Anyone who thought that once consolidation was done we’d see the big three legacy carriers hand-in-hand enjoying a new era of peace and love hasn’t read American’s application for one of Delta’s slots at Tokyo’s Haneda Airport. American rips Delta throughout the request, and that makes for a great read.
If you don’t know anything about Tokyo, here’s a handy image from a post I wrote back in 2010 explaining why Haneda is so desirable.
Haneda is just much closer to Central Tokyo and is generally the preferred airport if you can get there. Plus, you avoid having to deal with Godzilla. For years after Narita opened, however, only Narita was allowed to handle international traffic. Haneda was still an incredibly important airport with 747s packed to the gills flying around Japan, but it wasn’t until the last few years that international flights were allowed to start creeping in to Haneda.
When the US and Japan signed one of the silliest open skies agreements ever, US carriers were finally given access to Haneda. But “open skies” in this treaty didn’t include much in the way of greater access to the only airports that were really in need. The agreement allowed only 4 flights per day each way at Haneda by US carriers. As if that’s not restrictive enough, flights could only arrive Haneda between 10p and 7a. They could only depart Haneda between midnight and 7a. What a joke.
That didn’t stop airlines from rushing to grab as many slots as possible. The first allocation in 2010 gave one slot to Hawaiian for Honolulu service, one slot to American for JFK service, and two slots to Delta for both LA and Detroit service. With bad flight times, all the airlines except for Hawaiian struggled out of the gate.
A couple years later, Delta just couldn’t stand the losses on Detroit any longer and petitioned to have its slot moved to its new Seattle hub. That was granted in 2013. American called uncle later in 2013. Hemorrhaging at JFK, the airline just gave up the slot entirely. United ended up winning that slot for service from San Francisco.
Here we are just one year removed and American now wants a slot back. Why such an about face? Well there’s a completely different management team in charge now, post merger with US Airways. And the new team sees value in having that slot, apparently. In fact, it wants to fly daily from LAX, which seems completely insane since both Delta and ANA are in the market. I don’t like American’s decision to build up LA as a Pacific hub, but that doesn’t mean I can’t kick back and enjoy some fun reading.
The crux of the argument is that Delta isn’t really using its slot in Seattle. American calls it “near-dormant,” and that is true. This winter, Delta is doing the bare minimum. It’s flying one week every 90 days on the route and that’s it. In other words, between now and March 29, Delta will fly from Seattle to Haneda only 17 times. That’s nuts, but it’s technically enough to consider the slot active. What American is saying is that even if it meets the rules, we only have 4 slots and the feds should think about how to get the most value out of them.
But American’s petition goes beyond that. The airline calls Delta out for trying to “derail” open skies talks in Japan by only supporting it if Delta could move its entire Narita operation to Haneda. In the end, Delta may not have succeeded in shutting out Haneda entirely but “Delta garnered powerful political support for its position and brought enormous pressure on [the feds].”
The prose in this petition is masterful in cutting down Delta. For example, “Unlike Delta, when American decided to terminate its JFK-Haneda service, American did not hoard the frequency….” This is just fun.
But why exactly does American want this slot? It failed miserably last time, and really, nobody has done well except for Hawaiian in what is a completely different type of market. According to American, it learned from its last effort. Only flights from the West Coast will work thanks to the Haneda time restrictions. That’s the only thing that’s changed. While LA might work better in theory, American’s proposed flight times sit right on top of Delta in LA, and Delta isn’t doing all that great with it already. (Remember, American wants the Seattle slot from Delta, not the LA slot so that wouldn’t go anywhere.) It just sounds like a bad idea to me all around.
I will say that if Delta is going to waste its slot, then that should be reallocated to someone who will use it. I have to assume that American wants a slot so it can hold on losing money while hoping that the time restrictions will eventually go away. If that happens, then the slot becomes far more useful. Who knows when or if that’ll happen.
What happens next? Well comments come pouring in this month and then the feds have to decide what they want to do. It seems to me that this slot should be stripped from Delta since there are only 4 of them out there. Delta really isn’t using it. But I would be surprised if they just handed it over to American. I would think that if the feds want to take action, they’d open it up for others as well. That means we should see Hawaiian try for Kona again at the very least. That would probably be a better use.
What do you think should happen? Even if you don’t care, I highly recommend reading the short filing. It’s a fun one.
Is there a way to tell what percentage of flights from the US to Tokyo (NRT and HND) are connections, versus ending there? As in, is NRT still so much more successful for the US airlines because it’s a place to connect? I know some, like DL, are de-emphasizing it. Is it really just the time restrictions that has choked HND?
Neil S – It’s a lot tougher to get that info for international travel and I don’t have it myself. Maybe someone else with access to the data has it somewhere. But Narita is big for connections on all the airlines because they either have a hub there (Delta) or a joint venture partner (American, United). Haneda would have a lot of connecting options available to American or United if the times worked.
Well, OK, if American thinks it can make money with daily 777 service from LAX when Delta obviously can’t with 747 service from Seattle, I can believe that. Yeah! but I have to think this comes as much from bravado as blind faith in its own strengths. I would think this would be a good use for American’s 787s, but since they propose to start Haneda service as of 1/15/2015 and (if I’m reading the American fleet info in Wikipedia correctly) American won’t even start its first 787 service until about the same time, that might not be possible. I know airlines generally aren’t in the business of losing money. Is American’s application for this slot allocation being made because they really think they can serve the LAX-Haneda market profitably with sucky arrival/departure times, or are they just out to get their foot back in the door at Haneda at any cost? What’s their REAL motivation? I have to wonder.
The 787 comment is interesting. Perhaps they are applying now with the goal of using a 787. Apply now since DL released the schedule now and there is time to fight. Lose money on a 777 for a bit before switching. Also helps the application to say 777 since there are more seats.
I dont see how AA makes money on this route, but perhaps it plays into a bigger strategy across the pacific. Not sure why alliance codeshares are insufficient though….
Bibliobear – I tend to think American just wants to get a foot in the door with the hope that there will be changes in the future that make that slot more valuable. As for the 787, they have a bunch of routes now that need that airplane (LA – Shanghai, anyone?).
Cranky, thanks for the heads up re: Godzilla. Just to be on the safe side, I’ve changed my upcoming flight to KIX.
I think AA is ina slightly different position on Asian than the other 2 as they feel they need to build up there to meet future demand. They wont take a bloodbath on profit from a route, but they will be willing to fly at a loss for future viability. The 787 starts flying internationally next year and the 350 comes in 2017 and those planes could turn slightly loss making routes to profitable.
So is it only in America that a government lets its airlines act like children?
Try Italy, … France, … Australia, …
So the US carriers can’t get economical slot times, and no one can make money flying from the eastern half of the continent to HND, or so says AA. However, Air Canada can fly from Toronto to HND with a 2:45pm departure and 5pm arrival in Tokyo, and a return flight leaving at 6:30 pm from HND, arriving mid-afternoon in Toronto. AC could be losing its shirt on this, although it has deployed 787s on the route, but how in the heck does it have such good slot times? Maybe the silly part here is the US government’s ability to negotiate for competitive slots.
I suspect AC’s actually turning a profit on YYZ-HND. This was announced as one of the banner routes for the 787 but was switched fairly quickly to the larger 777-200LR and will be upgauged again to the 777-300ER in a couple of months. You don’t go from 251 seats to 349 unless you think you can fill them.
The other factor to consider is that Japan has been allowing additional international flights from HND to other places besides North America. That means AA/US/UA/AC can now offer more connections to Asia on JAL and ANA through HND, making it easier to fill their planes (potentially). DL doesn’t have a partner in Tokyo (and probably wouldn’t play nice with them even if they did) so they really have to rely on traffic to/from Tokyo itself.
“DL doesn’t have a partner in Tokyo (and probably wouldn’t play nice with them even if they did) so they really have to rely on traffic to/from Tokyo itself.”
Arcanum: LOL. So true.
David – I think this isn’t just the US government failing to get slot times lifted. I don’t remember all the details, but I think Delta was against less restrictive slot times unless they could move their entire hub to Haneda. Somehow this was the compromise. Others may remember better.
Arcanum – American and United can’t connect in Haneda now because of those stupid slot times. If the times were better, then the slots would be much more useful.
ha ha i say give the slot to alaska airlines for ANC-HND SERVICE ha ha
Why does only the U.S. have such silly slot time restrictions? Other international service at HND is being allowed into daytime slots, and the slots are really just creating artificial scarcity at HND, since it has 4 runways.
In the long run, NRT is going to be the LCC airport and HND will be the full service airport. Too bad Japan won’t just let that happen.
These filings are usually rather funny. It’s very amusing to read how one group so politely excoriates its rivals. Those polite little digs keep what would otherwise be boring legalese interesting.
I object to you calling that a fun read. I quit after page 3. :)
Well, I DID read American’s petition. You’re right; it sounds like a midnight cat fight in progress. Whether Amerikan Airlines can really make the slot work from LAX remains to be seen, but Delta seems to be spending a lot of money on flights from/to SEA that likely will not sell well. If I needed a trip to Japan during the November operating week, I would fly Delta from SEA< mostly because the plane is likely to be empty. (That's assuming that I would fly any international route on a U.S. carrier.) Fight is ON!
I think AA could get la to work if you can tech stop in NRT and fly NRT-HND. I imagine the best time to come in would be to compete against NH on their midninight flight having an arrival time around 5:00-5:30am giving everyone at least an hour to connect to JAL flights. Then have a HND-NRT-LAX flight around 2:30-4:00 pm and have the LAX-NRT continue to haneda and use that plane to take a midnight out flight HND-LAX. Of course I have no idea if thats actually legal to do and it complicates things a lot but if that fails you could always move the slot to an 787 out of PHX.
I wonder if DL will restart daily SEA-HND service to fend off AA..
With American being so weak in the Asia/Pacific region it has been extremely interesting to see them build up service from DFW and LAX. Next step for American could be using the 787 and A350 to points in Asia from former US Airways hubs such as Philly and Phoenix. To me this Haneda fight isn’t about making money (yet, if Japan and the U.S. ever regain their senses by opening up Haneda that slot becomes extremely important) but more about strengthening their Asia/Pacific network while also wrestling away a slot from an arch rival.
I read American’s petition. But I also read Hawaiian’s response to United’s petition for a 35 day delay on the start of service from SFO…where Hawaiian not so innocently said if UAL can’t launch on time…like Hawaiian did BTW…Hawaiian would be standing by to take the allotment off of UAL’s hands. How nice of them…
Great coverage, Cranky, and you’re right that American’s letter is a great read. Hawaiian’s response really piles on against Delta, too–I think it might be an even better read! http://www.regulations.gov/#!documentDetail;D=DOT-OST-2010-0018-0386
Loved the Hawaiian application!
Thanks for the link!
Ooo! This is turning out to be fun. Where is the popcorn? Can we require that any future frequencies to HND have free movie theatre quality popcorn onboard?
I think we should think in context of AA’s Alliance with Japan Airlines. There is a lot of opportunity to connect with JAL flights through HND, which no other airline can provide since they share booking.
Agreed that American might be able to use JAL for connections, therefore making it feasible, but only if they get a good slot. As it is, the Delta schedule is a horrible redeye leaving HND around midnight. Only the European and Japanese carriers have gotten juicy daytime slots for the international routes. I am dubious about American’s claims since they couldn’t make JFK work. They had a slot and couldn’t make it work, so why would this be any different?
I’m still learning about the industry, so forgive me if you think this is a stupid question. Why does this “slot” only have to fly into one city? Why can’t AAL fly a few days into DFW and a few days into LAX using this landing slot at HND? This would give them more flexibility with their schedule.
I’m not sure on the exact details, but flights to other countries are controlled by treaties, so I’m guessing the treaty between the US and Japan limits the flights to a specific gateway chosen by the US DOT.
TC – Not a stupid question at all. That’s just the way they set it up on the government’s level. It is kind of silly. Take Washington/National, for instance. They have a handful of perimeter exemptions that allow airlines to fly over the 1,250 mile limit. The first slots that were handed out there were tied to a specific destination. The later ones were handed out to airlines with no restriction on where it could go. Why? Who knows. They were just done at different times. I assume it’s the same thing with Haneda.
I guess regulation still exists in some form, then. I understand allowing “slots” in highly congested airports based on a time for landing/takeoff, but to regulate where those flights go is against the idea of a free market society.
Another way to get to Japan. I really had fun reading this.