The Feds Shoot Down Delta’s Request for Tokyo Flexibility

Delta, Government Regulation, United

It didn’t take long for the Department of Transportation (DOT) to make a decision on Delta’s motion to allow flexibility for slot usage at Tokyo’s Haneda airport. The ruling was a resounding “no way, y’all” to Delta’s plan, effectively backing most of United’s vision of how things should move forward. The question now is… what will Delta do about it?

I don’t need to spend much time on the backstory, because you can find it here. But I do need to deliver enough backstory to be able to smoothly work my favorite image into the post. You see, the US and Japan have an “open skies” agreement meaning airlines in the US and Japan can fly as much as they want between the two countries… except at Tokyo’s preferred Haneda airport.

Haneda is a busy place, and it’s because it is by far the most convenient airport for Tokyo and Yokohama. Narita to the north suffers from a distance problem, but also and more importantly, a godzilla problem.

And now that I’ve worked that in, I can skip most of the rest of the details. Just know that after two rounds of allocations, Delta has 7 of the daytime slots, United has 5, American 3, and Hawaiian 2 plus the 1 night-time slot.

Of Delta’s 7 slots, it flies five of them today with flights to Atlanta, Detroit, Los Angeles, and Seattle all doing well enough. Minneapolis/St Paul also flies, but seemingly only begrudingly. The two unflown are Portland (OR) and Honolulu. Those are the ones that Delta proposed could become floaters, allowing Delta to move them to other US gateways.

United’s response was a remarkably verbose and testy “no way, jerks.” It said that these were all doled out to airlines based on the specific gateways, and the decisions might have been different if they weren’t handed out that way. For this reason, it said Delta should have to surrender the slots and there would be a whole route case to determine what the best use would be. United isn’t doing this on principal, of course. It just wants a shot at those slots.

In its ruling, DOT agreed with United fully and completely. In summary:

Allowing carriers to now select at their discretion a different U.S. gateway would defeat
the Department’s rationale for selection of the existing carriers and gateways over other
competing applicants and would undermine the Department’s public interest
determinations made for the benefit of the traveling and shipping public.

DOT went on to systematically pick apart Delta’s entire argument. It started with the 2004 Brazil route case which Delta said created precedent. In that case, however, DOT says there were some slots with no gateways and others that had specific gateways attached. The “disparate treatment of otherwise similarly-situated carriers in the Brazil market” is what DOT said made it consider additional flexibility that wouldn’t necessarily be allowed elsewhere.

Delta went on to say that the fact that Japanese carriers that have joint ventures with US carriers do not have gateway restrictions creates that same two-tiered dynamic as in Brazil. DOT disagrees.

Another argument from Delta was around the 2017 Cuba case where United received flexibility. But as DOT notes, United only got that flexibility after having it included in the proceedings, “thereby giving all parties the opportunity to comment on the merits of the request and submit competing service proposals.” DOT used this to throw Delta’s argument back in its face, saying that the entire proceeding is what Delta’s proposal is lacking in the first place.

So, with that dismantling, the status quo remains. And now what happens? There are options.

Airlines do not need to use their Haneda slots through the summer season which ends on October 28 thanks to COVID-era waivers. But if an airline isn’t planning on having a route running by October 29, it has to inform the DOT by October 1 that it will not be using its authority. Mark that date on your calendar, because if Delta is going to abandon slots, it certainly isn’t likely to give any further advance notice than what’s required.

Delta still has these slots as of today. If it wants to start flying from Honolulu and Portland to Haneda on October 29, it can do that. The flights are currently in the schedule though many days are not showing any seats for sale and those that are appear to be only selling full fare tickets. This is how Delta had those flights in the system before, so we will see if it decides to start selling tickets soon or not.

If it opts to abandon one or both of those routes, then DOT would initiate another route case to determine who gets the slots. One would assume that Hawaiian has its fill of Haneda slots and would probably bow out of this one. But Delta would be likely to petition for either second daily service on its key routes like Atlanta and Los Angeles or possibly even doing its first New York/JFK trip. American would likely try for a second DFW flight. And United has telegraphed all along what it wants. It would like to fly 1x daily from both Houston/IAH and Guam.

What DOT would actually pick from that group remains to be seen. We aren’t there yet. For now, all eyes are on Delta to see if it will take a swing at Honolulu and Portland or not.

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37 comments on “The Feds Shoot Down Delta’s Request for Tokyo Flexibility

  1. I guess if Delta were REALLY spiteful (and presumably willing to lose some money), it could still fly those routes but just leave the pax ticket prices insanely high, while undercutting rates on the (weak) air cargo market to try to keep the bellies of the planes full.

    Are there rules about the minimum number of seats that must be available for sale?

    If not… I know it will never, EVER happen, due to the expense and Delta being smart enough to not want to anger the DOT even more, but the inner avgeek in me daydreams about Delta being petty enough to convert a few planes to “combi”-style planes, so that it could sit on the slots by flying a few rows of extremely overpriced pax seats in a widebody that has been converted to 95% cargo configuration. ;-)

      1. Sweet. That means that a Delta flight on a RJ from PDX to HND (with a refueling stop in Adak, Alaska) may be technically allowed, which is the BEST kind of allowed. /s/

        Similarly, that HNL to HND flight can also be operated by a RJ, with the pax treated to a quick tour of the WWII battlefields while the plane refuels at Midway (MDY in the Pacific, not MDW in Illinois).

        Someone give me a job in Atlanta and a ditch to use as a latrine, because I’ve just done DL’s slot squatting for it. ;-) (again, sarcasm)

  2. History shows again and again
    How nature points out the folly of (Delta’s) men (and women, of course, but it has to rhyme)

    Oh no, they say, he’s got to go
    Go go Godzilla, yeah
    Oh no, there goes Tokyo
    Go go Godzilla, yeah

    1. My thoughts exactly, John.

      The question now is… what will Delta do about it?
      A better question now is… what will Tim Dunn do about it?

      1. The beacons of Atlanta are lit! Delta calls for aid! And Tim Dunn will answer! Assemble the A350s!

        I have always been a strong believer of Tim Dunn’s analysis. When Timothee said there was a a high chance of DOT supporting the temporary shift in route route authorities, he was absolutely correct. High chance in aviator speak is anti competitive in regulator speak. The DOT saw the unmatched strategic advantage of having these route authorities transferred to hubs not included in DL’s initial application. The DOT had no choice other than to decline to DL’s application and is yet another example of DL becoming a victim of its own success.

        None of this changes the fact that the recent announcement at the Paris Air Show of DLs order of A350-1000 with accelerated delivery slots means that Delta can fly these routes and lose less money on these routes than pre COVID. If you think the CASM on the ex-LA birds are impressive, wait till you see them configured on the new deliveries.

        No other Korean gateway serves Haneda better than Incheon, and the DL-KE Air JV is still in its 5th year of infancy. The more disadvantaged DL/KE becomes in the Pacific market, the more likely the DOT will approve the KE/OZ merger. Some commenters had said that merger is uncompetitive in every sense of the word, but what they fail to realize that most of those who would be negatively impacted would be Koreans and not Americans. Now asking the DOJ to discriminate on national origin to facilitate anti competitive transactions is an interesting strategy, but the industry since COVID is a whole different beast requiring bold ideas. And if one needs new and disruptive ideas to get a wheelsup on the industry, who better than Delta.

  3. I can see both sides of the argument. But DOT’s ruling smacks of ego. It can’t seem to admit that its decision could possibly be flawed in any way or that market conditions might have changed. In fairness, Delta knew the rules of the game (and it really is a game) when it initially applied for the routes. The bottom line is that there’s nothing perfect when it comes to laws and regulations. And both sides raise valid arguments.

    It’ll be interesting to see what Delta does in October. It’ll be even more interesting to see what the DOT rules if there’s another slot allocation process. Will DOT grant Delta different routes? Will United/ANA be handed a dominant position at Haneda? Or will American/JAL get some more slots? Will Northern Pacific apply for a slot or two? What about Hawaiian? Will Godzilla move closer to Haneda? These and more answers may be coming in October – or November on – “As Cranky Turns.”

    1. If it seems like the DOT order smacks of ego, that’s because Delta’s request was a tad absurd, contrary to the very basis the slots were (and have been) awarded, going back decades now.

      The DOT expressly admits that market conditions have likely changed; but they also note the proper remedy for that is for Delta to give back the slots, and then DOT will open a new proceeding to develop a new evidentiary record.

  4. Welcome to the last remnants of CAB regulation.

    This whole thing impresses me as incredibly stupid. DOT needs to be out of the regulatory business. Just award the U.S. airlines the Toyko Haneda slots. Unless the Japanese government vigorously disagrees, let the U.S. airlines fly from wherever they want to Toyko Haneda.

    If Delta wants to fly seven round-trips a day from Atlanta, why not? It would be rather stupid, but that should be their right. Ditto for United from, say Chicago O’Hare. The only constraint should be whether the airlines have the slots to operate, if they choose to operate from slot constrained airports.

    1. The difference is that the slots are part of the treaty, which means they are the US’s slots. Which means the DOT has to allocate them somehow.

      The treaty doesn’t confer any rights to the airline, it confers them to the country.

      I suppose the DOT could just auction off the slots; but the last time that was suggested, all of the airlines were adamantly opposed to such an idea.

  5. If the current slots are returned and put up for a rebid, I wonder if DL would still be favored in the new allocation, since the lack of a JV that helped them in the first round is still at play.

    This could all be a long way of granting DL’s initial request, just making them take a few extra steps so that none of the initial DOT bid rules are violated.

    1. I agree, I would fully expect DL to win at least 1 of their 2 back for competitive balance. They would definitely win from JFK.

    2. Definitely will be interesting to see if Delta is able to successfully rebid since they just filed with DOT saying all their flights have depressed demand and they have a history of not being able to make Haneda work.

  6. Unrelated to the content of the post, but why is every commenter’s name [1], including mine from my last comment?

    1. Mark – Hmm, this is weird. The email notifications show the right name but it’s just how it’s being displayed. There must have been a recent theme update that broke this. I’ll work on it best I can to get it restored.

      1. AHA! It was something in the newest version of the Gutenberg plugin. I rolled it back and now it works. So, I’ll know what to keep an eye on.

  7. It appears that DL are aggressively discounting fares on HNL-TYO, while still putting full fares on PDX-HND.

    Next round of popcorns entertainment: DL and UA (plus AA potentially) submitting new bids for HND. MSP-HND still is in recovery/coping mode, which makes PDX-HND quite a stretch.

  8. Delta flew PDX to Haneda for years it seemed before the pandemic, or so it seemed as a local PDX flyer seeing it on the departure board back in the day. With travel returning to pre-pandemic levels I don’t know why they wouldn’t restart it, even if not daily

    1. They flew Portland to Tokyo Narita, not Tokyo Haneda. I flew it one time on an MD-11. Later on they used a 763. Back then the only flight to Haneda from the US Mainland was China Airlines with a 747 from SFO to HND. Reason for this was that Air China did not want to be in the same Airport as China Airlines so they made CI use Haneda while Air China used the new international airport at Narita. I used to fly on that CI flight also, and they used the so called International terminal 3 at Haneda which was an old building in which they were located by themselves. Their flights to TPE also left from this terminal They later switched their US flight to HND-HNL in lieu of HND-SFO.

  9. My son just reminded me today on an unrelated topic that you miss 100% of the shots you don’t take. We have no idea what DL was trying to do w/ its request but they undoubtedly thought they could use the two frequencies better.
    UA is right from what I can tell that Japan demand is improving so DL might have simply been able to put off operating HND to HNL and PDX in order to deploy airplanes to Europe where there is much stronger demand.
    There is an appeals process and Delta could legitimately argue that the US and Japan should not have Open Skies since the largest airport – HND – does not have Open Skies which the US requires every other country to have in order to approve joint ventures. AA and UA might not want to have to defend the DOT in that case. DL could probably only appeal if it flies the routes at least thru the winter.
    As for HNL, DL will very likely operate it. PDX could be sustained w/ a few connecting flights and low fares – not ideal for the industry for one of the shortest continental US routes to become a “trash route” that could easily siphon off low fare seeking passengers from across the country.
    If DL decides to walk away from one or both, they could reapply and would still have an advantage based on the same logic of total AA+JL vs DL vs. UA-NH flights. 2nd flights to a destination that already has a HND flight or has one on a JV to the same metro areas probably is not going to be as successful as a route that is new to a carrier/JV – which is why HND-BOS, JFK or SLC (in no particular order) would be more likely to be chosen than any other route other than if AA tries again on HND-LAS.

    The bottom line is that HND is siphoning off high value local traffic from NRT and its economic demise is coming. Japan will have no choice but to add another round of HND slots which will allow DL to build its own HND network.

    As for DL’s expected A350-1000 order, word is that Rolls-Royce will not give DL maintenance overhaul rights for the Trent XWB 97 engine that powers that aircraft while Boeing/GE has put a proposal on the table which includes lower prices than the A350 and overhaul rights for the GEnx engine which has sold far more than either of Rolls’ widebody engine models. Delta reiterated its desire to build Tech Ops.

    As for the DL-KE joint venture, DL is clearly waiting for resolution of the KE- Asiana merger to add more ICN flights. DL has more widebody aircraft entering service this and next year than any other US airline and they specifically said their JV hub to hub flights generate twice the margin of other international flying.

    1. “You miss a 100% of the shots you don’t take”. Shots fired! Say it louder for the Air Marshall in the aft lavatory! Checkmate DOT, Tim gets it.

      I too had a similarly relevant conversation with my ancestors. My understanding is that the Atlanta Falcons are looking for an Assistant to the Special Teams Coordinator who never punts, never kicks field goals, never fair catches, always does onside kicks, and only goes for the two point conversion. Watch out Delta, Tim is the perfect candidate.

      The day of measured growth for Delta are over, and the new era of unmeasured growth is here. If the recent A350 RR-powered order is delivered with 787 and GE power plants so be it. Aviation is a marathon, not a catwalk. Models are irrelevant. Corporate communications has always been a laggard compared to the breaking insights from Tim. Thank goodness they’re not in flight ops, as they’d likely use APU and wind sails to taxi the aircraft. Take note comms team and gov’t affairs, Tim likes full reverses on pushback and TOGA at cruise.

      Even if DL decides not to grow international flying with the ultra longe range and high payload 787-10s, they can easily replicate the proven strategy of making JV partner metal and labor do more of the flying on a lower cost basis. It doesn’t make economical sense to grow non JV hub flying when it’s half the margin of flying to JV hubs. After all Delta earns more revenue in London on its JV with VS than AA/ BA, or in South America with LA vs AA, or in Asia with KE vs UA/NH. DL also leads the way in the South Pacific with its ATI enabled solo venture.

      Not even the XWB-97 can drown out of the ALPA cries of “Our scope is dope.” Union citations are pennys for Delta’s multi billion dollar operation. And newsflash, scope it not dope. Dope is nope. If you want to use illicit substances, find a position in management.

      1. You others misunderstand a number of facts and thus come to wrong conclusions.
        1. The US has an air services treaty with Japan which limits US airlines’ ability to fly where the market dictates and at market-based numbers of flights – both of which are incompatible with US standards for Open Skies – even while granting JVs which do not have the same restrictions.
        2. It is unlikely DL will walk away from any HND routes w/o a high likelihood to re-win those frequencies.
        3. Japan said years ago that HND will eventually host all legacy/premium carrier intercontinental flights while NRT will be for LCCs. There are not enough slots YET at HND for that to happen, forcing NH/UA and JL/AA to operate split Tokyo hubs. DL needs to add less to its network to fully develop Tokyo than AA/JL or UA/NH do. Fewer flights US-China/HKG help every other transpacific airline.
        4. ICN is already a larger airport for coverage of Asia than HND; Japan’s role as a connecting hub will continue to diminish because of the split Tokyo hub. KE should be able to address market concentration concerns of the Asiana/Korean merger with remedies.
        5. The DL-ALPA scope agreement is not about telling the company where it can or can’t fly but about ensuring that JV partner widebody growth is matched or exceeded by DL widebody growth. The Asiana merger will automatically increase the required amount of DL widebody flights. If DL can generate more profits flying much of its own international network to JV partner hubs, that is what benefits DL and ALPA the most.
        6. Delta just said they expect Tech Ops to generate $5 billion in revenue by 2030 which could equate to nearly $1 billion in profits. All Delta employees benefit from DL profits, regardless of where they come from. Delta has MRO rights on every aircraft it has on order. Airbus has not sold enough A350-1000s for Rolls to share MRO revenues.
        7. Based on its current order book, Delta will have 24 ULH capable A350-900s, more than enough to add a whole lot more ULH flying. DL could still buy more new or used A350s.
        8. The lighter but less capable 787-10 has the lowest seat mile costs of any widebody including either A350 model. The 787-10 for UA and KLM seats more passengers than DL’s A350-900s but less than VS’ A350-1000s and can still fly 13+ hour flights. The 787-9 is comparable in size and direct operating costs to the A330-900.
        9. DL’s next widebody order is about fleet complexity vs. lower aircraft-specific operating costs and future Tech Ops profits. Under a potential DL-GEnx agreement, other carriers will subsidize DL’s widebody fleet as now happens with DL’s narrowbody fleet.
        10. DL, Airbus and Rolls-Royce have very strong relationships which Boeing and GE want a piece of. All will fight hard. DL has choices and will continue to have some of the lowest aircraft costs in the world net of Tech Ops profits which are far larger than the impact of any two routes.

    2. Why wouldn’t RR agree to a service agreement? They already have one for the Trent powering the existing 350 fleet.

  10. I can’t help but notice how close Godzilla is to Tokyo Disney. I’m sure that’s coincidental.

  11. I see a parallel between DL at HND and UA at LHR; neither have a partner at these top airports in G7 countries with premium rich demand.

    LHR has DL:VS and AA:BA while HND has UA:NH and AA:JL.

    I believe both HND and LHR are slot constrained and have other nearby international airports in NRT and LGW/STN.

    Have there been DOT decisions at LHR than have application at HND?

    Given DL’s focus on premium rich demand, no wonder they want to maximize flights to HND but if so why didn’t their initial DOT application include only premium rich originations? I sense PDX is likely marginal and HNL is likely tourist focused.

    DL’s quest for premium demand is also why it abandoned NRT for HND. Basically DL has destroyed the multi-decade franchise that Northwest used to have in Japan and Asia based on their pan-Asian connectivity from NRT.

    The Elephant-in-the-Room is it appears DL management made a mistake regarding applying for PDX-HND and HNL-HND.

    ALL Fortune 500 firms neither want to admit any management mistakes nor play by any 3rd-party rules, thus the “lets appeal to the DOT” initial path. UA was correct to call “foul ball” on this one, as was the DOT.

    At least UA has publicly spoken about their challenges at LHR in not having a local partner. If you look at UA-&-LH routes (eg LAX-DEL) you will see UA and LH are aggressive with routings that include a LHR-FRA leg in order to route transit passengers on to FRA for greater connectivity. DL could do the same with their Korean Partners too but we know that premium travelers won’t tolerate this extra segment. LH has hourly LHR-FRA for most of the day and I am certain that KE has hourly HND-ICN too, but again premium demand abhors extra segments.


    My conclusion is DL’s HND challenge is due to a) No local partner and b) Premium demand focus. Their path to resolution is to give up the slots and go through the DOT process once again and have a better thought out plan than their PDX and HNL mistakes.

    1. The routes DL has been awarded at HND are the exact same routes they operated from NRT at the time of the last beyond Tokyo NRT flight. PDX has had US carrier service to Tokyo for decades – first UA, then DL (pre-merger) as part of DL’s PDX Asia gateway, then NW, then DL again merged.
      PDX’s entire economy has taken a big hit under covid which has also changed alot of travel patterns.
      This winter will be the first winter post-covid that Japan-HNL traffic COULD rebound but it is far from clear that it will.
      The real surprise, if there is one, is that DL didn’t see the value in JFK to Asia and dropped JFK-Tokyo – which AA also flew and dropped, DL w/ NRT service and AA w/ night time HND service.

      As for the comparisons to LHR, again, the US does not have any power to tell airlines where they fly to any point in the UK – that is what Open Skies is supposed to be – and that is far different than the situation at LHR where airlines just need to obtain slots – no small task – but it is an economic and supply and demand problem, not a regulatory hurdle.

      And DL will add JFK-ICN – it is just a matter of time. Whether they continue to fly PDX to Asia – in any form – remains to be seen and it is far from certain how long the continued limited access regime to HND which is slowly siphoning off traffic from NRT will last.
      It took more than 10 years from the time DL inherited the NW hub until the lst round of HND awards were made – which happened just weeks after covid broke out. I suspect this will all be resolved and each of AA, DL, HA, UA and their partners will fly where they want in Japan.

      btw, Delta’s US-Japan routes ARE part of DL’s joint venture with Korean. They do not lack a partner. DL-KE just do not have a hub that carries connecting traffic over and beyond Tokyo; that is what Seoul is for and it will only grow when the Asiana/Korean merger is finally settled. KE says it is proposing a remedy plan to the EU and the EU has suspended their investigation of the merger pending receipt of that plan. The EU and US are the two major governments that have not yet approved the Asiana-Korean merger.

  12. What’s most important from this decision is that it means we will get at least one and possibly more appearances from the Godzilla’s Home graphic. We need to retain perspective on what truly matters here…

  13. I know DL moved all of their US-NRT flights to HND, but didn’t those seven NRT flights to the US have the advantage of being fed by other DL flights from around Asia into NRT?

    Without the hub it doesn’t seem like DL would need seven flights to HND, especially considering they’re up against the AA/JL and UA/NH JVs. Since a lot of the DL US hubs rely on connections, why not route those connections via their remaining five hubs, bolstering their profitability?

  14. Brett, your recent interview with UA’s Patrick Quayle brought up a good point that I’d never thought of that I think could tie into this story.

    You brought up how the limited flights between US and China have the silver lining of reducing capacity dumping and yield trashing from the US to Asia in general without as many connection opportunities in China on the large Chinese airlines.

    Does the current situation make these HND routes even more important for AA and UA, as they can more profitably connect pax from the US to cities around Asia via JL and NH?

    1. Mark – I’m sure it doesn’t hurt. Of course, United has been more proactive by putting those Singapore flights into the schedule which it can use to overfly Tokyo. But the connecting fares have to be a real benefit on those Tokyo flights.

  15. This is the right decision. DL got all it wanted by being allowed to consolidate at HND and got the largest slice of slots to do it. True, it has no Japan partner, but it has KE and ICN to flow connections over. Also, DL has flown JFK-TYO previously so launching JFK-HND would be nothing new.

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