Delta Air Lines is mounting an impressive campaign against a tentative agreement that would create five new slots for US carriers at Tokyo Haneda International airport.

The proposal, which was reached by Japanese and US officials in December 2015, would allow for 10 “daytime” slots – five for each country – for service between Haneda and the USA, says Ben Hirst, chief legal officer at the Atlanta-based carrier, in a presentation to the Metropolitan Airports Commission in Minneapolis today.

“The effect of that will be to divert Tokyo traffic [to Haneda] from Narita that is necessary to support Delta’s hub,” he says. “It will have a significant impact on Delta… It will cause Delta’s Asia hub to unravel.”

Painting a very bleak picture, Hirst outlines the process through which the airline’s hub at Tokyo Narita International airport would unravel. First, it would end flights to Los Angeles and New York John F Kennedy, next beyond services to Bangkok, Osaka and Shanghai, after which Minneapolis/St Paul and Portland flights would go and eventually flights to Detroit and Atlanta leaving it with barely a shell of the former hub.

“It’s the loss of the connecting traffic that will kill the flights,” he says, pointing to how Delta carefully balances its seats through Narita between connecting and origin and destination (O&D) traffic.

There are roughly 3,100 O&D passengers daily between the USA and Tokyo, his analysis shows. Delta carries about 900 of these, with the balance of the roughly 2,400 passengers it flies into Narita daily connecting on to the about 1,500 seats it flies to points further in Asia.

Hirst anticipates that Haneda could serve all of the Tokyo O&D traffic under the tentative agreement.

WORST-CASE SCENARIO

Hirst is very likely painting a worst-case scenario for Delta in Tokyo. While he outlines the basics of the new Haneda agreement, his assumptions are based on Delta receiving just one or two daytime slots at Haneda – far from a foregone conclusion – and does not account for the changes it is already making to its Narita hub.

He does not clarify whether the five new daytime slots are replacing or in addition to the four night-time ones available to US carriers nor whether the DOT would hold a new allocation proceeding for the slots. Delta could gain more slots at Haneda than their forecast two under either scenario.

The carrier already has one night-time Haneda slot that it uses for daily service from Los Angeles. It had a second slot for a Seattle Tacoma flight but returned it in September 2015 after the DOT instituted strict operating requirements.

Hirst also makes a number of assumptions about Delta's competitors American Airlines, Hawaiian Airlines and United Airlines. While American and United would undoubtedly coordinate with their joint venture partners Japan Airlines (JAL) and All Nippon Airways (ANA) to offer service in the largest US-Tokyo O&D markets, their slot decisions would have to also take into account the connecting traffic they carry over the city.

In addition, if the agreement adds the daytime slots to the existing night-time ones, Hawaiian may prefer to keep flying its Honolulu service at night – something that Hirst acknowledges works well in his presentation – leaving an additional daytime slots open to Delta.

"American urges the US government to finalise a deal to allow US carriers to operate at Haneda during times that are convenient and desirable for US travellers," a spokesman for the Fort Worth-based carrier says.

Hawaiian and United were not immediately available for comment on the proposed Haneda slot agreement.

Hirst’s unfavourable perspective on the situation does make sense. His presentation is part of an effort to build support against the tentative agreement by outlining how it will hurt the Minneapolis airport, whose board he was speaking too.

Metropolitan Airports Commission board members called for an official statement to be drafted and submitted to the DOT and US Department of State against the agreement as it stands.

Delta has been downsizing its Tokyo Narita hub since 2013. It has discontinued service to Beijing, San Francisco and Seoul and cut seat capacity by about a third at the airport over the past three years, Innovata FlightMaps Analytics data shows.

During that same period it has built an Asia Pacific gateway at Seattle Tacoma International airport, allowing it to overfly Tokyo with nonstop flights to more destinations in Asia. For example, it discontinued service between Narita and both Beijing and Seoul after adding nonstop to the cities from Seattle.

Delta could fly to Osaka and Taipei, two cities it serves over Tokyo Narita, from Seattle Tacoma with aircraft already in its fleet. In addition, it could easily replace the capacity on its Shanghai-Tokyo routes with higher gauge aircraft on its flights to the Chinese city from Detroit, Los Angeles or Seattle.

HANEDA HUB?

Delta wants to move its Narita hub to Haneda. Richard Anderson, the carrier’s chief executive, told Airline Business in 2010 and again in 2014 that they want enough slots at the close-in Tokyo airport to move their entire hub there, as well as an open market to buy, sell and trade slots.

“We need to be able to put a dozen flights into Haneda and run our hub out of Haneda, not out of Narita,” he said in 2010. “We need the ability to buy and sell [slots] with all of our alliance partners, so there is just a whole series of those kinds of free market evolutions that need to take place."

Delta’s demands are unchanged. It wants enough slots to move its entire hub all at once and an open market for those slots, says Hirst today.

“If they're going to liberalise Haneda, they need to open it up all at once,” he says, noting that the new tentative agreement does include some further liberalisation after 2020 that would be too little, too late for Delta’s Narita hub.

Japanese and US officials are scheduled to meet next in February in Tokyo, says Hirst. He anticipates a push to reach a final agreement on Haneda at this meeting.

The DOT was not immediately available for comment.

Source: Cirium Dashboard

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