The Airline Pilots Association’s opposition to the Puerto Rico Department of Transportation’s petition will not only hurt Puerto Rico’s economic recovery and sustainability, but also the U.S. economy, aviation industry, and geopolitics interests.
Just because Puerto Rico may acquire DOT transfer rights like Alaska, Guam or Marinas Island does not mean that this will negate or change the fundamental economic dynamics that make a mainland hub successful.
A continental hub has a different and much larger geographic, economic, population and intermodal connectivity options than of an isolated offshore location. These market differences and realities are the determining factors in a hub success or failure regardless of the travel distance between hubs.
Alaska and Puerto Rico as offshore jurisdictions have much smaller markets and populations pools, with very reduced intermodal possibilities than a mainland hub. Open skies agreements just give access to a market but that does not make the hub profitable per se. Cargo and passenger volumes are the bases for a successful hub.
Open skies agreements do not solve the volume problem to a geographically isolated jurisdiction. In addition, an offshore jurisdiction competes in an international environment against larger countries with the necessary cargo and passenger volumes to be a more profitable option to airlines.
To compensate for this locality disadvantage and service reduction, DOT provides expanded transfer options. This legal flexibility helps makes the offshore territory more efficient against its real competition that is the nearby foreign hubs, not the continental ones.
That is why an Anchorage airport with its enhanced transfer rights did not affect the operations of its closest mainland hub in Seattle-Tacoma airport but was able to compete with its nearby foreign competitors from Canada and Russia. If Alaska has had not acquired these transfer rights the economic opportunities that Anchorage was able to develop would have been in Vancouver or Russia and not in this U.S. offshore jurisdiction.
Puerto Rico indeed shows all the lack of economic development characteristics of an international isolated offshore jurisdiction, making it more difficult and expensive to conduct business from this territory. This is a contributing factor to Puerto Rico continuing economic problems and depopulation trend.
No damage to mainland hubs
Thus, a mainland hub market reality does not change or disappear, because an offshore territory acquires some transfer rights to deal with distinct and separate markets realities. So, ALPA predicted damages to mainland hubs will not happen and has never happened.
Air traffic between Europe and Latin America is growing and it has a lot of dormant growths potential as most South Americans have not yet traveled by plane, it has a growing middle class and many destinations does not have enough passengers volumes for Origin/Destination flights from Europe, thus the need of an intermediary hub stop.
These are the hub service opportunities for Puerto Rico in the participation on some of the almost 140 daily flights between Europe and Latin America that presently are overflight mainland airports.
So, a Puerto Rico hub will make the market much bigger with a new pool of customers.
This bigger pool of passengers and cargo that otherwise would not be available to U.S. airlines and businesses will facilitate higher yields per flight with fewer planes per destiny, helping to decongest origin and destiny airports.
An international transfer hub in Puerto Rico will bring in an aggregated cargo and passenger volumes due to its geographic position between Europe and Latin America and transit efficiencies of enhanced transfer rights.
Failure to understand these facts will take away economic growth possibilities for Puerto Rico, U.S. airlines and businesses. This will not affect any U.S. based airline like JetBlue, Southwest or Spirit that may use Puerto Rico as a Latin American hub, because their traffic is North-South.
The present economic war between the U.S. and China is fostering an economic and technological decoupling between the two countries, with the result of a reshuffling of product sourcing and supply chains to other parts of the world. Now more than ever the U.S. needs to develop new international export opportunities consistent with cabotage protections, this are the untapped opportunities a Puerto Rico based hub will bring in.
For example, new economic opportunities are been promoted to offset the negative effects of this trade war between the U.S. and China like the nearshore production-sharing to enhance the competitiveness of U.S. manufacturing through the integration of Caribbean value-chains. These efforts are been advocated by the Dominican Republic, Colombia, Mexico and other countries with FTA USA benefits.
Puerto Rico could participate in these programs through its free zones. But it cannot do it because of its lack of direct international connections and transfer rights. Components to be assembled or proceeded in Puerto Rico probably will transit first through a competing regional hub. Thus, making it more expensive and difficult to do business on the island.
Delta’s opposition ‘unfair’
Delta Airline’s opposition to possible hub international transfer opportunities in Puerto Rico is unfair because Delta is pursuing joint ventures with foreign airlines (Korean Airlines, KLM, Air France, ALITALIA), giving them access to the U.S. market. So why the discriminatory double standard by Delta and ALPA by opposing Puerto Rico attempt to end its international isolation and bring in some needed economic growth opportunities?
The continued and unreasonable opposition of ALPA to Puerto Rico participation in these regional economic activities, that are overflying U.S. continental airports is helping to enhance the hub profiles of foreign competing airports in the Dominican Republic, Colombia, and Panama.
This will be ALPA’s big legacy and accomplishment to direct more economic opportunities to these countries. Because a Puerto Rico hub with similar transfer rights will be a real competitor to these regional hubs, not to U.S. continental hubs.
ALPA’s position is based on erroneous and misleading information. Proof of our data correct interpretation is that these imagined problems have never happened in Alaska. That after a serious thorough analysis, we concluded there is not any real controversy on Puerto Rico petition, just untapped opportunities for the island, U.S. business and airlines. We respectfully hope that DOT acts on the public interest and approve island petition.
If ALPA really wants to protect U.S. economic and geopolitical interest, they should study and be aware of new geopolitical developments in the Caribbean by China Belt and Road infrastructure connectivity initiatives, some with dual-use with military capabilities.
The only U.S. geographical nearby presence to counterbalance China influences in the Caribbean area is Puerto Rico. But to be able to match regional competitors, Puerto Rico needs these transfer rights. These economic development opportunities will cost nothing to DOT and US Congress, they just need to provide the regulatory framework.
ALPA, by repeating its misleading information, does not make it more truthful. ALPA may win stopping Puerto Rico DOT petition due to its larger political power, but that does mean they are doing the right thing for U.S. airlines and businesses.
History will judge them responsible for missed economic opportunities, for being an unwitting agent for a foreign power and enhancing nearby competing hubs in the Dominican Republic, Colombia, and Panama.
We hope ALPA corrects its erroneous path.