What Daytime Haneda Flights Will Mean for Delta in Tokyo

Delta, Government Regulation

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.

Tokyo Airport Locations

(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.

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48 comments on “What Daytime Haneda Flights Will Mean for Delta in Tokyo

  1. Delta built its Tokyo hub on government largesse, beyond-rights that originate with Northwest Orient and US victory of Japan in World War II. But if your business model rests on government protectionism, it’s at risk in a change in policy. There are winners and losers when that happens, but Delta is on the wrong side of history on this one. The Narita hub has become somewhat less important in any case with new aircraft and the Seattle hub. So Delta ought to simply lose gracefully on this one.

    1. “So Delta ought to simply lose gracefully on this one”

      The words “lose gracefully” were banned by Richard Anderson.

  2. I’d say it is safe to say DL (and NW before them) has made more than enough money off the spoils of a war that ended long before most of those now working in the industry were even alive.

    It’s too bad that DL doesn’t have a partner in Japan, but as already noted, they have not one but two of the three largest (and state owned) airlines in China as partners (UA has the third). Just as has happened with DL in Japan, that’s leaving AA and HA with no partners from whom to lean on.

    It’s time to drop the hubris. At some point, DL has to admit they are not a chosen instrument.

  3. I agree as a MSP based traveler there is no way I’m going to LAX over a non-stop to Narita. Then again, if I’m to believe Delta the non-stop option will be done because of this. Time will tell.

  4. Let’s not forget that Northwest’s hub was originally located at Haneda. It was only moved once Narita was built and the Japanese government forced all international traffic there. While I don’t think Delta will win that battle, I do think they have a pretty good leg to stand on to argue that they should be allowed to move the hub back to where it was originally located now that the government reversed course.

    In the end, though, I could see Delta getting enough slots to maintain its US-Japan routes (with maybe an addition or two) and all the ex-Japan flying will go away either by overflying Japan from Seattle (possible), finally playing nice with Korean Air (doubtful) or growing in China, or a combination of these.

  5. I often hear horror stories about people using Chinese airlines to connect. Outside of China’s restrictive aviation policies, could this anecdotal evidence also be a reason for Delta’s reluctance to rely on China Eastern for connections beyond Shanghai?

    1. FF – That would surprise me if that were a reason. I think it’s just an issue of not being able to cooperate more fully due to restrictive policies. After all, it’s China. If China Eastern said “we want to make a good connecting facility,” it could be built in about 5 days (or something like that).

  6. “Do you really think that people in Minneapolis, Detroit and Atlanta would stop using Delta if it couldn’t fly them to Haneda?” — No, but people connecting through these hubs may prefer a different connection that takes them to Haneda. This could put a strain on the flights.

    1. Ron – Fair point, but I’d be curious to see where those people are connecting from. When it comes to Atlanta, there is no airline that can get anywhere near the connecting potential of Delta. American is closest from Charlotte, but I’m not expecting to see a Charlotte-Haneda flight anytime soon. The upper Midwest may be a little different with Chicago there, but I would still be very surprised to see a huge hit to Delta’s business.

  7. I always saw Delta’s build up in Seattle as a tacit acknowledgement that Narita was on the wane. The hope being that they could be big enough in Seattle and new planes would be economical enough that they could make SEA-BKK/MNL/etc work by the time their hand was forced on Nartita. Delta also has to be furious that they were forced to give up one of their slots months before they could have made it viable. Is AA even flying LAX-HND with it yet?

    1. Nobody forced DL to surrender the route. They’d just won the route case. The operating conditions were a bit harsh, but again, DL’s being fast and loose with dormancy and then trying to push the DOT around by telling them they had no standing to define the rules apparently had negative consequences…

    2. PeteyNice – I think some of these routes that they do today, like Manila, are just really tough to justify. That’s generally a very low fare market with a lot of VFR (visiting friends and relatives) traffic. It’s just not that attractive to operate from a long distance. But others like Taipei are ripe for a 787… if only Delta had any.

  8. Is it just me or do Delta and Donald Trump have a lot in common? They both want everything done their way or they will whine and complain about it if it’s not.

    1. Delta is protecting their existing market & shareholders. Are they supposed to stand by idly and watch while one of their main international hubs dies a slow painful death?

      The Donald just likes to hear himself talk… and woe be to those who disagree!

  9. I wonder if the folks in Atlanta wish they had put a little more effort into keeping their SEA-HND flight alive for a little longer. Hindsight is always 20/20.

    Truthfully, Delta needs to look beyond Japan and focus on China. That’s where the real growth will be over the long-term. United has already started to realize this with some of their recent expansion. The A350s can’t get here fast enough!

  10. PVG/China Eastern is not a viable alternative because of poor infrastructure for connections. Delta and Korean can’t see eye-to-eye, so ICN is not a viable alternative either. With continued Japanese currency weakness, NRT simply isn’t as appealing as it used to be for DL. The more direct services between HND and the US mean less O&D traffic at NRT to support the connecting traffic. It means pressure on RASM will only get worse. That’s why DL complains.

    But at the end of the day, DL has only itself to blame for the NRT/HND dilemma. Had they not deferred the original NW 787 orders, they could have built a much less NRT-centric trans-Pacific network by now just like UA has.

  11. DL’s real hope may be to form a joint venture with Korean Air and move the connecting Asia traffic to Seoul, since they lost the musical partners game in Japan. But, of course, they’ve been trying for years and KE has shown very strong evidence of no interest despite DL’s unseemly strongarm tactics (making KE their only Skyteam partner on which one cannot earn Medallion qualifying miles and dollars on any fare, for example). And I’m not sure Seoul has the local traffic to really support a hub with DL flights from all over the US.

    The problem with China Eastern is that without a joint venture they can’t coordinate schedules, capacity, and fares, even if Delta does see much of the revenue benefit through their ownership stake.

  12. Why wouldn’t Delta try to leverage its relationship with KL? It’d be better for fliers to connect in ICN than any Chinese airport, and utilize KL’s quite extensive inter-Asian routes.

    1. You mean KE (Korean)?

      Delta has (apparently) tried for years to establish a joint venture with KE, but KE has said no. In an (apparent) attempt to coerce KE to agree, DL has cut Skymiles frequent flyer earnings on KE; KE is the only Skyteam member on which one cannot earn Medallion qualifying miles, for example.

    2. Pete – Korean would be great, but it’s been clear that the two semi-partners are very far apart on any kind of agreement. Could this be the event that forces Delta to compromise more to get a deal done? Maybe. But this also can’t be a surprise to Delta. It knew further liberalization was coming and that didn’t push Delta and Korean any closer.

      1. Cranky – Would you have any guesses as to why Korean and Delta can’t come to see eye to eye on this issue? Korean (Hanjin) is a private company, but many Korean chaebols (including Hanjin) have close ties to government, which in turn operates the tourism industry and owns ICN. If Delta could feed ICN from MSP/DTW, which Korean doesn’t serve (as well as from its current routes to NRT), Korean Air/government would definitely benefit. Korea is very aware of and is trying to maintain/become the hub of Asia, and could tremendously benefit from capitalizing on continual loss of NRT influence. If ICN could win Delta, that would be a huge boon.

        Unless, I am wrong about how closely Korean Air and the government (ICN authority) care to cooperate.

        I’m not sure what Delta is trying to do here, marginalizing Korean Air in the recent years and prefering to go the China route. Yes, Chinese economy is(was) in a boon and the market is huge, but on the side of efficiency/transparancy, Chinese partnership wouldn’t benefit as much as a Japanese/Korean partnership.

        1. Also, if you would care to comment on how United is approcaching this with their relatively strong presence in NRT?

          It seems like with advancing aviation technology, airlines are ditching the hub-spoke for direct, and maybe US airlines (UA/DL) will give up on hub dominance in Asia?

          1. Pete – United has made it clear that the Narita hub is less and less important every day. Just look at all those 787s overflying Narita now.
            For markets with a great deal of demand, there’s no need for Narita. But for markets with less demand or in cases where multiple frequencies matter, Narita is still very important. The difference there is that ANA can do that flying and United doesn’t have to anymore.

            Really, United’s partnership with ANA means it just doesn’t have a Tokyo problem. Between the two of them, they can do whatever they want at either airport.

        2. Pete – I’m afraid I really don’t know the internal politics on this one.
          But Korean is an interesting company, to say the least. When I went on a trip with them (Part 1: http://crankyflier.com/2013/06/10/72-hours-with-korean-air-getting-to-korea-trip-report/), I got a sense of a business that’s run a great deal on national pride.
          There seems to be a sense that the airline is there to serve the country, and that explains some of the stranger aspects of it. (For example, it has a farm that was originally used to help rebuild S Korea’s beef population after the Korean War. It also owns a traditional town on Jeju Island.) So for a company with that mindset to come to terms with a hyper-profit-focused airline like Delta, I can imagine it would take a great deal of compromise on both sides. I’m just not sure either of them have it in them. But maybe things will change under Delta’s new leadership. Hard to say.

  13. They’ll survive.

    The future of Delta’s inter-Asia network is far from certain, but I think they’ll be able to easily sustain operations to the mainland US at both HND and NRT.

  14. I do wonder about that Portland-Tokyo flight. It seems to do fine as long as the economy isn’t upside down, but it is PDX’s only flight to Asia. I hope the Port of Portland sees the writing on the wall and can get something lined up as a backup. Maybe Hainan since they’re an Alaska partner.

  15. A daytime arrival in Japan means a nighttime or very early departure from the US. no matter how you look at it it’s going to be inconvenient for someone. This whole thing just takes the heat off of Deltas other complaint concerning flights to the Middle East and there probably going to lose that one as well.

    1. That’s not true. For example, DL’s JFK-NRT flight leaves JFK at 12:00 PM and arrives at NRT at 14:50. The return is 15:55-16:00.

      For Chicago flights, ANA flies ORD-NRT at 12:45-15:35 and NRT-ORD at 11:10-09:05 AM.

      So for the eastern and central US, there’s a ton of leeway to have flights that are convenient at both ends. The problem with the HND nighttime slots is that nighttime arrival/departure in Tokyo means nighttime arrival/departure in the US.

    2. David N – As Alex notes, that’s not correct. Nearly all US-Narita flights follow the same pattern. They leave morning to midday from the US with an afternoon arrival in Japan. On the return, they leave Narita in the late afternoon/early evening with a midday arrival in the US. (It’s very similar to the US to Europe pattern but in reverse.) There are a couple outliers here in some longer markets but that is the typical pattern and it’s what people are used to.

  16. Long live Godzilla on the Tokyo map! I’m sure he will rear his ugly head again, either on this map or with an analogy to a ugly airline decision…

  17. I can’t see NRT becoming LCC land anytime soon. I thing DL is (disingenuously) drawing a parallel with the London LGW to LHR experience. The narrative get murky because HND is not…and never will be…LHR. Despite the infrastructure upgrades over the past decade HND is cronicly restricted on the ground and with airspace restrictions.

    1. But why the presumption that Delta won’t be able to buy slots at Haneda? Delta used to fly to Gatwick, then liberalization happened, and today Delta has 10 daily flights to Heathrow from 7 US cities on its own metal. It cost big bucks but it was worth it, I guess. Why not do the same with Haneda? My guess is that they eventually will for the US flights. They could probably do it for the Asia flights as well, if these flights generate enough revenue to cover the cost of the slots.

      1. Ron – I’m not sure if slots can be bought and sold at Haneda or not. (Anyone?) But if so, Delta would probably be able to justify it to serve big markets in the US. I can’t imagine, however, the price being worthwhile for intra-Asia or Pacific beach markets. It’d be hard to acquire all the slots needed for a hub at a fair price. (If it’s even possible.)

  18. Should DL opt to route customers with connecting flights through China, would there be any Visa concerns? Certainly if passengers needed a Visa just to connect THROUGH China, it would make it quite burdensome.

    1. Really? I mean you have a ripe picking of tourists every single day that pass by your den using the airport limo(/bus).

      PS Thanks for not eating me last august.

  19. Could at least a share of this be positioning by DL for future strong arm efforts on Portland, Detroit and Minneapolis and their Asia focused businesses to extract incentives to maintain non-stop Asia service?

    As a pretty regular flier of DL’s PDX NRT flights, (with a few trips via both DTW and MPS/NRT as well – warning annecdata ahead) they’re most often full, front and back of the plane, and presumably lucrative at present and near to mid term.

    Potentially even in the longer term as well, judging from number of people going from plane thru transit security check, it seems a significant number are transit passengers who presumably don’t now, nor in the future care a bit about NRT vs HND.

    I get that running an airline requires long term strategic thinking and action, but at present there doesn’t seem to be any downside for DL as a part of this larger fight over HND to gin up a bit of panic amongst these 3 cities (note numerous articles and editorials in The Oregonian regarding potential loss of Asia non-stop) and see what kind of $$$ gets thrown the airline’s way.

    1. Tom – It’s always possible. I’m not sure Delta is thinking about it on that level yet. But you can certainly expect that would be part of the plan if the Narita hub starts to fall apart.

  20. Hanging their hat on a China Eastern/PVG focus city is an insanely risky proposition. Others made excellent points about infrastructure, visas and impossible JV benefits. The other side of the equation is political: no matter who wins the November election the conventional wisdom is that trade relations will sour. Aviation commerce tends to be one of the first casualtis in a trade war.

  21. Airports in China are terrible places to make connections. Immigration, customs, security in and out take several hours and not very friendly. With few exceptions you can’t do a within-security change of flights. Things would have to change a lot before Delta could set up a hub in China and make that works to passengers’ satisfaction.

    1. Rissy, I believe you can do a transfer at PEK and PVG (the other airports don’t count anyway for DL) without going thru immigration. PEK T3 especially is a good place to transfer.

      1. You can transfer without clearing immigration at CAN too. Done it several times Australia-CAN-Europe (actually a reasonably pleasant experience, except the international terminal at CAN doesn’t have much to eat and is quite uncomfortably hot). But as you say, not relevant for DL.

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