One could easily think that Tokyo Haneda International airport is the airline network equivalent of Shangri-La based solely on US carriers' repeated pining for access to the airport.
Limited to just four frequencies to Haneda among them, American Airlines, Delta Air Lines and Hawaiian Airlines are immersed in the latest US Department of Transportation proceeding to award a frequency since they first became available under the US-Japan open skies agreement in 2010. Their interest follows three previous similarly heated proceedings during the past five years.
American is proposing a daily flight from Los Angeles on an up to 260-seat Boeing 777-200, Delta is defending its daily flight from Seattle Tacoma on a 210-seat Boeing 767-300ER and Hawaiian is proposing a daily flight from Kona on a 294-seat Airbus A330-200 for the frequency.
The proceeding comes after Atlanta-based Delta, which holds the frequency for its Seattle-Tokyo Haneda route, cut flights on the route to just 17 roundtrips between October 2014 and this March. This schedule allowed it to meet the DOT’s minimum operational requirements that the frequency be flown at least once every 90 days.
Delta argues that it is in full compliance with these rules while American and Hawaiian argue that the carrier has failed to meet its operational promises, both in terms of frequency and seat capacity. They claim that their proposed routes will produce a greater public benefit than Delta’s service.
Reading just the numerous filings, one could easily come to the conclusion that Delta has committed a huge public injustice and that flights to Haneda are airline network gold.
“Seatless in Seattle” is American’s pithy catch phrase for the service reduction by Delta, playing on the title of 1993 film staring Tom Hanks and Meg Ryan.
But are Haneda slots really worth all the effort – and legal fees – that US carriers are investing in them?
“In order to have a meaningful presence in Tokyo, service to Haneda is a necessity,” says Scott Kirby, president of Fort Worth, Texas-based American, in testimony included in the carrier’s 5 January application. “Like LaGuardia in New York and Reagan National in Washington DC, Haneda is close to downtown, and heavily business-oriented, making it a popular airport for travel in and out of Tokyo.”
He goes on to say that American cannot have a strong presence in Asia without a strong presence in Japan and Haneda service is critical to achieving that status.
The Oneworld Alliance member is the only US carrier without direct access to Haneda, though it has indirect access via its immunised joint venture partner Japan Airlines (JAL). Delta holds two frequencies for flights from Los Angeles and Seattle Tacoma, Hawaiian one for a flight from Honolulu and United Airlines one for a flight from San Francisco.
Japan’s All Nippon Airways (ANA) and JAL have two US-Haneda frequencies each, which they use for flights to Los Angeles and Honolulu, and Honolulu and San Francisco, respectively.
Kirby’s claims may be true but US carriers have yet to demonstrate the criticalness of Haneda to the profitability of their Pacific networks. American held a frequency for service between New York John F Kennedy International and Haneda from the first proceeding in 2010 until it returned it to the DOT citing financial losses in December 2013.
“Our Tokyo Haneda flight has been quite unprofitable, largely because we are allowed to operate only during severely restricted hours, limiting our customers' options for connecting flights to and from other Asian markets,” said Virasb Vahidi, then American’s chief commercial officer, in a letter to employees in October 2013.
Delta made a similar – if less pointed – argument when it asked the DOT for approval to shift the US gateway of its Detroit-Haneda frequency to Seattle Tacoma in July 2012.
“Delta has found that eastern US-Haneda service is underperforming relative to the west coast-Haneda service,” it said in its application. “Seattle’s west coast location… allows for a more attractive and consumer friendly schedule that is a better fit with the Haneda operating window.”
Flights by US carriers to Haneda must arrive in Tokyo between 22:00 and 07:00, and depart between midnight and 07:00.
Shakeel Adam, managing director at airline advisory firm Aviado-Partners, says that the arrival times in Tokyo are “perfectly manageable” for a flight from the eastern USA with a departure between 19:00 and 22:00.
“North American markets do not typically take long haul late evening arrivals,” he says, citing a departure time from Tokyo after midnight that would arrive US east coast around the same time. “This could really be the problem, that for US carriers, the issue is not west coast to Haneda [but] it is east coast and potentially south.”
Adam adds that it would be difficult for US carriers to schedule onward connections from Tokyo through midwest and east coast hubs with these late arrival times.
While this explains the western gateway preference of US carriers for Haneda flights, it still leaves the question of why the airport is so sought after. Kirby cites its importance to business travellers, who generally pay higher fares and drive yield premiums, over flights to more remote Tokyo Narita International airport.
However, Tokyo Haneda does not appear to command higher fares than comparable service to Tokyo Narita International airport. A review of published airfares for both economy and business class seats on ANA, Delta and United for flights to Haneda compared to the same route to Narita for three different dates shows little or no difference in fare.
The only case of notable fare difference that shows a premium for flights to Haneda is on ANA when they ask for $1,334 for an economy roundtrip from Los Angeles departing 23 January and returning 30 January. This compares to $1,109 for the same trip to Narita airport.
Delta is actually charging more for a business class roundtrip to Narita than to Haneda on two occasions, asking $4,914 more than the Haneda fare for the 23 January-30 January itinerary and $1,545 more for a roundtrip departing 5 June and returning 12 June.
Haneda does not appear to be a pot of gold.
Positioning for future expanded access to Haneda could be driving US carriers. Brad DiFiore, managing director at Ailevon Pacific Aviation Consulting, says the effort that American, Delta and Hawaiian are putting into the current proceeding makes sense if they have long-term strategic motives to gain access to Haneda, such as gaining a frequency now that could be converted to more favourable time slots at the airport in the future.
“Its hard to imagine that’s a recipe for immediate financial success,” he says, referring to American’s proposal to begin a third Los Angeles-Haneda flight and the eighth Los Angeles-Tokyo flight. “There are definitely strategic reasons for doing it. That’s pretty clear.”
Both American and Delta have publicly pushed for more flexible and additional access to Haneda. Richard Anderson, chairman and chief executive of Delta, told Flightglobal a year ago that there is enough capacity at the airport to accommodate all flights by US carriers at Narita and Haneda based on the airline’s calculations.
“That’s dark skies… not open skies,” he said on the limits to US carrier at Haneda.
American pushed for additional access in a regulatory filing in June 2014, saying: “It is clearly in the public interest for the Department [of Transportation] to seize any opportunity to negotiate sufficient additional designations without time constraints so that all US carriers have the opportunity to access Haneda from their respective gateways.”
The end game of for US carriers at Haneda is far from clear but past precedent and ever more liberalised skies indicate that increased access at the airport will likely occur – eventually.
Source: Cirium Dashboard