Why I Question The Logic Of DOT Tokyo Haneda Slot Awards

I’m eating a little humble pie today…or at least humble mochi. My aviation predictions tend to be accurate, but not on the recent slot awards for Haneda Airport in Tokyo. Still, I question the logic of the DOT.

Late yesterday, the U.S. Department of Transportation tentatively awarded 12 Tokyo Haneda slots to a mix of four different airlines.

I’ve listed all slot requests below. Those in green were approved while those in red were denied.

• American Airlines
  • Dallas – DFW – (777-200ER) – Approved
  • Dallas – DFW – (777-200ER) – Denied
  • Las Vegas – LAS (787-8) – Denied
  • Los Angeles – LAX (787-8) – Approved
• Delta Air Lines
  • Atlanta – ATL  (777-200) – Approved
  • Detroit – DTW (A350-900) – Approved
  • Honolulu – HNL – (767-300) – Approved
  • Honolulu – HNL – (767-300) – Denied
  • Portland – PDX (A330-200) – Approved
  • Seattle – SEA (A330-900neo) – Approved
• Hawaiian Airlines
  • Honolulu – HNL – (A330-200) – Approved
  • Honolulu – HNL – (A330-200) – Denied
  • Honolulu – HNL – (A330-200) – Denied
• United Airlines
  • Chicago – ORD (777-200) – Approved
  • Guam – GUM (777-200) – Denied
  • Houston – IAH (777-200) – Denied
  • Los Angeles – LAX (787-10) – Approved
  • Newark – EWR ( 777-200) – Approved
  • Washington – IAD (777-200) – Approved

Why I Was Wrong

Delta received 5/6 of its slot pair requests. I had predicted:

Delta will receive two slots, one for Honolulu and one for Seattle. This is because this service change will still leave flights to Narita from both cities. Its other requests will not be priortized since they will lead to cuts from Narita.

Delta’s awards surprised me most because the carrier was upfront about wanting to replace service to Tokyo Narita with service to Tokyo Haneda. Narita is certainly no longer a Delta hub, but it still serves as important airport for local and connecting traffic. Since Delta’s requests from Atlanta, Detroit, and Portland would result in a net gain of zero flights to Tokyo, I figured that those requests would be passed over in favor of requests for additional service to Tokyo or from airports in which a Narita option would remain.

United applied for service from six cities, telling the DOT that it would replace flights to Tokyo Narita with Haneda flights from Chicago, Houston, and Washington. Service from Guam, Los Angeles, and Newark would represent new services and complement existing Narita service. Joint venture-partner ANA plans to continue Narita service from Chicago, Houston, and Washington. Thus, I predicted that United would receive all six slots:

United will receive a slot from all six cities. Three are a given–the new service to Guam, Los Angeles, and Newark. But I think the other three make sense because United does not face competition on these routes and consumers prefer Haneda over Narita. ANA will (presumably) continue to fly from Chicago, Houston, and Washington to Narita, meaning consumers will still have the choice to fly to either Tokyo airport.

Again, I was off. The DOT dismissed Guam because it it is already well-served by Narita:

United’s Guam proposal would require the allocation of a scarce Haneda slot pair to provide short haul flights in a leisure oriented market. While the Department appreciates the benefits that passengers might enjoy with access to the downtown Haneda airport, the large Guam-Tokyo market is already well-served at Narita, and the Department tentatively finds that an allocation here would not represent the best use of a limited Haneda opportunity.

And here were see what I view as the odd logic of the DOT. Well yes, Guam is already served by Narita. But why not Haenda as well? Isn’t the goal to increase flights to Japan, not just shift airports? Why target a “leisure” market? Aren’t all the other city pair awards also “well-served” at Narita? It strikes me as odd that United seems to have been penalized (in Houston as well) for the fact that it planned to maintain service to Narita either directly or via its JV/codeshare partner ANA.

Las Vegas Denied

The DOT also denied American’s requested for a Las Vegas to Haneda slot. I figured this was a sure thing because no other carrier serves this destination nonstop. Here’s why the DOT denied it:

The Department recognizes that Las Vegas is the fifth-largest mainland U.S.-Tokyo market, however, American proposes to offer connections to only five U.S. points over Las Vegas, four of which are being tentatively selected in this proceeding for nonstop U.S.-carrier Haneda service of their own. In view of the potential benefits of the other proposals that the Department is tentatively selecting here, and considering the carrier’s placement of this proposed service as its lowest-ranked priority, the Department has tentatively decided not to make an allocation for American’s Las Vegas-Haneda proposal.

So the DOT recognizes that local traffic between Las Vegas and Tokyo would be substantial. At the same time, it faults American for no longer having a hub in Las Vegas (i.e., limited connections available). I’m not sure why this proposed route is less valuable than another Tokyo to Honolulu flight for Hawaiian or Delta. But AA shares some blame too, as the DOT notes that it ranked Las Vegas as its lowest-priority slot request.

CONCLUSION

My predictions were off…I own up to that here. But I do question the logic of encouraging airlines to cut Narita service in order to serve Haneda. Why not encourage service to both Narita and Haneda, thereby providing more choice to customers on both sides of the Pacific and as a result, better fares?