Will DOT’s Decision About BOS-HAV Flight Signal Trump Administration’s Enforcement Of "People-To-People" Travel?

If the Trump Administration does not object to a request by Jet Blue Airways Corporation (with lesser significance for a United Airlines route request) for a BOS-HAV route, the conclusion by United States companies focusing upon Republic of Cuba travel-related activities will be the Trump Administration is likely to manage its policies and regulatory environment within the context of a commercially-centered holistic approach; unlikely to constrain commercial activities that are operational or those considered tangential to previously-authorized commercial activities while advancing decisions relating to post-24 February 2018 when a new president is inaugurated in the Republic of Cuba.

On 20 April 2017, Long Island City, New York-based JetBlue Airways Corporation (2016 revenues exceeding US$6.4 billion) for the second time requested the United States Department of Transportation (USDOT) to authorize “the first-ever non-stop service between Boston, Massachusetts [Logan International Airport- BOS], and Havana, Cuba [Jose Marti International Airport- HAV]” commencing on 1 November 2017. 

Jet Blue Airways Corporation had first requested the route on 2 March 2016.  The once-per-week flight, using a 162-seat Airbus A-320 aircraft, would operate on Saturdays with departure at 9:45 am and arrival at 1:45 pm.  The request by Jet Blue Airways Corporation to the USDOT was to transport “persons, property and mail.”

If the once-per-week flight operated at capacity on an annual basis, the service would transport 8,424 passengers.  Approximately 10,000 individuals of Cuban decent reside in the Commonwealth of Massachusetts. 

If the USDOT grants the request by Jet Blue Airways Corporation, given the low number of potential passengers of Cuban descent, the service would be overwhelmingly focused upon “people-to-people” and “educational activities” given the large number of educational institutions located in Massachusetts, New Hampshire, Vermont, and northern Connecticut that would use BOS as a departure point to HAV.  

NOTE: On 5 May 2017, Chicago, Illinois-based United Airlines, Inc. (2016 revenues exceeded US$36.6 billion) requested the USDOT to authorize a once-weekly flight from George Bush Intercontinental Airport (IAH) to HAV to daily service commencing on 28 October 2017 using aircraft with capacity of 70 seats to 160 seats; representing an annual at-capacity range of 25,550 to 58,400 passengers.  IAH is a hub for United Airlines; there are approximately 50,000 individuals of Cuban descent residing in the state of Texas.

During the Obama Administration and continuing through the first months of the Trump Administration, Members of Congress, White House staff, employees at the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and U.S. Customs and Border Protection (CBP) of the Department of Homeland Security (DHS), determined that there was and remains considerable abuse of the “people-to-people” and “educational activities” provisions relating to authorized travel.

Airlines require authorization(s) from the USDOT to service new routes.  Cruise lines do not require additional authorizations from the United States Department of State, USDOT, OFAC or United States Department of Commerce to change their schedules.

As of 10 May 2017, the three largest united states cruise lines could deliver 357,000 passengers during 211 sailings to the Republic of Cuba in 2017/2018/2019, earning gross revenues of US$422 million; with US$50 million spent by passengers in Cuba and approximately US$13 million in port fees to the Republic of Cuba.  Additional itineraries are expected to be announced soon.  And, smaller cruise lines are also operating in the Republic of Cuba marketplace.  

However, while airlines and cruise lines are increasing or seeking to increase their United States-Republic of Cuba schedules, the second hotel in the Republic of Cuba to be managed by a United States-based company has delayed its transfer from December 2016 to December 2017 to December 2019. 

An article published by The New York Times on 10 May 2017, "Cuba's New Luxury Hotels Look to Lure Waves of U.S. Tourists" referenced that the Hotel Inglaterra in the city of Havana, Republic of Cuba, will not transition to management by Stamford, Connecticut-based Starwood Hotels & Resorts Worldwide (a subsidiary of Bethesda, Maryland-based Marriott International) until December 2019No reason(s) have been provided for the thirty-six (36) month delay.  Starwood Hotels & Resorts International commenced management of the Sheraton Four Points Havana in June 2016.

OFAC Regulations

“OFAC has issued general licenses within the 12 categories of authorized travel for many travel-related transactions to, from, or within Cuba that previously required a specific license (i.e., an application and a case-by-case determination).  

Travel-related transactions are permitted by general license for certain travel related to the following activities, subject to the criteria and conditions in each general license: family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain authorized export transactions. 

“OFAC has issued a general license that incorporates prior specific licensing policy and authorizes, subject to conditions, travel-related transactions and other transactions that are directly incident to people-to-people educational activities in Cuba. Among other things, this general license authorizes, subject to conditions, persons subject to U.S. jurisdiction to engage in certain educational exchanges in Cuba either individually or under the auspices of an organization that is a person subject to U.S. jurisdiction and sponsors such exchanges to promote people-to-people contact. Travelers utilizing this general license must ensure they maintain a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba. The predominant portion of the activities must not be with a prohibited official of the Government of Cuba, as defined in 31 CFR § 515.337, or a prohibited member of the Cuban Communist Party, as defined in 31 CFR § 515.338.  

For travel conducted under the auspices of an organization, an employee, paid consultant, or agent of the sponsoring organization must accompany each group traveling to Cuba to ensure that each traveler has a full-time schedule of educational exchange activities. In addition, persons relying upon this authorization must retain records related to the authorized travel transactions, including records demonstrating a full-time schedule of authorized activities. In the case of an individual traveling under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, the individual may rely on the entity sponsoring the travel to satisfy his or her record-keeping obligations with respect to the requirements described above.  

For UPDATED JANUARY 6, 2017 5 a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565(b).  

What is an “organization” in the people-to-people context? In the people-to-people context, an organization is an entity subject to U.S. jurisdiction that sponsors educational exchanges that do not involve academic study pursuant to a degree program and that promote people-to-people contact. For a complete description of what this general license authorizes and the restrictions that apply, see 31 CFR § 515.565(b).”

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