Delta Ramps Up Its “All-or-Nothing” Strategy in Tokyo

Delta

Thinking about countries that have open skies agreements with the US, Japan is undoubtedly the least “open” of all. That’s because the most important airport in the most important Japanese city is highly restricted. But talks are coming to loosen things further, and Delta is getting ready to fight, encouraging a letter-writing campaign via an internal memo to employees sent last week. The strategy in a nutshell? “Give us everything we want or give nothing to anyone.”

When the US and Japan signed an open skies agreement, that enabled airlines to fly freely between the US and Japan… except to Tokyo/Haneda. Haneda had long ago been pushed into being the main domestic airport while newer Narita handled the international load. Haneda, however, is strongly preferred.

How so? Well here’s one of my favorite maps (that I just keep using over and over).

Tokyo Airport Locations

Narita is far and Haneda is close (plus, Haneda has a Godzilla-free ride into Tokyo). For people flying from the US to Tokyo, it might not matter as much. But for people living in Japan, it makes a tremendous difference. Of course, this wasn’t an issue when Haneda and Narita handled different geographies. But the airport built a new international terminal and added runway capacity. Airlines were allowed to begin international flights within Asia. Then the US and Japan signed an open skies deal.

Delta, which has long had a hub in Tokyo (via Northwest, which built it after World War II) wanted to move its entire hub over to Haneda because of its status as the preferred airport. But that just wan’t going to happen. In the end, US airlines were given four measly roundtrips a day between Haneda and the US.

There was a fight for these slots, though it soon became apparent that success was far from guaranteed. Hawaiian was a clear winner with its Honolulu flight, mostly because that flight serves Japanese people more than anyone. Plus, the flight times aren’t bad.

But service to the mainland struggled. American won the right to fly from JFK, and that bombed. American gave up the slot and United picked it up from San Francisco. Delta had the other two slots. While it still flies to LA today, it failed in Detroit, moved it to Seattle, and failed there as well. American will begin flying that slot from LA this year.

With Haneda being the preferred airport and a mere 4 flights on US carriers allowed, how could this possibly fail? Well, the deal between the US and Japan allowed flights to operate at Haneda only when Narita was closed during its nightly curfew. That means the flight times are pretty awful with evening departures going west and departures after midnight coming back.

The fact that there is a limit on Haneda operations is simply obnoxious. You can’t really call it open skies. (Yes there are slots at a place like London’s Heathrow, but there’s nothing saying airlines can’t acquire more there if they have the means. At Haneda, there is no option.)

Fortunately, talks been the US and Japan have been proceeding and they’re looking to open up daytime slots finally. But Delta is scared, and rightfully so.

See, ANA (which has a joint venture with United) and Japan Airlines (which has a joint venture with American) control the vast majority of slots at Haneda. So if operational restrictions are loosened, United and American will have access to whatever slots are needed, in theory. (That being said, the relationship between the US and Japanese carriers aren’t nearly as cooperative as those between the US and their European counterparts.)

Delta, however, operates its lonely (and shrinking) hub at Narita. If Delta doesn’t have the ability to move its entire hub over to Haneda, then the airline is threatening doom and gloom.

What will happen? In that internal memo to employees, Delta says it “would be forced, over time, to cut all seven of its direct flights between the U.S. and Tokyo-Narita.” That sounds highly unlikely to say the least.

In the memo, Delta likens it to the London situation at Heathrow and Gatwick where Heathrow is THE business airport while Gatwick is primarily for leisure carriers. It wasn’t always that way, because Heathrow used to be highly regulated and everyone else was pushed to Gatwick. Now that it’s been liberalized, no US airline is left over at Gatwick.

The reason that no US airline is left, however, is because those airlines could get the slots they needed at Heathrow. That wouldn’t be the case in Tokyo, where frequencies would still be restricted if this negotiation goes as planned. And for that reason, Delta should still be able to keep Narita a viable operation. But there is certainly the risk that Delta could lose some business, and that’s why Delta is gearing up for a fight.

Delta says that if it can’t move its whole hub, then the status quo should remain. That would be bad for consumers but good for Delta. After all, if consumers prefer Haneda as Delta states, then Delta is arguing against consumer preference.

What should happen? I can understand Delta’s concern and I think most airlines want the same thing in the end. There should be total liberalization. If airlines can acquire the slots they want, then let them. Stop with the protectionist garbage.

But the airlines diverge on how we should get there. Most airlines disagree with Delta and think that incremental liberalization should be encouraged if it’s the best we can get. It’s in the best interest of travelers even if it means baby steps. Baby steps are better than no steps at all.

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15 comments on “Delta Ramps Up Its “All-or-Nothing” Strategy in Tokyo

  1. “Delta, which has long had a hub in Tokyo (via Northwest, which built it after World War II)”

    This wasn’t just ‘after’ World War II but the spoils of war ‘from’ World War II. But tell me again how it’s only the Gulf carriers that are subsidized by their governments…? ;)

  2. “Give us everything we want or give nothing to anyone.”

    Isn’t that Delta’s strategy on pretty much everything?

  3. For me personally I’ll take the DL direct into NRT before connecting at LAX to fly into HND. Sure, it would be nice if the direct was into HND but at the end of the day connections are always a hassle. I think you’re right that this is entirely a discussion about what’s best for the Japanese consumer.

  4. DL is acting like a child with it’s ‘we play my way or we don’t play at all’ attitude. Who do they think Japan is going to favor or side with, ANA and JAL or with Delta.

  5. DL’s stance is totally confusing. Less than 2 years ago I believe they said NRT was redundant and ‘on-shored’ Asian flying to SEA. Interport flying has been down scaled or cut altogether in favor of direct service from US gateways. Now they are leveraging pending liberalization as a do or die issue.

    IMHO this is a straw man argument that portends closing the NRT hublet….which they will do anyway.

  6. Interesting that the slots that Delta (via Northwest Orient) owns were originally all in Haneda. The Japanese govt forced all international flights to move to Narita, and now that they’ve “reopened” Haneda to international destinations again, they have done a “bait and switch” to limit competition.

    How does the public consumer benefit with less access by competition? It doesn’t.

    The “lack of slots” for other airlines is meant to provide a protectionist set up for ANA(Star Alliance) and JAL(Oneworld), while eliminating completion and choice for travelers by artificially restricting Delta (Skyteam).

    There is plenty of room for everyone at Haneda with the expansion, and there is no reason to limit one network’s access to providing more competition.

  7. Delta is afraid of competition. They run hubs at Narita and in Europe and are terrified that the ME3 will develop hubs in europe via 5-th freedom rights. They seek government protection rather than compete, and provide an inferior service and product. Delta is a disgrace to aviation.

  8. Delta has been building up years of bad karma with all the entities it has pissed off. With the Japan Open Skies deal, it appears the chickens will finally come home to roost. And deservedly so.

  9. Have any of the airlines grown into their HND flights? HA seemed to do well from the start, while others struggled. UA was a more recent addition. Does their flight do better since it starts from the west coast, where departure and arrival times aren’t as bad?

    1. Matt – I don’t know any specific numbers about United, but the flight times are still not great. And JAL flies from San Francisco to Haneda as well. It just seems unlikely that Haneda flights will be successful without a change in slot timing rules.

  10. I commuted between DFW and TYO for a over a year…although it has been a few years. I never minded NRT…the NEX (Narita Express Train) worked well for me…even though my office was in Shinagawa…which is quite close to HND.

    I also used to travel 4-6 times/year to LON. I always preferred LGW to LHR, with a fast train link to Victoria Station vs. a slow tube ride to Central London or the Heathrow Express ride to the western edge of the city.

  11. Thanks for posting this. I booked an the new AA flight from LAX to HND for May and was wondering why the flight arrives at 10:30PM and leaves form HND at 1:00AM. It is so much closer to Tokyo, but horrible arrival and departure times. I hope they can change this because arriving after midnight at the hotel is not ideal for any traveler.

    1. I also wanted to add that I agree that they should just open it up to fly into either NRT or HND. I definitely prefer to fly into HND to shorten the travel time to central Tokyo.

  12. With the announcement of agreement between US/Japan to expand the Haneda slots from 8-12, is it wishful thinking to expect a new post on this subject? I am very curious how you think this will play out and hopefully the inclusion of your favorite map again.

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