Delta Walks Away From the Seattle to Haneda Route, Forces American to Lose Money

It’s hard to fathom just how bad the Seattle to Tokyo/Haneda route must have performed for Delta. After all, Delta isn’t shy about putting money into routes that it finds to be strategically important for one reason or another. But Seattle must have been so bad that the airline decided instead of having to obey the rules set forth by the Department of Transportation (DOT) to retain the slot, it would rather give it up and let American have it. This may sound like a win for American, and it might be in the long run. But for now, American is just going to lose a bunch of money.

You’ll remember back in October when American decided to go after one of Delta’s Haneda slots. Though the US and Japan are said to have an open skies agreement, it’s really not “open.” The most desirable Tokyo airport, Haneda, is only allowed to have 4 flights per day from US-based carriers. And those flights can only operate at night, when Narita is closed. That sucks. But Haneda’s location makes it highly desirable.

Tokyo Airport Locations

Having just been to Tokyo, I can confirm two things. First, Narita is really, really, really far from Tokyo. In a country with incredibly fast and efficient trains, it still takes an hour to get from Tokyo Station to Narita. And if you drive? Bring survival supplies. It gets particularly hairy by Godzilla’s home. See, here’s a picture of him Godzilla Attacksthreatening me while I was in Tokyo (click to enlarge).

Haneda, meanwhile, is just so much easier. But here’s the thing. While the Japanese know how much easier it is, Americans don’t really care as much. Or they just don’t know. For Japanese airlines, these Haneda flights should be able to do much better. But for US carriers? It’s a tougher sell, especially since the flight times are rough.

Of the four slots, the one that has to be doing the best is Hawaiian’s Honolulu-Haneda flight. Why? Because it’s full of Japanese people and the flight times, while not great, aren’t nearly as bad because of the shorter duration and fewer time zone changes. United’s Haneda flight from San Francisco is probably the one with the next best chance of success. You have United’s SFO hub on one side and ANA’s joint venture to help on the other. While ANA has a Haneda flight to LA, it doesn’t have one to SFO. So that’s a nice fit.

Then we have Delta. After much shuffling, it had both an LA and a Seattle flight. The LA flight can’t be doing well, but it’s about to do a whole lot worse. The Seattle flight must have just been awful. That’s why Delta effectively wanted to shutter the flight for the winter, flying the bare minimum required.

American, on the other hand, had a slot that it used from JFK until it realized it couldn’t deal with the losses so it dropped it. But under new management, American wants that slot back. It’s not because it thinks it can make money with it (no friggin’ way), but it wants a seat at the table. When further liberalization occurs, it wants to have a slot it can use off the bat. That’s why American asked DOT to give it Delta’s slot.

DOT came back with its preliminary ruling suggesting that Delta could keep the slot but it had to fly it every day. If it didn’t, it would lose it and American would automatically get it. Delta fought that, saying the conditions were too onerous, but Delta lost. The final ruling came out on June 14 and three days later, Delta decided to walk away.

In a letter to the feds, Delta, as usual, got combative. It blamed the feds for requiring year-round service in a market that can’t support it. Then it acted like the disadvantaged child because “it lacks a Japan airline partner to provide connectivity beyond Haneda to points in Japan and other countries in Asia.”

Ah yes, that Seattle-Haneda flight arriving at 1015p would have been successful if only Delta could take advantage of all those midnight connections. (There are maybe 2 or 3 from JAL and ANA at that time of night that would matter.) But Delta does have a point. This is not how “open skies” should look, and Delta should be able to move its Narita hub to Haneda if it can get the slots. The artificial constraints are silly.

But now that Delta is walking away, that means American has to fly it on the LA-Haneda route. Keep in mind that ANA and Delta already fly this. With American in there, it’s just going to be a bigger bloodbath. I’m guessing American is looking to see if there’s a way it can put a Mesa CRJ-900 on this route with extra fuel tanks. That probably won’t be possible, so if you have American miles, get ready to use them on this route. But hey, American has a seat at the table as it wanted. It’s just going to have to pay a lot for that privilege.

Delta flies from Seattle through September 30, at which point American will presumably take over. I’m really surprised Delta gave up on this authority, but sometimes routes are just so bad that they can’t be justified.

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40 Responses to Delta Walks Away From the Seattle to Haneda Route, Forces American to Lose Money

  1. Neil S. says:

    Is the Open Skies deal the way it is because the US and Japan both agreed to it for some reason, or because Japan got it the way it wanted it, for some other reason? Why can’t the USDOT limit ANA and JAL from landing at optimal times in the US, and force the Japanese to relax the rules at HND?

    It also strikes me as odd that three flights – leaving out the HA route, which is mainly tourism – into HND, no matter the arrival time, can’t succeed just based on O&D from the US. Say it’s approx 800 plane seats, from a country of 330MM. Isn’t there enough business in Tokyo that would fill these flights? I guess not but that just seems off to me.

    • Jeffery says:

      HND is a slot issue not an Open Skies Issue. More like JFK and LHR, if you’re airline is based where there’s an open skies agreement with US or UK you can fly into those airports, if you get a slot for someone already there. Though HND is different in that they limit the availability of those slots to horrible times, so there is some room there for the governments to argue over.

      I do think its a good investment for AA (disclosure I work for an AA subsidiary but front line) as it has their foot in the door whenever the slot times change and it can actually schedule a flight at a decent time to allow for booking onto JAL for connections. Plus AA has been weak in Asia, new points, especially points that theoretically would drive paid premium travel are important. HND, SYD, and reports that AA are in talks already for AKL, plus Parker said he was working on relationship building for LAX-PEK, shows that AA does want at least a solid presence in Asia moving forward.

    • CF says:

      Neil S – It’s a good question. I don’t know why the US agreed to these rules, but it’s actually possible that the US was the one arguing FOR them. I’m thinking of it this way. Delta has a hub at Narita (and United does sort of). There aren’t enough slots to move the whole operation over to Haneda. If Haneda opens up completely, then American/JAL and United/ANA will have plenty of slots to use to the US. Delta would be stuck having a hub at an inferior airport with no ability to move. I don’t know if that’s how it played out, but it’s possible.

  2. Billy says:

    It’s like that Family Fortunes (Family Feud?) where the first family wins the point, then “passes” while the other family struggles to win the round.

    Just not sure which family has “passed” and if the metaphor stretches this far.

  3. Jared says:

    Wouldn’t American have a better shot at this for 3 reasons?

    1) I would assume LAX can support this better than SEA even with competition.

    2) There are way more business travelers and these are the ones that would most likely want the Haneda flights.

    3) Domestic connections on JAL as part of OneWorld.

    • CF says:

      Jared – I’d be surprised. On #1, LAX just has so much more capacity. You’ll now have 3 flights on a route that’s not doing well in the first place. Plus there’s a ton more Narita capacity there vs Seattle as well. For #3, there aren’t really any connections heading west. That flight will arrive late night so other than a random flight to Bangkok or two, that flight will only support people staying the night in Tokyo. Eastbound will have more connections, but you need them both ways.

      • Jeffery says:

        While I agree with you in general on capacity, it seems likely that AA is going to swap the LAX-NRT to LAX-HND, so there isn’t a net capacity increase to TYO as a whole, which I think limits the disruption somewhat. What it may do is reduce yields in both premium and economy cabins for all carriers to HND.

  4. Kevin says:

    Haha – I have that same picture. Ran across Godzilla wondering around while the wife was shopping at Don Quixote. :-)

  5. Sean S. says:

    Like you said Brett, everyone keeps saying that Haneda is the “coveted” airport, but it is not clear that is actually true. If it was, the passenger numbers would be there to continue justifying these routes. Honestly I suspect it comes down to the fact that most people either don’t know, or don’t care enough, to pay a premium for Haneda on their ticket. While closer, I feel most people who fly into Tokyo at this point are fairly familiar with Narita’s lag time into the city, and it evidently isn’t an issue.

    • Alex Hill says:

      True, but the flight timings are orthogonal (since HND flights only operate when NRT is closed), so it’s an apples to oranges comparison. We won’t really know which is preferred unless and until there are NRT and HND flights at vaguely comparable times.

      And I think the issue is even worse than people being unwilling to pay a premium for HND; I think that people aren’t flying the HND flights (at least in premium cabins) even at a discount. That has to be due to crummy timing.

      • WR Cage says:

        Air Canada has commercially viable timing on both YYZ-NRT and YYZ-HND, clearly HND is the more popular aircraft. YYZ-HND gets 77W service while NRT got downgraded to 788 (smaller airplane). At YVR AC does YVR-NRT while ANA does YVR-HND, both flights are equally popular, but HND flight has reduced JAL capacity on NRT.

        Clearly the issue with U.S.A.-HND flights is the awful slot times at HND.

        • pg says:

          From a UK perspective, BA has two daily flights from LHR to TYO: BA7 which arrives at HND at 7.20am and BA5 which arrives at NRT at 9.10am – so vaguely comparable on timings. They tend to price up the same in all cabins. The differentiator for me is that BA5 to NRT is operated by the legacy WW fleet cabin crew who are (in general) more polished and better at premium cabin service than their younger MF fleet colleagues who operate the BA7. That said, HND is clearly superior if connecting anywhere domestically in Japan as there are many more options there. And both BA times are poor in comparison to what the Japanese carriers offer between LHR & TYO.

    • v-squid says:

      Haneda actually has a lot better domestic connections than Narita within Japan. A friend of mine used to travel a lot to the smaller Japanese cities from Europe and he said it’s almost impossible to connect through Narita. The problem is that the US airlines have only these nighttime slots that do not have any connecting domestic flights.

  6. A says:

    You have to consider that the HND flights only pull from markets that do not have direct service to NRT – and – SEA. For example, I know many people that travel to Tokyo for business that take the direct flight from MSP. There is no time savings in flying to SEA or LAX just to connect onto a flight into HND. But also consider if your home airport was not a major hub, like JAN. It would be crazy to go JAN-ATL-SEA-HND when you can do JAN-ATL-NRT.

    NRT

  7. Alex Hill says:

    “American, on the other hand, had a slot that it used from JFK until it realized it couldn’t deal with the losses so it dropped it. But under new management, American wants that slot back.”

    Is that really true? When old AA management applied for a slot, they listed LAX as their first priority and JFK only as a second slot if they got the LAX slot; they got the JFK slot only. So old management wanted an LAX slot too. They just didn’t have the chutzpah that DL did to try to move their JFK (DTW) slot to LAX (SEA) when the east coast slot didn’t work due to the even-worse timing options than what can be done from the west coast. I’m not at all convinced that old AA management wouldn’t have wanted the LAX slot just as much as new management.

    I know you generally think highly of the old HP management and lowly of the old AA management, but I think this is just an opportunity that wasn’t evident when old AA management gave up the JFK-HND slot. But once DL set the precedent that HND slots are a little more versatile than the DOT indicated, AA cleverly pounced when DL gave them the opportunity. We’ll see who gets the last laugh in a year or two (or five).

    • CF says:

      Alex – Regardless of what the old management team may have wanted, they had a flight going from JFK and decided they didn’t want it because it lost so much money, so they walked away.

      While I do generally like what the new management team is doing, Asia is an area where I disagree. I would have done the same thing as the old management team. I think this team is pouring too much money into LA and trying to create a true Asian hub from there when I think it’ll just be a huge loss-making venture. They can support that strategy now that the airline is making money across the board. But I just don’t see it working in the long run. I hope they prove me wrong, but I just don’t get it.

  8. David SF eastbay says:

    I can just hear the locals saying, “Another crazy American taking a I’m scared photo with Godzilla”…lol

    • Hey the Japanese tourists come to Seattle and take lots of photos of themselves around fountains.. it goes both ways.. ;-) They’re not even anything unique or famous..

  9. Grichard says:

    Transport from Narita is so comfortable and reliable, I just don’t see the longer time as much of an issue. It is 20 hours from my front door to Tokyo. An extra half hour in a reserved seat, on a comfortable train with interesting scenery, isn’t really a problem.

  10. Whats the turn around time on the ground? I wonder if its already longer if they could have a 3-4 hour boarding period.. (i.e. get on board, get your seat all set and fall asleep. Not sure if it’d be completely worth it but its an idea to bounce around.

    • CF says:

      Nick – Well, Delta in LA today has it this way. It leaves LAX at 640p and arrives at 1030p. Then it leaves Haneda at 1230a and arrives back at LAX at 7p.

  11. DesertGhost says:

    It’s possible Delta’s new Seattle hub’s financial performance had something to do with the decision. It may not be doing as well as Delta executives want the public to believe, and given the overall losses (if my guess is true), the flight was too much of a burden. American probably doesn’t lose as much at LAX (if it loses money at all), so the Haneda flight’s losses might be worth absorbing to enhance the hub overall.

  12. David SF eastbay says:

    Just wondering, why do we get these ‘we’re pausing email’ notices? I don’t call 20 comments being out of hand.

    Heads up: the conversation around Delta Walks Away From the Seattle to Haneda Route, Forces American to Lose Money is getting out of hand.
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  13. John G says:

    American has an advantage over Delta in that they can throw a 787 on the route while Delta cannot.

    • CF says:

      John G – Well, Delta can run the 767 on these routes, so it’s not as much of an advantage. If Delta was forced to fly a 777 or A330 then that would make it way worse.

      • USBT says:

        Delta flies both HND flights (LAX and SEA) with a 767.

        United flies SFO-LAX with a 777. United simply switched one of its 2x daily Narita flights to Haneda. It’s other (NRT) service is a 747.

  14. oldiesfan6479 says:

    “I’m guessing American is looking to see if there’s a way it can put a Mesa CRJ-900 on this route with extra fuel tanks.”

    LOL, Crankster! I can just see the pax arriving at the LAX gate to see a CR9 sitting there. And the gate agent explains: “Oh, this is just the aircraft to take you to San Jose, where you’ll board a 777 for Tokyo! (AA corporate speak: “We just want the option to pick up some additional traffic from the Bay Area.”)

  15. USBT says:

    I can see the LAX-NRT service working for American. Maybe not hugely profitable but not as bad as you think.

    Those late flights to Haneda can work for origin-destination. The Bay Area and southern Cal still have sizable Japanese businesses. And the late flights can be an advantage to business travelers. Americans can work a full Friday in Tokyo, fly from HND and still make it home Friday. The Japanese can get an almost full Sunday with family, and arrive in SFO/LAX Sunday evening and make an 8am Monday meeting.

    It must be generating some business for United (with ANA frequent fliers helping out) as they’re flying HND-SFO on a 777. If demand was slow they’d have switched to a 788.

    I guess Seattle just doesn’t have that O&D traffic (nor DTW where Delta started from before switching to SEA).

    Why would this work for American at LAX? Well they have the Japan Airlines joint venture, so could attract JAL frequent fliers from the Japan side (just as United gets ANA fliers for SFO) who are likely flying the late night from HND on Delta because it’s all they have. If American can attract the JAL fliers it could be Delta that gets squeezed on the LAX route.

    • Todd says:

      I don’t think you’re going to see a whole lot of connecting traffic from SFO on the new AA LAX flight. In SFO, we already have HND flights on JAL and United.

  16. Jim says:

    I don’t think American is necessarily going to lose on this route. They aren’t subject to the requirement to use it every day that Delta was given for Seattle. There are already two other airlines on this route, but AA has a large hub at LAX so they can probably make it work. LA is a major destination for Japanese people, much more so than Seattle.

  17. jhon says:

    any results on guesses and thinking ???

  18. Bill from DC says:

    From a convenience and accessibility standpoint, HND and NRT sound a lot like DCA and IAD here in our nation’s capitol. I also understand the uninformed incoming passenger dynamic, I hear from lots of people who ask if it matters whether they fly into Dulles or “Reagan.”

    Wondering aloud if AA just wants back into the game so they could then petition to transfer the HND slot either to JFK or possibly DFW. The Feds have already proven with DL to be quite amenable to such changes!

    • CF says:

      Bill – The slot times make midwest and east coast flight even worse than west coast. On the eastbound flight, if it leaves at 1230a then it arrives at 1215a into JFK or about 1030p into DFW. So there are zero connecting options. American tried to do the early morning one instead, so it left at 6a and arrived at 545a, or something like that. That was also terrible from a passenger departure perspective and it meant holding the airplane overnight in Tokyo, wasting time.

  19. Cook says:

    I must be missing something. What is it? If I’m flying from the West Coast (USA) to Tokyo, of course I want to deplane at Haneda. If simply making a connection ‘near’ Tokyo, do I care?
    I did NOT know that Narita closed at night, (seems dumb for a major, international hub, and I’d guess local pressure about noise issues…)
    Sorry and sad to say it, but I’ve learned the hard way: regardless of of Tokyo airport terminations, and even arrival times, if I can find a BC seat **on JAL or ANA metal,** I’ll buy it and long before I’d so so on Delta or possibly later, American. By any measure, flying to Tokyo is a difficult trip. JAL and ANA generally have the soft services nailed; Delta and American (especially United) just do not have a clue. The fares are roughly equal, code-shares are a good thing at times, but smart flyers on this route fly Japanese metal (made in USA) whenever possible. Sadly, our own carriers just don’t get it. [rant mode=OFF] A good article, Brett. Thank you. -C.

  20. Andrew says:

    Where is that in Tokyo that there are zero Japanese people in that photo?!

    • CF says:

      Andrew – You’re right, I didn’t notice that but that’s funny. That was right in Shinjuku, in the thick of things. Very random that it’s a bunch of non-Japanese there.

  21. MC says:

    it is very interesting how the airlines wanted to fly to HND so bad….now that they have the routes, they find they aren’t paying off and seem to be loosing money….people in the U.S. don’t know about HND unless they travel to asia a lot….everyone thinks Tokyo and it’s automatically Narita…that is the way it has always been….if you want to fly to HND and make it work, you have to advertise the heck out of it…i have seen no advertisements for the close in airport….American is just greedy and wants it all for themselves….at least Delta found out how bad it was and decided it wasn’t worth the continued loss…American is going to lose Buckets of $$$$ and they don’t care as long as they have the route….what will happen when the next downturn comes and for instance, American is loosing tons of $$$$ money on the route….will they still keep it or drop it and continue to waste money because of it’s location….HND is well know by asian carriers and the people know how close it is to the city….time will tell on this….Delta will more than likely keep it’s NRT hub and they should just expand from their and use their HND flights as point to point from the U.S.

  22. Edward says:

    As an airline blogger, it would be helpful for you to do your homework and better serve your readers with more info..

    HND was a domestic and close proximity to (Japan the country) service airport until they built a new runway and international terminal. At this time slots were allocated to different countries for global international service.

    Each country had to place a bid/request for slot times. The US DOT sat on their hands (basically did not care) and did NOTHING! So once everyone else got cushy times..the US was handed by Japan what was left!!!

    THE US3 clearly said nothing during this time, or maybe they did but it was too late.

    Yes, whereas NRT is known to everyone, and they have put up with it since it opened in the 1970s. HND is the sweet spot. It is slap bang net to Tokyo and the bay and its preferred!

    Clearly AA has great lawyers in Japan, and probably know whats about to happen! Or its strategic to crimp DL in SEA, and they’ll take the loss…moving a ton of cargo between cities if seats are unsold. Its amazing how many people feel a route viability is based upon bums in seats.

  23. 02nz says:

    The late-arriving flights from the US to HND can be useful for onward connections to SE Asia (e.g. departures to BKK, SIN, SGN around midnight). But this doesn’t really work in the reverse direction.

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