charters landing fees
of $73 to $148 per passenger, depending on age and whether the passenger
is part of a tour group.

Yet Cuba lists its standard international landing fee at José Martí as
$4.89 per metric ton of a plane's maximum takeoff weight, according to
Melissa Marchand, CEO of Houston-based Global News Matters, which
produced the "Cuba Business Outlook 2016 Report."

That fee was also listed by the Montreal-based International Civil
Aviation Organization, or ICAO, in a 2010 report documenting standard
fees at airports around the world.

Charter flights to Cuba typically use a 162-seat Boeing 737-800 with a
maximum take-off weight of 79 metric tons. This aircraft would cost up
to $23,976 in landing fees at José Martí if operated by a U.S. charter
flight company.

That compares with just $386.31 if the plane were from another country.

If all those 1,200 charter flights using American Airlines planes each
year landed in Havana, they would generate up to $28.8 million in
landing fees.

That compares to about $463,572 in landing fees for planes from another
country.

According to the ICAO's 2010 report, José Martí has other fees it
charges international carriers, such as for airplane parking and
aviation navigation. It is possible the U.S. charter flights' landing
fees are meant to encompass all of these.

Still, for a 162-seat Boeing-737-800 out of Tampa charged the standard
international rates, all of these fees would total an estimated $4,800,
or around $23 per person on a sold-out flight.

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The rules that prohibit any country or airport from charging
discriminatory fees against specific countries or airlines are part of
the United Nation's Chicago Convention, which sets standards for
international civil aviation. Cuba and the U.S. are among 191 nations
that signed on to the convention.

The ICAO was created by the Chicago Convention to oversee the agreement.

Pressed on whether Cuba is violating the Chicago Convention, ICAO
spokesman Anthony Philbin replied via email that his organization "does
not respond to detailed requests on charges from anyone other than
government representatives of Member States themselves, as per the
Convention articles which apply."

Philbin also said there are rare occasions where a signatory files an
official "Difference" against the convention for an exception. He did
not reply when asked if Cuba has ever done so.

Airlines negotiate landing fees with airports. The U.S. government
usually gets involved only upon request of airlines when they feel
discriminated against.

One U.S. charter flight company told the Tribune it did send the State
Department a letter informing them of the excessive charges. Company
operators asked that they not be identified for fear they would lose
their landing rights.

The company provided the Tribune a copy of the letter but did not know
whether the State Department read it.

Whether Cuba is violating U.N. regulations depends on interpretation of
Articles 5 and 15 of the Chicago Convention.

According to Article 5, nonscheduled international aircrafts, such as
charter flights, can have additional "regulations, conditions or
limitations" placed on them at the discretion of the contracting state.

This could be interpreted to justify higher landing fees to pay for a
separate hangar serving just American travelers. U.S. charter planes
landing at José Martí Airport use Hangar 2, separate from the rest of
the complex.

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Landing fees are supposed to help cover the cost of maintenance and
operations of the runways and terminals.

Tampa International received $14.6 million in landing fees during 2014
for flights from all airlines that land here — about half of what Cuba
could collect off American Airlines charters alone.

Once bilateral aviation agreements are in place and regularly scheduled
commercial flights are permissible, Article 5 would no longer apply to
U.S. carriers.

Article 15 of the Chicago Convention reads, "The charges imposed by a
Contracting State for the use of such airports or air navigation
services shall not be higher for aircraft of other Contracting States
than those paid by its national aircraft engaged in similar
international operations."

"In other words," ICAO spokesman Philbin said in an email, "if you set
up a lemonade stand in your neighborhood and charged your local friends
10 cents a glass, under this provision you wouldn't be able to charge
more than 10 cents a glass to kids from other neighborhoods, as well."

Still, whether the fees are discriminatory could depend on a reading of
the Article 15 phrase "engaged in similar international operations,"
said Daniel Zabludowski, an international business attorney in Miami
with Hinshaw & Culbertson.

If that means Cuba cannot charge the U.S. more than the U.S. charges
Cuba in landing fees, then Cuba is not in violation of the convention
because it cannot land planes in the U.S. now, Zabludowski said.

American Airlines did not answer directly whether it is willing to pay
the current landing fees. Kass would say only, "We look at costs when
evaluating where we fly and how often we fly there."

The airline's top Cuba concern is putting its own employees to work in
Cuban airports. At the moment, Kass said, U.S. airlines cannot employ
American citizens in Cuba or hire locals to work there.

A State Department spokesperson told the Tribune via email, "We
anticipate that such matters would be addressed if and when the United
States and Cuba reach an understanding on the expansion of flights to
include scheduled service."

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Another issue that may come up in discussion of a commercial airline
agreement is the $4 billion that American courts have said the Cuban
government owes U.S. citizens who were victims of terror crimes.

To settle these claims, any plane owned by Cubana de Aviacion, operated
by the Cuban government, could be subject to seizure once it lands in
the United States.

So a Cuban airline may not want landing rights in the U.S.

Some attorneys have speculated that once Cuba was taken off the State
Department's State Sponsor of Terror List in May and had its sovereign
immunity restored in U.S. eyes, it enjoyed retroactive protection from
such lawsuits.

Not so, the State Department said. Plaintiffs holding existing judgments
against Cuba can continue to pursue ways to satisfy their judgments.

Still, attorney Zabludowski says Cuba can work around that.

Cubana de Aviacion leases planes from other countries, he said, which
the airline would likely use for U.S. flights.

"If Cuba doesn't own them, they cannot be taken," Zabludowski said.

If Cuba is in violation of the Chicago Convention, it is in good
company: The U.S., by forbidding Cuban airlines to land at its airports,
also is in violation.

Yet another issue that may arise in negotiations over commercial
flights: Cuba contends that another provision of the U.S. embargo,
preventing its airlines and airport from purchasing U.S. aviation
technology, is also a violation of the Chicago Convention.

Despite the higher landing fees and a ban on American travel for
strictly tourism reasons, the number of U.S. visitors traveling to Cuba
has increased 30 percent since President Barrack Obama issued executive
orders in January making it easier to travel to the island nation,
according to the Cuban government.

Americans now can visit Cuba as long as the trip falls under one of 12
categories, including education, research, humanitarian and athletic
competitions.

"The numbers speak for themselves," said Kass of American Airlines.
"They have already grown dramatically since the president's
announcement. And we know those numbers will only get larger."

pguzzo@tampatrib.com

Source: Cuba's fees on U.S. flights may violate pact | TBO.com and The
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