Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Cuban travel services provider alleged to monopolize market for charter flights between U.S. and Cuba, (Oct 27, 2014)

By Linda O’Brien, J.D., LL.M.

A provider of travel arrangements between the United States and Cuba attempted to monopolize the market for charter flights between certain cities in the United States and Cuba by selling airline tickets to flights between Tampa, Florida and Havana, Cuba below its operating costs, according to a complaint filed in the federal district court in Miami, Florida (Island Travel & Tours Ltd. Co. v. Cuba Travel Services, Inc., October 23, 2014).

Island Travel and Tours is certified by the U. S. Departments of Treasury and Transportation to sell tickets and arrange travel for consumers between certain cities in the U.S. and Cuba. Cuba Travel Services (CTS) is also certified by the U. S. Departments of Treasury and Transportation to sell tickets and arrange travel for consumers between certain cities in the U.S. and Cuba. Island Travel and CTS each market their respective services to consumers in Florida and are direct competitors in a highly-regulated market.

The complaint states that, in November 2011, after spending months obtaining the requisite approvals from various U.S. government agencies, Island Travel began operating charter flights twice weekly between Tampa International Airport (TPA) and Jose Marti International Airport in Havana, Cuba (HAV). In December 2013, CTS began operating charter flights thrice weekly between TPA and HAV. Each travel services provider is required to pay fixed fees on a per passenger basis for each passenger transported between TPA and HAV as mandated by the U.S. and Cuba governments. In addition, Island Travel must charter aircraft from U.S. certified air carriers in order to transport passengers between TPA and HAV.

Assuming that each flight chartered by Island Travel between TPA and HAV was fully booked, the total cost to Island Travel for such flights would be over $410 per passenger. Commencing in December 2013, CTS sold tickets for air travel between TPA and HAV for $339 to $399 per passenger, below its operating costs. In addition, CTS paid a commission on each ticket sold by authorized travel agents of up to $50, the complaint alleged.

According to the complaint, CTS’ intent in selling air travel tickets below its operating costs was an attempt to drive Island Travel out of the TPA-HAV charter flight market and create a monopoly on air travel between TPA and HAV. After CTS began selling air travel tickets below operating cost, Island Travel’s ticket sales decreased and it was forced to cease operations with respect to flights between TPA and HAV. As a direct and proximate result of CTS’ predatory pricing practices, Island Travel was injured in its business, deprived of the benefit of free competition in the market for charter flights between TPA and HAV, pressured in its pricing, and subject decreased profits.

The plaintiffs assert claims for unfair and deceptive trade practices, tortious interference with existing business relationships, and attempt to monopolize in violation of Section 2 of the Sherman Act and the Florida Antitrust Act. The action seeks injunctive relief, damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:14-cv-23947.

Attorneys: Richard L. Richards and Jason Goldstein (Richards & Associates) for Island Travel and Tours Ltd. Co.

Companies: Island Travel & Tours Ltd. Co.; Cuba Travel Services, Inc.

News: Antitrust FloridaNews