U.S. Airlines Squabble Over Slots in Tokyo: Round 4

By Markets Fool.com

In 2010, the United States and Japan agreed to allow a limited number of nonstop flights from the U.S. to Haneda Airport near Tokyo. Haneda is by far the closest airport to downtown Tokyo, but for more than three decades, all flights to the U.S. had to use the more distant Narita Airport.

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According to the agreement between the U.S. and Japan, each country was allocated four slot pairs for flights between the U.S. and Haneda. (Each slot pair allows one daily roundtrip flight.) The slots for U.S. carriers were restricted to 10 p.m.-7 a.m.

U.S. airlines have vigorously pursued slots at Haneda Airport.

Despite this unusual constraint, numerous carriers including American Airlines , Delta Air Lines , United Continental , and Hawaiian Holdings have been interested in serving Haneda. Even today, these airlines continue to squabble over the limited slots for Haneda flights.

The initial competition
When the U.S. Department of Transportation opened the application process to divide up its four slot pairs, several carriers responded. Delta asked for all four slot pairs, in order to fly to Seattle, Detroit, Los Angeles, and Honolulu. American proposed daily flights to New York and Los Angeles. Hawaiian Airlines asked for slots to fly twice daily to Honolulu.

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Lastly, United, Continental, and Continental Micronesia -- all of which are today part of United Continental -- requested slots for daily service to San Francisco, Newark, and Guam, respectively.

Delta received two Haneda slot pairs in the initial allocation, while United and Continental were left out in the cold.

Ultimately, the DOT gave two slots to Delta for flights to Detroit and Los Angeles, one slot to American to fly to New York, and one slot to Hawaiian to fly to Honolulu. It awarded these flights based on Honolulu, New York, and Los Angeles being the three top U.S. origin/destination cities for flights to Japan, and Detroit being a key connecting hub for travel between the eastern U.S. and Japan.

The drama begins
That could have been the end of the story, but operating successful service to Haneda was easier said than done. Airlines were interested in Haneda primarily because they thought business travelers would enjoy the convenience of flying to an airport closer to Tokyo. But while the location was convenient, the flight times were the very opposite.

Airlines found the 10 p.m.-7 a.m. window for arrivals and departures at Haneda to be particularly problematic for flights to the eastern U.S. Delta delayed the start of its service to Detroit, temporarily suspended it, asked for a waiver of the "use it or lose it" rules for the Haneda slots, and ultimately canceled the flight.

In mid-2012, Delta requested permission to instead fly from Seattle to Haneda, seeing that West Coast service to Haneda was performing better. However, the DOT solicited a new round of applications. United again proposed San Francisco, American again proposed Los Angeles, and Hawaiian proposed Kona (on Hawaii's Big Island, in lieu of a second daily flight to Honolulu). Ultimately, Delta won that round in early 2013.

Another bump in the road
Later in 2013, American Airlines decided to call it quits on its New York-Haneda route. Like Delta, American had delayed the start of service, suspended the route for a while, and even lobbied to loosen the restrictions on flight times at Haneda. None of these efforts offered a long-term solution, so American simply opted to give up its lone Haneda slot.

American Airlines' New York-Haneda route was a big money-loser. Photo source: American Airlines.

With American out of the running -- and Delta now satisfied with its Haneda slot holdings -- the DOT had to choose between two applications: United again proposed flying to San Francisco and Hawaiian again proposed Kona. This time, United finally got its chance to serve Haneda, and it inaugurated service in October 2014.

Time for round 4!
Recently, Delta, American, and Hawaiian have squared off for a fourth time. Delta's Seattle-Haneda flights have been only slightly more successful than its flights to Detroit. As a result, Delta dropped the route for nearly the entirety of the weaker fall and winter seasons, announcing plans to operate the route seasonally going forward.

American Airlines complained to the DOT in early October, arguing that the route should be awarded to an airline willing to operate year-round service. Despite the failure of its route from New York to Haneda, American Airlines wants to fly from Los Angeles to Haneda. Hawaiian later chimed in, also opposing Delta's seasonal flights.

The DOT has reopened bidding yet again. On Monday, American Airlines announced that it had applied for year-round service between Los Angeles and Haneda, while Hawaiian Airlines put in its third application for rights to fly year-round from Haneda to Kona.

Hawaiian Airlines is again seeking a second slot pair so it can fly from Haneda to Kona. Photo source: Wikimedia Commons.

Will the fourth time be the charm for Hawaiian Airlines?
Hawaiian Airlines has always faced an uphill battle in its efforts to get a second slot pair at Haneda Airport. With only four slot pairs available, the DOT has understandably looked to promote nonstop service from major mainland hubs to Haneda.

However, this is Hawaiian's best shot yet. It is proposing daily year-round service with a 294-seat A330, which would represent a more efficient use of the slots than Delta's seasonal service with a smaller 767-300 aircraft.

Furthermore, American's proposed route to Los Angeles would be the third Haneda-LAX route (joining flights by Delta and ANA). Los Angeles also has plentiful service to Narita Airport. By contrast, Hawaiian's proposed flights to Kona would be the only international service at Kona, bringing new tourists to Hawaii and potentially creating more than 1,000 jobs.

The DOT may still opt for either Delta or American in order to bolster competition for flights between the top West Coast hubs and Haneda. Nevertheless, Hawaiian Airlines has made a compelling case for getting a second slot pair at Haneda, based on its proven success on the Haneda-Honolulu route.

The article U.S. Airlines Squabble Over Slots in Tokyo: Round 4 originally appeared on Fool.com.

Adam Levine-Weinberg owns shares of Hawaiian Holdings, The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.