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Tokyo Haneda Coveted Slots Battle – Part 4

Tokyo Haneda International Airport

Tokyo Haneda International Airport

We have been covering the battle for Tokyo Haneda’s coveted flight slots over the past three blog entries (Follow the links for part 1part 2,  and part 3).

In this last entry, we will examine what is the current state of affairs on the Tokyo Haneda International Airport slots. All the players from part 1 are back into the game and there is good news ahead. We will start this part beginning January 1, 2014.

Details

Prior to American Airlines (AA) pulling out its New JFK flight to Tokyo Haneda in December 1, 2013. United Airlines (UA) and Hawaiian Airlines (HA) lobbied the US Department of Transportation (DOT) for the soon to be abandoned slot.

United Airlines

UA won this round’s battle over HA’s request for a Kona (KOA) to HND service and was awarded a flight to Haneda from its San Francisco (SFO) hub on February 28, 2014 (refer to DOT’s bulletin). In its decision, the DOT said “The Department has now tentatively determined that United’s San Francisco-Haneda service proposal would provide the best use of the one available opportunity.  DOT tentatively found that United’s proposal would introduce a new U.S. carrier at Haneda and would promote competition by giving business and leisure travelers an additional choice for connecting service to Haneda via United’s well-established San Francisco hub.

Shortly after the final decision was made, the airline announced its intention to start this route on October 26, 2014.

United flying from San Francisco to Tokyo Haneda
Image taken from https://hub.united.com on January 13, 2015 (All Rights Reserved)

The initial flight times noted below were very favorable to both business and leisure passengers.

UA875 SFO   1835 – 2205+1 HND
UA876 HND 0005 – 1715-1 SFO

Analysis

Business travellers can enjoy at least a half day of work prior to departure to SFO. Inbound flights arrives before public transportation service ends.  In addition to access to public transportation, inbound passengers can enjoy terminal amenities and have convenient connections when arriving in SFO.

Delta Air Lines

Less than 1.5 years after starting its SEA flight to HND, DL suspended this flight from October 1, 2014 to March 29, 2015 citing the seasonal nature of the route with the DOT. However, as noted from the chart below, the main reason could be that the loads (noted in table below for Winter 2014) were forecasted to be similarly poor for Winter 2015. It is however operating selective flights within this time period to ensure that the route does not violate the dormancy clause (the DOT can automatically reallocate the slot if the route is no operational within a 90 day period).

SEA to HND loads from Oct 2013 to Mar 2014
Information taken from US Department of Transportation on January 12, 2015 (All Rights Reserved)

DL’s own passengers also had a better flight alternative to Tokyo by utilizing the Narita (NRT) flight with the following schedule:

DL167 SEA   1200 – 1530+1 NRT
DL166 NRT  1635 – 0851       SEA

Given it is operating the most Tokyo flights from US mainland via Detroit (DTW), Los Angeles (LAX), Atlanta (ATL), New York (JFK), Minneapolis-St. Paul (MSP) and Portland, ORE (PDX), there may not be additional available feeder passengers for the SEA-HND flight as that flight leaves at 1822 (noted schedule below).

DL581 SEA   1822 – 2235+1 HND
DL580 HND 0015 – 1624-1 SEA

When American Airlines filed a motion with the DOT on October 2, 2014 request the withdrawal of the SEA to HND flight and the associated slot, Delta Air Lines responded on January 5, 2015 (refer to document).

DL stated the following as reasons why it should keep the slot to HND:

1. Service Proposal – while the SEA-HND flight is suspended, DL is making the investment to grow its Seattle operations to faciliate a year-round daily flight schedule.

“This has been made possible by the increased Delta-operated connecting service into Seattle, which grew to 51 daily departures in August 2014, will grow again to 85 in 2015, and is anticipated to continue growing in 2016. This growth represents an increase of 240 percent inSeattle flights, which will provide the necessary feed needed to make the Seattle-Haneda service a continued success. “

“As Delta has continued to implement its Seattle hub strategy, passenger traffic and profitability have surged. Delta’s Summer Season SEA-HND 2014 performance improved by an Delta Information Response astounding 54% percent year-over-year. Based on this strong performance, Delta has committed to a full pattern of daily Seattle-Haneda service in summer 2015 and beyond.”

2. Current U.S.-Tokyo Services – Although it has the most flights from the US to Tokyo, it is operating at a disadvantage because it is not part of an airline alliance that features a Japanese airline.

3. Public Interest Benefits – This has not changed from when the move from Detroit to Seattle was approved back in 2012.

4. Aircraft Statement – DL is committed a Boeing 767-300 aircraft to this route already.

“Because Delta has committed aircraft to the route, and is currently selling tickets, reexamination of Delta’s Haneda slot holdings would cause irreparable harm to Delta by compromising its marketing ability, leading to suboptimal allocation of scarce aircraft resources, and creating inconvenience for the traveling public – which could irreparably damage Delta’s reputation and goodwill.”

5. Fuel Consumption – There is no net effect of fuel consumption of 11.8 million gallons annually for this route.

6. Startup Condition – DL believed it is in full compliance of Order 2013-2-4 and will restart the SEA-HND service in March 2015.

American Airlines

While American Airlines may have abandoned its JFK flight to HND in 2013, it came out swinging with the DOT by filing a motion to request DL’s SEA slot away given it was not fully utilized currently.

It even started a new web page to gain public interests in its mission to take away a slot for its LAX operation using a 777 with 247 seats in a three class configuration.

American Airlines and Haneda Airport Slot 2014
Image taken from airline’s website on January 13, 2015 (All Rights Reserved)

Hawaiian Airlines

HA would still like to operate a new flight from Kona (KOA) to HND and filed a motion with the DOT for the DL slot.

Other Consideration

Back in 2013,  the Japanese Ministry of Land, Infrastructure, Transport and Tourism (MLIT) awarded 7 nations day time slots from HND to the following nations:

China – 28 (can only be used to PVG and CAN – 14 each)
France – 14
Germany – 14
Singapore – 14
Thailand – 7
United Kingdom – 14
Vietnam – 7

As US is still in negotiation with Japan, no daytime slots were given in 2013 and 2014.  It is inevitable that daytime slots would be awarded in 2015.

Examination

At this point, here is a quick recap:

  1. DL wants to keep its SEA-HND flight and restart on March 29, 2015
  2. AA wants to take over DL’s HND slot and operate from LAX
  3. HA wants to take over DL’s HND slot and operate from KOA
  4. Daytime slots may be available 2015 for bidding

Key Notes

1. DL’s response is very interesting as it failed to fully address why it had to stop operating this route in the first place if loads and yields were improved in the Summer 2014 season by over 54%. Even with this passenger load increase, the airline might have forecasted that the winter ticket sale exhibited a similar pattern as Winter 2014 and decided to suspend this flight. Although an aircraft was assigned to this route, it would have been re-purposed and would not incur substantial costs.

There are only 2 non-stop flights daily from SEA. UA used to operate a daily non-stop flight from this city but cancelled the service in 2013 ahead of its partner’s All Nippon Airways’ introduction.

Seattle to Tokyo

Flights from Seattle (SEA) to Tokyo (both HND and NRT)
Information taken from Google Flight on January 15, 2015 for flights on January 29, 2015 (All Rights Reserved)

2. There are currently 8 daily flights from LAX to both NRT and HND (4 from StarAlliance, 2 from OneWorld and 2 from SkyTeam). AA’s request to operate a HND flight from LAX will not change this dynamic as it will just move its existing NRT flight over to HND. This scenario is not ideal for the Japanese authorities or the DOT as both wants the HND slot be used to service new communities and not affect existing NRT traffic.

Los Angeles to Tokyo

Flights from LAX to Tokyo (both HND and NRT)
Information taken from Google Flight on January 15, 2015 for flights on January 29, 2015 (All Rights Reserved)

3. There are currently no non-stop flight from Kona to Tokyo. This may be beneficial for HA if it can plead the case with the DOT that there would be enough passenger traffic to support such a flight. Given there are 12 flights a day from Honolulu (HNL) to HND and NRT. There may be good feeder traffic available for HA to transport.

4. Daytime slots are more coveted than nighttime slots in general. Access to public transportation and amenities at HND would not be affected. Additionally, east coast US cities would greatly benefit from better scheduling.

Opinion

American Airlines

Given daytime slot negotiation between Japan and US is near its finalization, AA may be better off supporting DL’s Seattle flight to Haneda provided that the airline cannot request additional change of city or timing (i.e. move from nighttime to daytime).  If DL is able to keep its two nighttime HND slots, AA would have an increased probability to receive approvals for daytime slots once they are available and operate flights to the east coast. It can even create new routes to Tokyo once the airline receives the new Boeing 787-9 from Boeing in 2015.

Delta Air Lines

Is keeping two nighttime HND slots truly beneficial to DL especially if passenger loads on the SEA-HND flight may not improved with the new feeder traffic being introduced in 2015? DL might be better off supporting a transfer of this slot to HA where it faces the least amount of competition at KOA. By losing one nighttime slot, the airline is in a better position to obtain daytime slots in the future to operate to hubs like ATL, MSP or DTW.

Hawaiian Airlines

Hawaiian stands to gain whether it receives daytime or nighttime slots from the DOT. It only operates one flight from Hawaii to Tokyo and this could work in its favour as new flights would only promote competition and services to new communities.

Other

Japanese authorities do not want US airlines to move existing NRT flights to HND. This would likely be part of the negotiation with the DOT before assigning the country with the favorable daytime slots.

The DOT wants new communities to be served on new flights to HND. In the future, it will likely favor applications from airlines who can clearly demonstrate that routes would 1. promote competition that would benefit passengers and 2. reach new communities un-served or underserved (e.g.  Miami, Washington DC, Philadelphia, Phoenix, Indianapolis, etc) currently to Tokyo.

What will happen to the SEA-HND slot?

DOT will open a case to examine whether to allow DL keep the SEA flight to HND or transfer the right to AA or HA. Given all the facts presented thus far, DL will likely keep its rights to fly from SEA.

Follow the blog for updates in this link.

 

 

 

 

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