U.S. Policy Concerning Cuba and the Aviation Industry
Updated August 4, 2017. On July 25, 2017, the Office of Foreign Asset Control issued a revised set of frequently asked questions and answers concerning the forthcoming regulations. The revised answers helped to clarify some of the items that remained unclear after the June 16, 2017 announcement. The information in this update makes it clear that individual traveling to Cuba under a permitted travel category would not be required to obtain a license from OFAC. Further, the revised answers clarified that the predominant portion of the activities engaged in by individual travelers must not be with prohibited officials of the Cuban Government or prohibited members of the Cuban Communist Party. The revised answers did indicate that there could be a change to the list of prohibited officials of the Cuban Government or list of sub-entities of the Cuban Government, within the new regulations. Finally, the revised answers did clarify that entities which have business dealing prior to the new regulations taking effect will be permitted to continue after their issuance, consistent with the other regulatory authorizations. FMJ will continue to update this article as new information is available.
On June 16, 2017, President Trump announced changes to the United States’ policies towards Cuba, which will restrict certain actions that had been previously allowed under President Obama’s policies. The changes are ostensibly designed to: (i) enhance compliance with U.S. law; (ii) hold the Cuban government accountable for oppression and human rights abuses ignored under the previous administration; (iii) further the national security interest of the U.S and those of the Cuban people; and (iv) provide groundwork for empowering the Cuban people to develop greater economic and political liberty. The announcement was released concurrently with a White House policy memorandum, directing the Department of the Treasury and the Department of Commerce to adjust the current regulations to ensure adherence to the statutory ban on tourism to Cuba and to adjust the current regulations regarding transactions with Cuba and Cuban nationals. The President directed the Department of the Treasury and the Department of Commerce to have begun the process of issuing new regulations by July 16, 2017.
U.S. Cuban policy has always had a huge impact on the aviation industry. But between the liberalization of rules under the Obama Administration and the newly announced changes, where does the U.S. aviation industry stand with respect to Cuba?
Passenger travel is, of course, often one of the key considerations. Under the current regulations, individuals are permitted to travel to Cuba for 12 specific purposes which are authorized by a general license. Under President Trump’s changes, the permitted reasons for travel to Cuba may be reduced to prevent travel for self-directed non-academic educational purposes and only allow group travel for academic educational purposes. The permitted travel of individuals allowed commercial airlines to begin flying directly to Cuba as of August 31, 2016 without the need for a specific license, and multiple commercial airlines have started conducting scheduled operations to Cuba.
Commercial Operators were and still are required to obtain approval from the Federal Aviation Administration and the Department of Transportation, but do not need to obtain a license from the Department of the Treasury Office of Foreign Asset Control. Commercial Operators will also need approval from Cuba’s Civil Aviation Institute as well. Based on the press release and policy memorandum, the authorized air carriers will still be permitted to operate into Cuba and no change is expected to commercial flight operations. President Trump’s proposed changes regarding individual travel to Cuba only affect the travelers and do not affect the airlines which currently have operations in Cuba.
Currently, United States depository institutions are permitted to open and maintain correspondent accounts at a financial institution that is a national of Cuba to facilitate the processing of authorized transactions and U.S. financial institutions are authorized to enroll merchants and process credit and debit card transactions for travel-related and other transactions consistent with the regulations. The current regulations also allow for payment to Cuban nationals, other than Cuban Government officials and Cuban Communist Party officials. President Trump’s proposed changes to the regulations will attempt to maximize the development of economic ties between Americans and the private and small business sector of the Cuban economy while at the same time driving economic activities away from the Cuban Grupo de Administración Empresarial (“GAESA”), a Cuban military-run entity which operates in most aspects of the Cuban economy. It is unclear what changes will be made to the regulations to accomplish this goal, but removing the GAESA from certain aspects of economic activity opens up those same areas to private businesses, allowing the private business owners more economic freedom.
Under the current regulations, U.S. individuals and companies are already restricted from engaging in transactions with members of the Cuban Council of Ministers and flag officers of the Revolutionary Armed Forces as well as individuals and companies listed on the OFAC Sanctions List. This list of entities is updated regularly and will presumably be updated and revised as the revised regulations become effective. Additionally, for Cuba, a specific license is required to be issued by the Bureau of Industry and Security of the United States Department of Commerce for the sale of aircraft and related parts. However, the United States Export Administration Regulations (“EARs”) currently contains a policy of generally granting license applications for “items necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises.” While there has not been any direct information provided concerning changes to this general policy, our assumption is that a license to export aircraft and relate parts will be required in some fashion. It remains uncertain if exportation to state-owned enterprises in Cuba will be permitted in the aviation market based on the objectives of these changes.
With respect to noncommercial aviation, aircraft operated under Part 91 of the Federal Aviation Regulations are also permitted to fly to Cuba, provided the purpose of the trip is compliant with the regulations and the flight is compliant with 14 C.F.R. § 91.709, which required a departure from a specific airport, a creation of a flight plan; and a filing with Office of Immigration and Naturalization Services. While the list of potential compliant rules might narrow, there is no indication that the ability of Part 91 operators to fly for them is likely to change.
While the new Cuban policies went into effect as of the date of the announcement, the impact of the changes will not be felt until the revised regulations are effective and no time frame has been announced for their expected arrival. Based on the press release and the policy memorandum, it does not appear that the forthcoming changes to the Cuban regulations should excessively disrupt commercial aviation operations. And while the exportation of an aircraft and or related parts from the United States to Cuba still requires a license the general policy of granting license applications for the benefit of civil aviation safety, the policy is a positive step to more freely conducting business in Cuba. Any transaction taking place in Cuba or involving a Cuban citizen should be reviewed to ensure compliance with the current regulations and laws and should also be reviewed based on the anticipated changes to the regulations. FMJ will update this article upon the issuance of the revised regulations.
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 See Fact Sheet on Cuba Policy issued June 16, 2017, https://www.whitehouse.gov/blog/2017/06/16/fact-sheet-cuba-policy.
 See National Security Presidential Memorandum on Strengthening the Policy of the United Stated Toward Cuba issued June 16, 2017, https://www.whitehouse.gov/the-press-office/2017/06/16/national-security-presidential-memorandum-strengthening-policy-united.
 The current approved purposes for travel include: 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.
 See 15 C.F.R. § 746.2(b)(2)(v).