Last week the US and Japan came to an agreement to expand operation at Tokyo’s close-in airport Haneda beginning this Fall. We know Delta is strongly against this, but others are thrilled. What can we realistically expect to happen?
There’s no need to rehash the entire story again, so you can read some of the history here. Let me just sum it up quickly. For you analogy-fans (do you exist?) out there, Haneda is to Tokyo as LaGuardia is to New York (minus the short runways). It is easily the preferred airport with a short, Godzilla-free path to Tokyo itself, but it had been limited to domestic travel for years. That has begun to change.
(Am I the only one who thinks this image never gets old?)
After years of going back and forth, Haneda was first reopened for US travel just a few years ago. The result of those negotiations were a measly 4 daily flights by US carriers and another 4 by Japanese carriers. As if that wasn’t insignificant enough, these had to operate in the middle of the night when Narita was closed. That’s garbage, and it explains why the Haneda flights have struggled mightily.
Many assume that this was Japanese protectionism at its finest, but this actually came from the US side. Why? Well, some airlines (*cough* Delta *cough) either want Haneda to be opened completely or not at all. That was the compromise. But as with most liberalization efforts in the last couple decades, once the ties start to loosen up, there’s no stopping further progress.
The new agreement allows for an increase in two daily flights on each side. One will be allowed to operate any time of day while the other will be only at night. In addition, the four existing slots will lose their time restrictions and can operate during daytime hours.
What will this new ability to fly during the day mean? Look no further than Canada to catch a glimpse of our future. See, Canada hasn’t had these silly night flight restrictions, so we can see how airlines have adapted to the opening of Haneda without conditions. Air Canada is the only airline that flies between Toronto and Tokyo. And right now, it flies a 787-9 to Haneda and nothing to Narita. During the summer, it does still fly to Narita daily on a 787-9. But during that same time period, Haneda gets upgauged to a 777-300ER.
Or look at Germany. Lufthansa will only fly from Frankfurt to Narita this summer three days a week on an A340. Haneda? That’ll be daily on a 747-8, in addition to ANA’s two daily flights on its own metal.
The point is this. If given the choice, Haneda will win. The only thing stopping it is a lack for slots to accommodate everyone. And that is Delta’s biggest concern here.
See, American and United are both thrilled by this move. After all, American has a joint venture with JAL, and United has a joint venture with ANA. Those are the two largest slot-holders at the airport by a mile. So when full liberalization inevitably (eventually) comes, they won’t have any trouble getting slots. Sure United has a hub at Narita, but it has become less important over the years and if it wants, it’ll be able to work with ANA to move those flights to Haneda in some form.
On the other hand, there’s Delta. Delta has no partner in Tokyo. It tried to take a stake in Skymark, but ANA won that battle, further strengthening its own Haneda slot portfolio. So Delta has its Narita hub and no ability to replicate that at Haneda because it won’t be able to get the slots. So what happens?
This particular round of liberalization isn’t going to hurt that much. After all, it’s still not that many flights. But in the long run, Delta envisions its Narita hub becoming weaker and weaker because there will be so many options at the preferred Haneda. Delta won’t be able to move all of its flights to Haneda so it’ll have to just axe them. That may be the case, but is that the end of the world?
I put Delta’s Tokyo flying into 3 groups. First is the mainland US which has 7 cities (Atlanta, Detroit, Los Angeles, Minneapolis, JFK, Portland, and Seattle) with flights to Tokyo. With daytime restrictions going away, Delta can use its LAX slot to go to Haneda and then not bother with Narita. JFK and Seattle might be challenging. But do you really think that people in Minneapolis, Detroit and Atlanta would stop using Delta if it couldn’t fly them to Haneda? No.
Then there’s the Japanese beach stuff (Guam, Honolulu, Palau, and Saipan). That’s price-sensitive leisure flying that is meant for Japanese locals. But Delta likes to say that Narita will become a low fare, leisure airport anyway. If Delta wants to keep competing in that market, then it’s in the right place. Or maybe that flying just goes away.
Lastly there’s the flying beyond Tokyo into Asia (Bangkok, Hong Kong, Manila, Shanghai, Singapore, and Taipei). That may serve Japanese locals, but the real purpose in Delta’s network is for US connections. The question for Delta becomes how to serve those in a world where there is no Delta hub in Tokyo. Answer: China.
Delta has made it clear it sees the future in China, and it took a stake in China Eastern to make its point. So why wouldn’t Delta move away from Tokyo and work with China Eastern to flow people from the US into Asia? The airline already flies to Shanghai from Detroit, LA, and Seattle. And China Eastern has JFK. No, there’s no joint venture possible now since China’s aviation policies are too restrictive, but that doesn’t mean Delta and China Eastern can’t use Shanghai as a perfectly good way to serve those people connecting through Tokyo today.
Of course it’s important for Delta to have a good presence in Tokyo because it’s a major business center. But it doesn’t need to have an entire hub there. Over time, I’m sure we’ll see further liberalization, and as always, Delta will find a way to make sure it can serve Tokyo well from the mainland US. If the future truly is China, then this could push Delta into a very good place.
