I’ve already gotten you up to speed on Delta’s request for DOT to allow airlines to pick which gateway they use for up to 2 of their Tokyo Haneda flights, and today it’s time to dig into United’s counter-arguments.
United is particularly unhappy with Delta since that airline has been able to extract the most Haneda slots out of any US carrier… yet it never is happy and is always trying to change the rules of the game. I assume that this — along with Delta’s attempt to get behind a loosening or elimination of the perimeter rule at Washington/National — has really put United’s government relations team on edge, because they arranged a media call to discuss the airline’s response last week. They have decided not to hold back in showing their displeasure.
I’ll go through United’s more relevant arguments here, but as always, read the full filing for more.
“Delta Does Not Paint a Realistic Picture of U.S.-Japan Demand Recovery”
Delta says that demand sucks, and it gives this chart in its filing:
Some of this is not a surprise. After all, Honolulu flying is primarily Japanese origin, and that market is far further behind in the recovery than US origin. That’s why Honolulu looks so pathetic on that chart.
More broadly, this is an important point of contention. United notes Delta is putting its thumb on the scale by showing demand levels overall for both US and Japanese originating travelers. That helps Delta to skew demand downward to plead its case when it full well knows that it will take more US point of origin in its markets like all mainland US carriers. (Again, Honolulu is an outlier and is almost entirely Japan origin. Delta has no business flying this route anyway.)
United says that from US origin, demand is now at 73 percent to Tokyo — above the average US long-haul demand — and rising rapidly now that the last COVID restrictions have gone away in Japan.
United isn’t just spouting off numbers. As it says, “And for the avoidance of doubt, United is anticipating a full return of demand in Summer 2023 and thereafter.”
The Mystery of the $10,000 Delta Ticket
United held a media call when it filed its objection, and it led off by talking about the “mystery” of the $10,000 Delta ticket. United says Delta is trying to create a self-fulfilling prophecy by keeping demand down on the routes it wants to reallocate. How so? Well, just take a look at Portland.
As mentioned, the waiver allowing airlines to not use their slots expires at the end of October, so both Honolulu and Portland are in the schedule after that. But Delta has pulled back inventory to only sell full fare in all classes of service on the Portland route. That means even in coach it’s $10,000+ roundtrip. It isn’t doing the same in Honolulu, which is odd, but maybe that’s because demand is dead on that route anyway.
United thinks Delta is trying to suppress demand with artificially high fares so it can then show DOT that demand is dead and it needs flexibility. I don’t see this the same way as United. I think Delta is simply not planning on flying this route. It hopes it can get the flexibility to use the authority to fly from another gateway, but if not, it’ll just walk away from the slot. Delta really doesn’t want to take a bunch of bookings which it will just have to refund or rebook. To me, this is just a pragmatic way to deal with the situation while Delta waits to see how it plays out.
“The Department Should View Delta’s Proposal with Skepticism Given its Operating History at Haneda”
I already talked last week about some of Delta’s checkered past on how it has dealt with its Haneda presence. While I don’t disagree that the airline’s history is concerning, to me this argument is a distraction. Delta has the right to propose whatever it wants. If the suggestion is sensible, then who cares what the airline’s history is? Judge the proposal on its merits.
There is plenty of drama in this proceeding, but I tend to take a different, more measured view of the whole thing than all the airlines involved. That being said, I agree with United’s suggested outcome.
DOT has awarded these slots based on the specific gateway that will be used. If it had awarded slots based solely on airline with flexibility on gateway, it may have come to a different conclusion in the initial award. So to now change the game just because the pandemic is over and things are different — even though Delta made a similar proposal pre-pandemic — would seem to be a mistake.
If Delta doesn’t want to fly to Honolulu or Portland, it should give the slots back as American did at JFK long ago and then let them go out to be reallocated through a DOT route case.
To that, Delta says it’s an issue of time:
…slot-pairs forfeited for underutilization and/or returned to the Department’s pool for reallocation will cause a gap in service – depriving consumers of the benefit of a scarce asset during the pendency of a multi-month Department administered proceeding.
So which is it Delta? Is demand so weak that you can’t fly or is it so strong that we just can’t afford to wait the months required to do a full proceeding to reallocate them? The airline is tying itself in knots here, but I can’t blame it. Why not try everything in your arsenal to keep your slots before giving up?
The reality is that Delta tried to get as many slots as it could during the previous proceedings, threatening doom and gloom if it couldn’t get them because it doesn’t have a Japanese partner. Thanks to that effort, Delta pulled in more slots than it otherwise would have. Now it is trying hard to keep those slots but repurpose them as it sees fit, and that doesn’t seem right.
DOT should go back to a proceeding. Delta can participate and ask for a second Atlanta or whatever it is that it wants. We already know that United will ask for Houston/IAH — something that would seem to provide much greater benefit than a second flight in any other existing market — and Guam, a market that I think would be a giant waste of a slot. Maybe American wants to try for a second DFW and maybe Hawaiian — well, nevermind, Hawaiian can’t even fly what it has now thanks to Japanese-origin weakness. I would think it would sit this one out.
While the idea could be floated that the whole original allocation should be scrapped and they can redo it without any gateway designation, that is risky and I don’t imagine any airline would be willing to play that game. That means DOT should just reallocate unused slots under the current system. If Delta doesn’t want to fly to Portland or Honolulu, the airline should give them back and hope that it can win them for a new gateway in a new proceeding.