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The Caribbean airline market continues to be defined by tourism that caters to North American and European passengers seeking to escape colder weather for sun and relaxation. Inter-island connectivity continues to have numerous gaps, however, with flights to hubs in Miami and Panama City often necessary to connect between islands.
But it is a growth market, according to IATA, which reported total Caribbean air traffic—including flights operated to and from the region by international airlines—increased 7.7% year-over-year in the January-August period in 2024. IATA Americas regional VP Peter Cerda said growth could especially be seen by comparing traffic to 2014 levels. In 2024, there were 31% more available seats versus 2014, he noted.
“There are more flights, more planes, bigger planes,” he said, citing the Bahamas, the Dominican Republic and Jamaica as “big winners” that attract significant tourism traffic.
Lynden Pindling International Airport (NAS) director of commercial development Jan Knowles said the Nassau, Bahamas, airport was handling around 4 million passengers annually, with the capacity to grow to 5 million passengers per year. NAS, around 180 miles from Miami, has especially strong connectivity from the US East Coast. Alaska Airlines, American Airlines, Delta Air Lines, United Airlines, JetBlue Airways and Southwest Airlines all serve the market from the US.
“I think we have just about every US carrier that we would like to have,” Knowles said. “There’s always room for more, and of course, there is always room for more routes … American is our big carrier. You can get to us via Miami. We also have Copa and that is our connection to South America via Panama.”
However, even a strong Caribbean market like the Bahamas struggles with a dearth of flights to other islands in the region. Bahamasair operates flights from Nassau to Cuba, Jamaica, and Turks and Caicos. Traveling to other spots in the Caribbean is usually done by connecting via Miami, Knowles said.
Cerda noted that while routes to, from and within the Caribbean total 270, up from 245 in 2019, “there is still a gap of regularly scheduled flights” within the Caribbean.
Cerda noted 64% of Caribbean airline traffic comes on routes to and from the US, with another 10% on routes to and from Canada. “Canada and the US make up 74%,” Cerda said.
NEW ENTRANT
In 2000, Panama-based Copa Airlines opened service to its first three US destinations, turbocharging a strategy started in the 1990s to make the small Central American country a “hub of the Americas.” The carrier uses Boeing 737s to connect passengers efficiently between North and South America via one stop in Panama City, a model that has led to consistent financial success over the past quarter century.
Now, some 900 miles northeast of Panama across the waters of the Caribbean, another airline is preparing to open 737 service to its first three US destinations as it builds what the carrier’s executives call a “new hub of the Americas.” Arajet, a rapidly growing Dominican Republic ULCC that launched service in 2022, views Las Américas International Airport (SDQ) in the capital of Santo Domingo as potentially another Tocumen International Airport (PTY), Copa’s hub in Panama City. The Dominican airline also intends to make Punta Cana (PUJ), the country’s most desired tourist destination, a complementary base with broad international connections.
Copa operates flights from PTY to over 80 cities in the Americas, functioning not only as a north-south hub, but also as a key transfer point for passengers in the Caribbean. Arajet operates flights from SDQ and Punta Cana combined to 23 cities in 15 countries.
“Arajet envisions transforming the Dominican Republic into a premier connecting hub of the Americas and democratizing the region’s skies through lower fares and optionality,” CEO and founder Víctor Pacheco told ATW. “The Dominican Republic’s strategic location … allows for convenient connectivity throughout the region.”
READY TO GO
Copa had been building connections in Latin America and the Caribbean when it launched flights in 2000 from PTY to Los Angeles, Orlando and New York JFK airports. It has steadily developed a US network since, making Raleigh-Durham International Airport in North Carolina its 16th US destination in 2024. Copa has said about two-thirds of its passengers on US routes are connecting via PTY.
Buoyed by a Dominican-US Open Skies accord that went into effect in late December, Arajet will in the second quarter launch flights from Santo Domingo to New York, Miami and San Juan, Puerto Rico. Pacheco said the long-anticipated Open Skies agreement—off-and-on talks to amend a restrictive bilateral agreement stretched over 25 years—“represents an important achievement in air connectivity” that will enable Arajet to serve passengers traveling to the Dominican Republic, Caribbean and South American destinations.
Because the lack of an Open Skies agreement stood between Arajet’s entrance to the US, the carrier focused on growth in the Dominican Republic, the Caribbean, and North, Central and South America in the meantime, Pacheco said.
That means the carrier is ready to begin connecting passengers between major Latin American destinations and the US as soon as the new routes launch. Its Boeing 737-8s have a range of 3,500 nm, and Arajet said 25-30% of its passengers are connecting.
Pacheco noted the carrier is already the largest Dominican airline, “flying over 100,000 passengers for several consecutive months, and surpassing 1 million passengers in 2024, becoming the first Dominican airline to carry over a million passengers in a year.”
Arajet aims to have a US network as expansive as Copa’s within three years, when the Dominican carrier could operate to as many as 20 US destinations, according to chief communications officer Manuel Luna. “We’re looking forward to having destinations on the West Coast, in the center and in the Northeast,” he said.
Potential US destinations targeted by the airline include Atlanta, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, Orlando, Philadelphia and Washington DC.
Arajet operates a fleet of 10 737-8s, with an 11th expected to be delivered by the second quarter and 15 scheduled to be in the fleet by the end of 2025. The airline is operating a classic ULCC model in which low fares are offered for 177 economy seats, with fees for all add-ons. There are also eight premium economy seats with more legroom in Arajet’s 737-8s at the front of the cabin.
The single-fleet type and ULCC model will allow Arajet to offer a low-fare option for travelers flying long-haul between South and North America, Luna said. Arajet’s current routes with the best performance are Sao Paulo and Buenos Aires to Santo Domingo, routes that are eager to have the connection to the US through Arajet, Luna said.
IATA’s Cerda said Arajet was following the Copa model in an important way.
“They’re using one of Copa’s best practices,” he told ATW. “That best practice is establishing a very strong relationship with your airport, establishing a very strong relationship with your government, and creating a strategy that will benefit all three parties. That’s something that Copa has done very successfully regardless of the political party that is in power. It is always a partnership.”
Las Américas Airport is managed by private operator Aerodom, a subsidiary of France’s Vinci Airports, under a long-term concessions contract with the government extending to 2060. A new terminal project is underway at SDQ, and Aerodom CEO Monika Infante has said the government and airport operator are committed to growing the airport’s capacity.
“You are seeing a lot of investment and capacity growth,” Infante told ATW last year. The airport handled 5.6 million passengers in 2023 and expects to surpass that figure for 2024 once Q4 figures are in. SDQ handled 4.5 million through the first three quarters of 2024, up 6.4% year-over-year and up 35% over the first nine months of 2019.
Infante said the new terminal will increase capacity by 4 million annual passengers.
“We are very happy with infrastructure right now,” Luna said. “In both Punta Cana and Santo Domingo, they have planned to improve their infrastructure. In Santo Domingo, there’s going to be a new terminal that is going to be open in 2027, so it’s going to bring more facilities for airlines operating there. The same in Punta Cana. They opened a new terminal just one year ago … so, we’re very happy with how the future is looking for those two airports.”
TOCUMEN VS. LAS AMÉRICAS
While Cerda believes what Arajet has been building in Santo Domingo is impressive, he warned the Dominican carrier will face challenges competing with Copa as a north-south connector carrier, given that the Star Alliance member’s Panama City hub is so entrenched in its role.
“I think one of the disadvantages that Arajet may have is the size of Copa’s operation compared to what they have,” he explained. “Also, Arajet is creating a mindset that going through Santo Domingo is a viable option. I think the biggest disadvantage today is that Copa offers five or six flights to Buenos Aires every day, whereas Arajet may offer one flight a day to Buenos Aires from Santo Domingo. And it’s not only Copa. You have Avianca with its base in Bogota. You have LATAM with its base in Lima. You also have the US carriers, who are competing aggressively [for Latin American traffic] with their hubs. It is a very challenging environment.”
Copa CEO Pedro Heilbron, speaking on the carrier’s third-quarter earnings call, expressed confidence in the Panama City hub’s status. “We plan to continue strengthening our hub of the Americas in Panama,” he said. “We firmly believe that our business model remains as robust and relevant as ever and that our hub of the Americas in Panama is the best connecting hub in Latin America, making us the best positioned airline in our region to consistently deliver industry-leading results.”
Cerda said Arajet wisely is also establishing an operational base at PUJ. “It’s really becoming the primary airport of the country because of how important it is as a destination, a point-to-point airport,” he explained.
Pacheco added: “Punta Cana is the country’s busiest airport and the most important tourist center in the Caribbean.” The airline is flying to 14 destinations from PUJ. The airport, managed by Grupo Punta Cana, said it was handling over 8 million annual passengers.
Arajet plans to start flights from Punta Cana to Miami, New York and San Juan at some point this year, adding to the service from Santo Domingo. Luna said Arajet will not initially operate daily from SDQ to the US points, “but our goal is by the end of 2025 to have a daily flight to the three destinations from Santo Domingo.” In addition to Santo Domingo and Punta Cana, a third Dominican city, Santiago de Los Caballeros, is likely to see US routes launched in 2025.
The carrier already operates from SDQ to Montreal and Toronto Pearson in Canada.
“Our main focus in 2025 is to fly to the US and put as many flights as possible to those three destinations,” Luna said.