January 20, 2015 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.
Motion and Application of AMERICAN AIRLINES, INC. Motion of HAWAIIAN AIRLINES, INC. in the matter of 2010 U.S.

- Haneda Combination Services Allocation Proceeding Docket DOT

- OST

- 2010

- 0018

CONSOLIDATED REPLY OF AMERICAN AIRLINES, INC.

TO APPLICATIONS AND A NSWERS OF DELTA AIR LINES, INC. AND HAWAIIAN AIRLINES, INC.

Howard Kass Vice President

– Regulatory Affairs Robert A. Wirick Managing Director, Regulatory and International Affairs Abigail Donovan Director, Congressional and Federal Affairs American Airlines, Inc. 1101 17th Street, N.W. Washington, DC 20036 (202) 326

- 5153 howard.kass@aa.com robert.wirick@aa.com abigail.donovan@aa.com Charles A. Hunnicutt Patricia N. Snyder Jason D. Tutrone Thompson Hine LLP 1919 M Street, NW Suite 700 Washington, DC 20036

- 1600 (202) 263

- 4189 charles.hunnicutt@thompsonhine.com patricia.snyder@thompsonhine.com j ason.tutrone@thompson hine.comTABLE OF CONTENTS

I. Introduction

.............................................................................. . ......... . . ... .. 1 II. Delta Consistently Has Underutilized the Detroit/Seattle
- Haneda Slot Pair It Was Allocated, and Its Actions Prevent Maximizing the Public Benefits of That Scarce Resource

............ ... ..................... ................................................ ...... ... 3 III. American’s Proposed Los Angeles - Haneda Service Is Substantially Superior to Delta’s Current and Hawaiian’s Proposed Services and, Alone, Will Maximize the Public Benefits

..... ............... ......................................................... ... .. ............ . . 8 A. America n’s Proposed Service Will Provide Substantially Superior Competitive Benefits to Delta’s and Hawaiian’s Proposed Services................................10 B American’s Proposed Service Will Provide Substantially Superior Consumer Benefits to the General Traveling Public Th an Either Delta’s or Hawaiian’s Proposals.................................

....................................... ... ... ....... . 1 2 C. Allocating a Haneda Slot Pair to American for Los Angeles

- Haneda Service Will Benefit American’s Large Loyal Customer Base

... ...... ........................... ... 1 3 D. Allocating a Haneda Slot Pair to American for Los Angeles

- Haneda Service Will Provide Substantially Superior Benefits to Multiple States and U.S. Communities.....................................................................13 E. In Contrast to Hawaiian’s Proposed Kona

- Haneda Service, American’s Los Angeles

- Haneda Service Would Benefit U.S. Passengers...........................

.. 14 F. American Will Provide the Largest Continental U.S. Aircraft on Its Los Angeles

Haneda Route, Delta the Smallest.......................................................16 G. American’s Los Angeles

- Haneda Service Would Provide Superior Car go Capacity to Both Delta’s Seattle

- Haneda Service and Hawaiian’s Proposed Kona

Haneda Service.............................................................................16 H. American’s Proposed Start

- Up Date Is Not a Gimmick; It Is Real, It Is Underway, and It Is Achievable........................................................................18 IV. Hawaiian’s Proposed Kona - Haneda Service Offers Little to the U.S. Public

– Assuming It Could Actually Be Cleared for Takeoff

........ ..................................................... . 19 A. As a Preliminary Matter, the Department Must Ask Whether Hawaiian Could Even Start Its Proposed Kona

- Haneda Service.........................................20 B. Valuable National Resources Should Be Used to Provide Benefits Throughout the United States................................................................................22 1. Hawaiian’s and Hawaii’s Unique Characteristics Only Benefit Hawaiian and Hawaii.............................. ...........................................22 2. American’s Service Proposal Provides Benefits Throughout the United States and Better Shares the Economic Benefits Associated with These Valuable National Resources....................................................22 C. Kona Service Would Provide Virtually No Benefi ts to U.S. Consumers...........23 1. Only Japanese Tourists B enefit from Hawaiian’s Proposal

... ... ... ... ... .. 232. Hawaiian Neglects Exports of Actual Goods.................................24

D. Reliance on the Japanese Economy and Japanese Tourists Is a Risky Proposition............................................. .............................25 1. The Currency Exchange Rate Works Against Hawaiian.....................25 2. Contrary to Hawaiian’s Assertions, When All Reasons for Travel are Included, Japanese Visitors Actually Spend Less Money in Hawaii than in Los Angeles and the Continental Unit ed States...............................27 E. Tokyo

- Kona Did Not Work for a Japanese Carrier with Fewer Operations, Fewer Seats , and Better Access to Japanese Consumers

... ....................................28 1. Hawaiian’s Numbers Don’t Add Up............................................28 2. The Success of the Honolulu

- Han eda Service Cannot Be Replicated in Kona.................................................................................29 F. Successful Services Between the Mainland U.S. and Haneda Exist................30 G. Hawaiian Misunderstands Alliances....................................................30 H. Hawaiian Could Start Service Today If It Were Truly Committed to Serving Kona

- Tokyo ( a nd, of Course, Assuming the Existence of CBP/FIS Facilities at Kona)........................................................................................32 V. Seattle Will Continue to Be Well Served to Tokyo If the Department Determines that i t i s i n the Public Interest to Reallocate the Seattle
- Haneda Slot Pair

......... . ....................32 VI. Conclusion

.................... . ..........................................................................351 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.
Motion and Application of AMERICAN AIRLINES, INC. Motion of HAWAIIAN AIRLINES, INC. in the matter of 2010 U.S.

- Haneda Combination Services Allocation Proceeding Docket DOT

- OST

- 2010

- 0018

CONSOLIDATED REPLY OF AMERICAN AIRLINES, INC.

TO APPLICATION S AND ANSWERS OF DELTA AIR LINES, INC. AND HAWAIIAN AIRLINES, INC.

I. Introduction This proceeding is one that no one wanted to happen. Not the Department, wh ich prefers carrier selection cases for distributing new commercial opportunities to U.S. carriers to withdrawing them for under

- utilization. Not Delta, which face s the prospect of having the Department withdraw one of its two Haneda slot pair allocation s . Not American, which prefers the traditional method of entry into Haneda

– via market liberalization

– but has been thwarted by a lack of liberalization at the negotiating table, due, in large part, to Delta’s intransigence. American presumes that Hawaiian also prefers a scenario where carriers and competition, not the government, determine the appropriate service levels in the ma rket. As the Department is well aware, since the American/US Airways merger closed in December 2013, returning to Haneda has been a top international priority for the company, and2

American has worked tirelessly to gain access to Haneda with American

- liver ied aircraft. 1 Yet , despite those efforts and a plea from over 100 Members of Congress in support of further Haneda liberalization, tangible progress at the negotiatin g table has been non

- existent. 2 At the same time, Delta, the holder of two of the four Haneda slot pairs available to U.S. carriers, published a winter schedule showing just enough Haneda operations to game the dormancy rule and avoid an automatic reversion of its Seattle

- Haned a slot pair to the Department. With difficult bilateral prospect s and the flagrant non

- and under

- utilization of the valuable Haneda slot pair, American initiated this proceeding by asking the Department to withdraw the valuable slot pair from Delta and reallocate it to American to put that scarce resource to a higher and better use (Motio n of American, October 2, 2014)

. Indeed, American appreciates the Department’s recognition of the extraordinary, even unique, circumstances regarding Haneda. These circumstances, where a single carrier significantly under

- utilizes one

- fourth of the total U.S. slot pair allocation and stonewalls progress at the negotiating table , is not analogous to other markets such as Brazil , where all U.S. carriers who want t o serve the market can and do. 3 This is a unique case wh ere the Department should remain focused on what it said in its Instituting Order:

“This proceeding will consider whether the public interest calls for permitting Delta Air Lines, Inc. to retain the currently allocated Seattle

-

1 American has faced criticism of its JFK

- Haneda service by the other applicants (DL Consol. Ans. at 3, Ex. DL

- A

- 301; HA Consol. An s. at 54 and Ex. HA

- 2015A

- 104

- 5 ). The facts are clear: after losing tens of millions of dollars on the route and realizing that East Coast U.S. flights to Haneda could not be commercially viable given the Haneda curfew restrictions on U.S. flights, American returned its Haneda slot pair so the Department could reallocate the frequencies to another carrier and put the slot pair to a higher and better use. Returning the slot pair was the right thing to do at the time given the conditions facing the company and the fact that this slot pair represents an extremely scarce national resource. American should not be crit icized by the other applicants or penalized by the Department in this proceeding for doing the right thing and acting in the public interest. 2 In addition, both California Senat ors submitted letters of s upport for American’s Los Angeles

- Haneda service proposal. Senator Feinstein’s letter was previously submitted. Included in this filing is a letter of support from Senator Boxer. 3 See infra at page 83 Haneda slot pair for schedule d combination services, or whether the public interest calls for an alternative use of that slot pair.” 4
Since the December 15, 2014 Instituting Order, each party has had ample opportunity to be heard through four sets of written testimony and/or narrati ves, as well as two sets of exhibits, and to critique the other applicants’ proposals. American has proved that its Los Angeles

Haneda service proposal is substantially superior to those of Delta and Hawaiian. Therefore, a Department allocation to American to operate Los Angeles

- Haneda service represent s the h ighest and best use of the slot pair and is in the public interest.

II. Delta Consistently Has Underutilized t he Detroit / Seattle
- Haneda Slot Pair It Was Allocated, and I ts Actions Prevent Maximizing the Public Benefits of That Scarce Resource As the Department undertakes its review of the highest and best use of the Haneda s lot pair currently used by Delta for Seattle

- Haneda service, a threshold issue is Delta’s historical record in using that slot pair since the Department’s Final Order in July 2010. 5
On this question , the fac ts are unassailable: Delta, over and over again, made promises, both with respect to Detroit

- Haneda and Seattle

- Haneda, and , over and over again , reneged on those promises ( Exs AA

- 301

- 314 )

. It is also unassailable (and Delta itself even concedes ) 6 that Seattle

- Haneda has n o t performed well until now (a point it could hardly contest given the route’s low to mid

- 50 % average load factor)

. Delta has abandoned the Seattle

- Haneda market for weeks and months at a time with no service at all or a skeleton operation designed not to

4 Order 2014

- 12

- 9 (“Ins tituting Order”) p. 8. 5 Order 2010

- 7

- 2, July 6, 2010. 6 Delta Response to Evidence Request at 2 (Jan. 5 2015).4

serve the traveling public, but rather to adhere to the minimal requirements of dormancy rules that prevent automatic reversion of the slot pair. 7 The specifics of Delta’s failed promises are described in detail in American’s Direct and Rebuttal Exhibits 8 and in Hawaiian's Exhibits

. 9 The specifics of Delta’s non

- utilization or substantial underutilization of t his Haneda slot pair are described, as well, in American’s Direct and Rebuttal Exhibits 10 and Hawaiian’s Exhibits

. 11 The historical record is clear and incontrovertible

. Delta tries to explain away the poor performance of the Seattle

- Haneda route by saying that it was not operating its own metal on connecting flights at Seattle, and that the commercial incentives of Alaska and Delta were not aligned, and, therefore, its connecting traffic suffered

. 12 Now, Delta claims , that , with the introduction of substantial numbers of Delta own metal connecting flights in recent months (and more to come), it has had “astounding” results, and Delta will be well

- positioned at Seattle, and the Seattle

- Haneda flight will operate daily , year round starting March 29, 2015 “and beyond

. ” 13 While Delta’s argument may sound plausible , a cursory review of the empirical evidence reveals that its explanation is inconsistent with the facts and does not hold up to scrutiny :

 Delta’s Seattle “buildup” has been almost a complete competitive overlap of the code share service that Delta enjoyed on Alaska before the buildup (and continues to enjoy)

. Only one new unduplicated service was added

– Jackson Hole, Wyoming

– with Tokyo PPDEW of less than one ( Ex. AA

- R

- 103

- 104 ) ;

7 As the Department noted in its Order denying Delta’s Petition for Reconsideration, citing its decision in Order 97

- 12

- 19 at p. 6, n. 12, th at the Department need not make a determination regarding the dormancy condition because “[it is] instituting this proceeding under [its] general powers to review the public interest bases of the current awards.” Order on Reconsideration, Order 2015

- 1

- 14, January 15, 2015, p. 4. 8 Exs

. AA

- 301

- 314, and Ex

. AA

- R

- 101 9 Ex. HA

- 2015A

- 1002,

- 1005 10 Exs. AA

- 309

- 316, and Exs. AA

- R

- 104

- 111, Exs. AA

- R

- 126 11 Exs. HA

- 2015A

- 1002,

- 1005 12 Response of Delta Air Lines, Inc. to Evidence Request , p. 2 (Jan. 5, 2015). 13 Id. , at 1.5  Delta’s other Seattle route to Tokyo

– Narita

– performed exceedingly well (and daily, year

- round) before any buildup ( Ex. AA

- R

- 105 ) ;

 All of Delta’s other Seattle international routes also enjoyed high load factors (even by Delta’s admission) ( Ex. DL

- 205 ) (and daily , year - round) before any buildup at S eattle with Delta’s own metal ( Ex. AA

- R

- 105 ) ; and

 Delta has, in recent years, cancelled over 30 routes with substantially higher load factors than Seattle

- Haneda (Ex

. AA

- R

- 126). The facts speak for themselves: b efore Delta’s own metal buildup at Seattle, all of its other international routes performed exceedingly well without Delta’s own metal, except one : Se attle

- Haneda

. Delta’s explanation simply doesn’t hold water. 14
Delta then tries again to explain away its poor track record of performance on the Seattle

Haneda route by claiming that Seattle

- Tokyo is more seasonal than other Tokyo

- Haneda gateways (E x. DL

- A

- 302)

. This is simply n ot true

. As American clearly demonstrated, neither Seattle , nor Tokyo , nor Seattle

- Tokyo is a seasonal market

. Specifically :

 With respect to Seattle in general :
o No other Delta international service at Seattle operates on a seasonal basis

. All operate year

- round ( Ex. DL

- 205 )

.
 With respect to Tokyo :
o No Delta service to Tokyo from anywhere operates on less than a year

round schedule

. All operate on a daily basis, except the smallish Portland, Oregon market, which operates 5 times weekly in the winter (5 times more than the larger Seattle

- Haneda market ) ( Ex. AA

- 32 4 ) ;
o No airline operating between the U.S. and Tokyo operates less than a year - round schedule; and
o No other airlines reduce their Tokyo schedule for the winter ( Ex. AA

324 )

.

14 In deed, if the summer 2014 Delta own metal buildup at Seattle had the “astounding” results Delta claims, and that buildup was and is continuing, why did Delta abandon the Seattle

- Haneda route beginning in October 2014 and continuing for the six

- month period through the end of March 2015? By all logical accounts, Delta’s Seattle

Haneda service should have continued without interruption, but see Ex. AA

- 311.6  With respect to Seattle

- Tokyo :
o ANA operates a Narita service daily , year - round ( Ex. AA

- R

- 125 ); and
o Delta itself operates a Narita service daily, year - round ( Ex. AA

- R

125 )

.
The “seasonal ity ” argument of Delta is sheer fantasy , an attempt to post h o c justify the poor performance on the Seattle

- Haneda route

. But it does raise one question : i f, indeed, the Seattle

- Haneda service is seasonal, as Delta claims, what does this portend for Delta’s newest commitment to operate that service on a daily basis “

... effective March 29, 2015 and beyond ” (D elta Consol. Ans., p. 1), and specifically for the winter 2015

- 2016 season ? A nd t he next winter season? Are we going to witness a repeat of this winter when, for months, there was no service an d only 17 flights in 182 days? Delta’s claim of seasonality demonstrates that, once beyond this case, its commitment to operating Seattle

- Haneda in the winter will join the litany of other unfulfilled Delta Haneda promises. 15 Delta attempts to analogize the current Haneda slot pair situation to the Brazil frequency allocations regime are equally misplaced

. There are simply no analogous fact s or circumstances

. Haneda slot pairs and Brazil frequency allocations are worlds apart for at least three reasons:

 First , there are four slot pairs available for U.S. airlines at Haneda; in Brazil, originally there were 105 fully unrestricted weekly frequ encies available for U.S. airlines, then another 49 weekly frequencies were added

.

 Second , every U.S. airline that has sought Brazil frequencies received an allocation; in Haneda, every U.S. carrier seeking this Haneda slot pair has one slot pair, except Delta, which has two , and American, which has none .

15 According to the Oxford English Dictionary (Delta’s choice of dictionaries), “beyond” merely means “happening or continuing after (a specified time, stage or event).” “Beyond” can mean one day, one week, one month. It is not a real, definitive commitment to operate Seattle

- Haneda service for any specified time, let alone daily, year

- round, see Response of Delta Air Lines, Inc. to Evidence Request at 1 (Jan. 5, 2015).7  Third , in Brazil, when a U.S. airline was not using its allocated frequencies and another carrier requested them, either the U.S. airline holding unused frequencies voluntarily surrende red them, or the Department reallocated th em. ( See Order 2008

- 11

- 21) In Haneda, Delta is squandering one of the four slot pairs and refusing to allow it to be put to a use that would “maximize the public benefits of this scarce resource.” So, if there is to be an analog ous situation to Brazil, Delta should surrender its Seattle

- Haneda slot pair to the Department to be reallocated for a higher and better use and in the public interest

. Stripped of its three primary claims

– (1) “own metal” buildup ; (2) “Seattle seasonality , ” and (3) Brazil frequencies

– all of which the evidence totally eviscerates

– and, in light of its indisputable abysmal track record of performance on the Seattle

- Haneda route and equally abysmal utilization of the scarce resource of this Haneda slot pair, Delta fall s back, essentially, to a “trust me” argument that it will live up to its newest Haneda commitment to operate daily , year - round service beginning “ March 29 , 2015 and beyond. ” 16 This position, of course, raises the question of whether Delta’s commitment, well intended or otherwise, is credible or even remotely likely given the realities of the Seattle

Haneda service :

 The Seattle

- Haneda route has the lowest load factor of any Delta international route (transborder excluded) (Ex. AA

- R

- 108 ) ;

 All of Delta’s international routes at Seattle experienced exceedingly high load factors without any alleged “benefit” from a Delta own metal “buildup”;

 Delta does not have the opportunity to down

- gauge to a smaller aircraft since it is already operating the smallest aircraft (on both Seattle

- Haneda and Los Angeles

- Haneda) available for transpacific flights ( Ex. AA

- R

- 109 ) ; and

 Delta has, in recent years, cancelled over 30 routes with substantially higher load factors than Seattle

- Haneda (Ex

. AA

- R

- 126). Delta has n o realistic option to turn a service with a 56 % load factor into a viable route

.

16 Delta Response to E vidence Request , p. 1 (Jan. 5, 2015).8

III. American’s Proposed Los Angeles - Haneda Service Is Substantially Superior to Delta’s Current and Hawaiian’s Proposed Services and, Alone, Will Maximize the Public Benefits As explained in the Introduction, American filed its October 2, 2014 Application and Motion requesting the Department to reallocate Delta’s Seattle

- Haneda slot pair to American for Los Angeles

- Haneda service just after Delta announced its abandonment of the Seattle

- Haneda market for the winter 2014

- 2015 season

. 17 American did not seek this action out of spite for Delta or to pick a fight with Delta

. American’s decision to seek the requested action was based on American’s structurally inferior position in Japan and Asia

– American being the only U.S. airline locked out of the important Haneda market

– and its top international commercial priority of i mproving its presence and position in Asia, beginning with Haneda ( a n own metal presence that is less than Delta and United, wh ich enjoy the benefits of inherited incumbency status in Japan )

. American saw an opportunity to allow the public benefits of a v aluable scarce resource to be put to a higher and better use rather than having them lie dormant and unused for almost six full months. Delta has attempted to counter American’s request to gain access to Haneda by suggesting that it , not American, is “dis adva ntaged” in Japan because both American and United have antitrust immunized alliances , with JAL and ANA, respectively

. It is indeed novel and fanciful for Delta to try to describe itself in Asia, Japan or Tokyo as “disadvantaged.” As American demonstrated:

 Delta has the largest Third/Fourth and Fifth Freedom network in Japan of any U.S. airline, with 19 segments from Tokyo and 679 monthly departures (Ex. AA

- R

- 112, p. 1) ;

17 Motion and Application of American Airlines, Inc., October 2, 2014.9  Delta operates more flights between the U.S. and Tokyo than any other car rier

– U.S. or Japanese

– and almost the same number as JAL and American combined (491 for JAL/AA and 486 for Delta) (Ex. AA

- R

- 112, p. 2); and

 Delta is four times the size of American in Japan, operating 12 routes to Japan , while American operates only 3; and operating 117 weekly flights to Japan from U.S. points compared to American’s 26 (Ex. AA

- R

- 113)

. So, if any airline is “ disadvantaged” in the market , it is American, not Delta. Moreover, Delta’s “alliance” argument is without merit

. A t least for American, its Joint Business Agreement with JAL ( which is extremely beneficial to the market and to consumer s ) clearly helps lessen the disadvantage that American has vis

- à

- vis Delta, but it does not eliminate or negate it

. In f

act, even i n an alliance versus alliance comparison, American and one world are at a disadvantage in Tokyo versus Delta and SkyTeam , both in terms of flights and seats offered (Ex. AA

- R

- 114)

. American’s disadvantage to Delta in Tokyo is, of course, historical

. Delta , through its acquisition of Northwest, inherited Northwest ’s extremely valuable Japan incumbency

. Try as it may, American cannot overcome, even with a Joint Business Agreement with JAL, that advantage in one fell swoop

. American must increase its Asia, Japan and Tokyo position s one step, one route, at a time. That is why gaining access to Haneda from an American hub that allows American to operate at commercially viable (though not ideal ) times, given the current Haneda curfew limits , is such a priority for American . Gaining access allows American, a new entrant in U.S.

- Haneda markets, to increase its presence in Japan and provide U.S. consumers a n additional travel10

option , including American’s customers who today have no Haneda option. 18 These are all important decisional criteria relied upon consistently by the Department in carrier selection proceedings. 19 But, in truth, this proceeding is not all about American and what is good for American

. Rather, it is about the best and highest use of a very sca rce and very valuable national aviation

resource

– one of only four U.S. Haneda slot pairs

– and maximizing the public benefits of that

scarce resource . As we show below, American’s proposed Los Angeles

- Haneda service achieves that objective far better th an either of the other services proposed in this proceeding.

A. American’s Proposed Service Will Provide Substantially Superior Competitive Benefits to Delta’s and Hawaiian’s Proposed Services In addition to providing the U.S.

- Haneda market with new carrier service by American , reallocating the Haneda slot pair to American will provide substantially superior competitive benefits in a number of important areas a nd at a number of different levels:

 Intra

- gateway carrier competition at Lo s Angeles

. American Los Angeles

Haneda service would provide first time U.S. carrier competition to Delta service at Los Angeles and additional competition to ANA. Because Los Angeles is , by far, the largest continental U.S. market to Tokyo and Haneda, an d the largest U.S.

- Haneda market (Honolulu

- Haneda) already has three airlines competing, there is a need for enhanced competition on the Los Angeles

- Haneda route ( Ex. AA

- R

- 209 )

. Enhancing intra

- gateway

18 Delta suggests that metal neutrality means that American and JAL are indifferent as to which carrier flies a route and, therefore, American is present at Haneda via JAL (Delta Consol. Ans. At 8

- 9, and Ex. DL

- 303). That is wrong, and Delta knows it. As A merican has explained, “metal neutrality” creates economic indifference between the partner airlines, but it does not eliminate passenger/cultural preferences for one airline over another. Delta’s partner, Virgin Atlantic, could not have proved this fact m ore clearly when Virgin’s CEO explained why Virgin was going to fly certain routes on which, pr eviously, only Delta flew (Conso l Ans. of American at 8, Jan. 12, 2015). The reality is that American has no access to Haneda, is the only U.S. airline with no o wn access, and Delta, in addition to being the largest airline in the U.S.

- Japan market, has 50% of the U.S.

- Haneda slot pairs. American is both disadvantaged in Japan and locked out of Haneda. 19 Order 2006

- 9

- 8, Los Angeles

- Puerto Vallarta Combination Ser vice Proceeding, et al., at 12, n. 40 (Sept. 11, 2006) (adding JetBlue as a new entrant to U.S.

- Mexico markets); Order 2000

- 11

- 24 at 11; U.S.

- China Air Services (2001) (Nov. 24, 2000) (adding UPS as a new entrant to U.S.

- China markets)

.11 competition is an important policy objective and decisional criteria of the Department

. 20

 Inter

- alliance competition at Los Angeles

. Currently, both Star (through ANA) and SkyTeam (through Delta) operate on the Los Angeles

- Haneda route. There is no American or one world presence. By allocating to America n a Haneda slot pair to operate Los Angeles

- Haneda, the Department would be injecting first time , three

- alliance competition at Los Angeles ( Ex. AA

- 207

- 208 )

. 21 This inter

- alliance competition objective would be extremely important to promoting competition. As the Department stated in allocating American a Haneda slot pair to operate JFK

- Haneda: As previously noted, Continental (along with United) is a member of the Star alliance. Delta is a member of Skyteam. In the overall U.S.

- Asia market, the Star and Skyteam alliances currently hold significant positions. Thus, an award of Haneda rights to American here should enhance alliance competition by improving the competitive posture of American and one world in the U.S.

- Asia market as compared to t he Skyteam and Star alliances. An award to American would also benefit alliance competition in the U.S.

- Japan market, where members of the other alliances are significant participants. For example, selection of American’ s New York proposal provides the benefit of head

- to

- head competition with the Narita services offered at JFK by Skyteam member Delta and Star member ANA. 22

 Inter

- gateway Competition with SFO

. The Department has traditionally relied on improving competition among gateways to increase the overall level of competition in a market. 23 In this case, a n allocation to American of a Haneda slot pair to operate Los Angeles

- Haneda service would provide a strong competitor (American) in the largest West Coast U.S.

- Toky o market to

20 Order to Show Ca use, 2005/2006 U.S.

- China Air Services Case and Designation, Order 2005

- 2

- 14 at 23 (Feb. 22, 2005); adopted as final, Order 2005

- 3

- 40 at 7

- 8 (Mar. 29, 2005) (relying on inter

- gateway, intra

- gateway competition, and inter

- alliance competition in selecting A merican to provide Chicago

- Shanghai service). 21 American exhibit AA

- R

- 124 shows how the Los Angeles

- Tokyo market remains underserved compared with the Seattle

- Tokyo market ( Ex. AA

- R

- 124 corrects direct exhibit AA

- 212, but the corrections do not undermine the point of the exhibit). 22 Order to Show Cause, 2010 U.S.

- Haneda Combination Service Allocation Proceeding , Order 2010

- 5

- 7 at 11 (May 7, 2010). See also, Order to Show Cause, 2005/2006 U.S.

- China Air Services Case and Designation, Order 2005

- 2

- 14 at 24 (Feb. 22, 2005); adopted as final, Order 2005

- 3

- 40 at 7

- 8 (Mar. 29, 2005)

. 23 Order to Show Cause, 2005/2006 U.S.

- China Air Services Case and Designation, Order 2005

- 2

- 14 at 23 (Feb. 22, 2005); adopted as final, Order 2005

- 3

- 40 at 7

- 8 (Mar. 29, 2005).12 compete with United in the second largest continental U.S. West Coast

- Tokyo market, San Francisco. 24
B. American’s Proposed Service Will Provide Substantially Superior Consumer Benefits to the General Traveling Public Than Either Delta’s or Hawaiian’s Proposals American, today, has no own metal access to Haneda. Consumers throughout the United States (and Japan) when wishing to travel to or from Haneda are foreclosed from choosing American

. This not only severely disadv antages American, but, more importantly, severely limits the travel options of the entire traveling public, depriving them of greater choice and competitive alternatives. Delta, today, suffers no such disadvantage. Indeed, in addition to being present at seven U.S. gateways to Tokyo (AA

- R

- 112, p. 1), Delta can offer travelers two Haneda options, compared to none for American. Hawaiian, of course, operates from Hawaii, so, in general, its Haneda service options for continental U.S. consumers is very limited, but its proposed Kona

Haneda service offers no connecting service from or to the continental U.S. ( Ex. AA

- R

- 203 )

. By allocating to American a Haneda slot pair, the Department would be openin g the U.S.

- Haneda market to a third continental U.S. airline service and a new entrant at Haneda , thereby greatly enhanc ing the options of all U.S. (and Japanese) consumers and shippers

– an important Department carrier selection decisional criteria. 25

24 Order to Show Cause, 2005/2006 U.S.

- China Air Services Case and Designation, Order 2005

- 2

- 14 at 23 (Feb. 22, 2005); adopted as final, Order 2005

- 3

- 40 at 7 (Mar. 29, 2005). 25 Order 2006

- 9

- 8, Los Angeles

- Puerto Vallarta Combination Service Proceeding, et al ., at 12, n. 40 (Sept. 11, 2006); Order 2000

- 11

- 24 at 11; U.S.

- China Air Services (2001) (Nov. 24, 2000).13

C. Allo cating a Haneda Slot Pair to American for Los Angeles - Haneda Service Will Benefit American’s Large Loyal Customer Base American is the largest U.S. airline by passengers flown, carrying 197 million passengers in 201 4

. 26 A s the Department is well aware, customers generally prefer to travel on the airline whose loyalty program they favor. Today, American’s customers

— whether it is the 197 million number or less, have no travel option on American if they want to fly to Haneda. They are forced to decide to f

ly to Narita on American or go to Haneda on a carrier other than American. That is a decision that inhibits consumer choice and carrier competition. By allocating American a Haneda slot pair to operate Los Angeles

- Haneda service, the Department would ena ble millions of consumers to have a real choice and substantially improve the U.S.

- Haneda competitive landscape. D. Allocating a Haneda Slot Pair to American for Los Angeles - Haneda Service Will Provide Substantially Superior Benefits to Multiple States and U.S. Communities American has shown that its proposed Los Angeles

- Haneda service will benefit 16 S tates (15 in the summer) and 30 U.S. communities (23 in the summer) (AA

- R

- 203), representing 195 million U.S. citizens (AA

- R

- 204). Delta’s Seattle

- Haneda se rvice benefits only 11 S tates in the winter (14 in the summer) and 13 U.S. communities in the winter (23 in the summer) , representing 127 million U.S. citizens (35 % less than American) , and Hawaiian’s one S tate, two communities and 1.4 million U.S. citizens ( Ex. AA

- R

- 204) (Figure 1)

.

26 American Airlines Group Reports December Traffic Results, http://www.prnewswire.com/news

releases/american

- airlines

- group - reports

- december

- traffic

- results

- 300018860.html

.14 Figure 1 American’s Los Angeles - Haneda Service Will Benefit Most U.S. Consumers American Los Angeles - Haneda Delta Seattle
- Haneda Hawaiian

Kona - Haneda States (winter/summer) 16/1 5 11/14 1
Communities (excl. gateways) (winter/summer) 30/23 13/21 2 Population 195 million 127 million 1.4 million ( Ex s . AA

- R

- 203

- 204 ; Ex. AA

- SR

- 103 , 107 ) Haneda is, as the Department stated, a scarce resour ce. It is a national resource. The public benefits should be available to as many S tates and communities as possible , and surely not
to just one S tate and two communities. American’s proposed Los Angeles

- Haneda service will do just that: maximize the overall public benefits and allow t hem to be enjoyed by the most S tates and communities. 27
E. In Contrast to Hawaiian’s Proposed Kona - Haneda Service, American’s Los Angeles - Haneda Services Would Benefit U.S. Passengers Hawaiian’s proposed Kona

- Haneda service would , by Hawaiian’s own admission, consist of approximately 96 % Japan

- originating travelers ( Ex. HA

- 2015A

- 109 )

. While such a heavily disproportionate im balance of originating traffic may indeed benefit the Haw aii an economy

– a point American will address below

– it provides little or no benefit to the U.S. traveling public and to the U.S. consumer

. Benefitting U.S. consumers and U.S. interests, not Japanese consumers or Japanese interests, is the proper purview

– indeed, mandate

– of the Department.
T here is no question that American’s proposed service will provide substantially superior public benefits to U.S. traveler s and U.S. consumers than would Hawaiian’s Kona

- Haneda proposed service.

27 Procedures and Criteria for Selecting Carriers for Limited

- Entry Markets et al, 51 Fed. Reg. 43180, 43187 (hereafter the “Policy Statement”); cited in Order 2006

- 9

- 8 at 12 n.23, Los Angeles

- Puerto Vallarta Combination Service Proceeding, et al. (Sept. 11, 2006).15

In addition, the service expo rt benefit described by Hawaiian needs to be put in context in
two r espects.

 First , Japanese tourists in 2013 spent an average of $275.70 per day on their

stay s in Hawaii and stayed an average of 5.94 days. 28 That spending number already was down 11.1 % from 2012, in large part because of the depreciation of the Yen relative to the U.S . Dollar. 29 Because the Yen has depreciated to an even greater extent relative to the U.S. Dollar in 2014, that spend rate should have fall en even further in 2014, and 2015 looks to continue this trend

.

 Second , as Hawaiian acknowledged, Japan tourists also spend and create service exports in Los Angeles ( Ex. HA

- 2015A

- 615 ). Indeed, they do. Although they spend less per day than the Hawaii visitor ($242.00 versus $275.70), they stay longer in the U.S. (9.9 days versus 5.94 days). 30 So, the average spend in the United States of the Japan

- originating passenger on a Los Angeles trip is 46 % greater than the Ha waii spend

— $2,396 per trip versus $1,638. 31 Two additional factors are important to note.

 Japan

- originating passengers to Hawaii overwhelmingly stay in Hawaii and visit no other S tate. In contrast, Japanese travelers to Los Angeles visit other S tates and areas , including Nevada, New York, Arizona, Illinois and Washington, DC. Thus, the benefits of this service ex port are spread among several S tates, not just one.

 The primary reason for Japanese travel to Los Angeles is business/ professional/conventions/conferences at 48 %

. In Kona , the primary purpose of travel is pleasure

— 8 9 % (Hawaii Tourism Authority 2013 Annual Visitor Research Report, p. 43 ). Haneda is clearly the preferred airport for business travelers

.

28 2013 Annual Visitor Research Report, State of Hawaii, Department of Business, Economic Development & Tourism, p. 43. 29 Consol Ans. o f American at 8, Jan. 12, 2015 30 “Characteristics of Travelers From Japan to Los Angeles,” Los Angeles Tourism & Convention Board, Updated September 2014. Note: Statistics for 2013. 31 Hawaiian adjusted its sp end figures upward for 2014 (Ex. HA

- 2015A

- 601) despite a likely decrease. American used the unadjusted spend amounts provided by the Hawaii Tourism Authority.16

F. American Will Provide the Largest Continental U.S. Aircraft on Its Los Angeles - Haneda Route, Delta the Smallest American initially will operate the Los Angeles

- Haneda route with a B777 aircraft with 247 seats (Ex. AA

- 103 ). Throughout 2015, American is r efurbishing its B777s with numerous passenger enhancements and will increase the seating configuration to 260 seats (Ex. A A

- 104 ). Delta operates Seattle

- Haneda with a B767 configured for 211 seats. American’s proposed Los Angeles

- Haneda service would provide anywhere from 17.1 % (current) to 23.2 % (reconfigured) more seats than Delta

. Where entry and capacity are highly constrained, as here, the Department “must maximize [its] limited opportunities to enhance capacity. 32
The larger Ameri can annual seat capacity translates into an additional 125 B767 flights and 26,200 seats at the current B777 configuration, and 170 additional B767 flights and 35,770 seats when the B777 is reconfigured (Ex. AA

- R

- 111 ). 33
G. American’s Los Angeles - Haneda Servic e Would Provide Superior Cargo Capacity to Both Delta’s Seattle - Haneda Service and Hawaiian’s Proposed Kona - Haneda Service American’s B777 is a cargo shipper’s dream. It has abundant cargo capacity even at 100 % passen ger load factors (Ex. AA

- 108). At 100 % passenger load factors, the cargo capacity of American’s B777 is 43,114 pounds per flight (average both directions, winter and summer) versus Delta’s 14,664 pounds (Ex. AA

- 222). American would provide over 20,000,000 more

32 Order 2007

- 9

- 25 at 15

- 16, In re 2007/2008/2009 U.S.

- China Air Services and Combination Frequen cy Allocation Proceeding (Sept. 25, 2007) (selecting US Airways’ proposal to provide 269 seats per flight over MaxJet’s proposal to offer 96 seats per flight). See also, inter alia, Order 2006

- 8

- 17 at 3, 2006 Guam

- Narita Allocation Proceeding (Aug. 17, 20 06). 33 See Order 2006

- 8

- 17 at 3, supra , awarding Northwest 14 Guam

- Narita frequencies on the basis that Northwest “would offer 27 more seats per flight, which annualizes to nearly 20,000 more seats per year. It would also offer more seats per flight in e ach class of service, thereby providing more travelers with more options.” American’s B777 service offers more seats than Delta’s B767 service and more premium seats than Hawaiian’s proposed service. (Ex. AA

- 103; Ex. DL

- 103, Hawaiian Application on 8)17

pounds of annual cargo capac ity than Delta even at a 100 % passenger load factor (Ex. AA

- 222). This is a public benefit that the Department has long recognized is important. 34 In its Application in this proceeding, Hawaiian provided no information on its cargo capacity, despite the clear requirement to do so in the Instituting Order at page 7, item 1. Therefore, given the high density configuration of Hawaiian’s A330 (294 seats), and the extensiveness of Hawaiian’s exhibits, it must be assumed that Hawaiian has no room for cargo
on t hese flights or no interest in providing any benefits to the shipping community. 35 Even if that were not the case, however, the cargo benefits of Hawaiian’s Kona

- Haneda

serv ice would be extremely limited. Generally, of course, U.S.

- Asia cargo is highly dir ectional

ex - Asia. However, there are substantial cargo movements westbound from the continental U.S. to Japan , but far fewer from Hawaii. Indeed, t here are significant continental U.S. exports to Japan, especially from Los Angeles

. In this regard, Ameri can at Los Angeles , by operating B777 aircraft, would be the superior promoter of U.S. exports to Haneda as between it, Delta and Hawaiian, and would provide the greatest public benefits to the shipping community. In addition, with respect to inbound cargo from Japan, many of those shipments are semi

- finished goods that require completion or enhancements at U.S. companies. This work is located in the continental U.S., not Hawaii, so even import cargo benefits U.S. wages and jobs in the continental U.S., no t (or to a far lesser extent) in Hawaii.

34 Orders 90

- 8

- 57 and 86

- 5

- 43 (requiring consideration of the ability of the selected carriers to move freight to and from points beyond their proposed hubs). 35 Hawaiian clearly understands the requirements of Order 2014

- 12

- 9, including the requirement to sp ecify cargo capacity. In its August 27, 2012 Application for Kona

- Haneda service, Hawaiian complied with this evidentiary requirement. At Exhibit HA

- App 2012

- 3, it estimated the cargo capacity at 21,160 pounds per flight. (Application of Hawaiian Airlines, Inc., Docket OST 2010

- 0018, August 27, 2012). Even assuming, arguendo , that Hawaiian remains interested in cargo for its proposed Kona

- Haneda service, its cargo capacity would be less than 50% of American’s, and American would provide more than 10,000,000 more pounds of annual cargo capacity than Hawaiian.18

H. American’ s Proposed Start
- u p Date Is Not a Gimmick; It Is Real, It Is Underway, and It Is Achievable Finally, American addresses its proposed start

- up date of 60 days after the issuance of a final order in this pro ceeding ( See Application of American , at 2

- 3 )

. This start date commitment clearly reflects American’s strong commitment to the Los Angeles

- Haneda route and the priority that American’s management places on gaining access to Haneda. Both Delta and Hawaiia n attack American on its proposed start

- up commitment date and claim it is unrealistic and intended as a gimmick ( Ex. HA

- 2015A

- 907 ). In reality, nothing could be further from the truth, as we show below. 36 The Department should rest assured that American did not select 60 days by chance or as a gimmick. That d ate was decided upon after internal discussion about the scarcity of this resource, the importance to American of gaining access to Haneda, and what date was achievable so that American ’s commitment and credibility would not be at risk

. American is submitting the testimony of Suzanne Boda , American’s Senior Vice President, Asia, Canada, Europe and Cargo ( Boda Testimony, AA

- ST

- 1 ). In her testimony, Ms. Boda recounts her experience in opening new stations in her over 30 years of working in the airline industry , of working for Northwest and liv ing in Tokyo , and her responsibilities in starting this Los Angeles

- Haneda service f rom an operations perspective. Ms. Boda explains that it was her decision to approve a 60

- day start

- up, based on her experience in Japan and what she knows has to be done. Ms. Boda explains that work has already begun on start

- up tasks

— not to be presumptuous of a Department decision to allocate this Haneda slot pai r to American, but to be well prepared and ahead of the curve if that

occurs.

36 Delta Consol. Ans. At 819

The American firm 60

- day start date is in remarkable contrast to Hawaiian’s shifting answers to a start date:

“...on or about June 1, 2015 or approximately 90 days after Hawaiian receives the [allocation]...” Application of Hawaiian, p. 5 (emphasis added)

" It would be Hawaiian’s recommendation that the Department specify a date [to start service] no earlier than 90 days after issuance of the final order...” Application of Hawaiian, p. 9 (emphasis added) “Hawaiian reserves the right to ask for delay of the startup date should any court proceeding be instituted to review an award of the frequency to Hawaiian until such time as the case is resolved .” Application of Hawaiian, n 6, p. 7 (emphasis added)
Thus, Hawaiian’s start date could be years away, while American’s is firm at 60 days af ter issuance of a final order. The public benefit is maximized by an earlier start date. IV. Hawaiian’s Proposed Kona - Haneda Service Offers Little to the U.S. Public

—Assuming It Could Actually Be Cleared for Takeoff Hawaiian has made its case for a fourth service between the State of Hawaii and Haneda. Currently, three Haneda services are operated at Honolulu

— by ANA, JAL and Hawaiian. Hawaiian’s proposal is to begin service at Kona, on the Island of Hawaii. It would be the only

non - preclearance international flight at Kona and the first since JAL terminated its service to Tok yo in October 2010. As American shows below, t here are numerous reasons why Hawaiian’s Kona

- Haneda application falls short of delivering the superior publ ic benefits that American’s Los Angeles

H aneda service will provide.20

A. As a Preliminary Matter , the Department Must Ask Whether Hawaiian C ould Even Start Its Proposed Kona
- Haneda Service B efore the Department analyze s the merits of Hawaiian’s application , there is a substantial threshold issue: if the Department were to reallocate this valuable slot pai r to Hawaiian, could Hawaiian even operate the flight given the lack of a U.S. Customs and Border Protection (“CBP”) Federal Inspection Ser vices (“FIS”) facility in Kona? In its 241

- page Answer, Hawaiian is completely silent about the lack of a Kona FIS facility even though the issue was raised previously and, surely, Hawaiian must be aware of this
pre - flight precondition

. 37 Unquestionably, Hawaiian knows that, on December 24, 2013, the Director of CBP Field Operations in San Francisco denied a request by the State of Hawaii Department of Transportation to reopen the international arrivals inspection facility at Kona

“ without meeting current CBP Airport Technica l Design Standards (ATDS) for passenger processing facilities.” 38
The CBP San Francisco Field Operations Director’s letter also notes that the State of Hawaii requested a waiver from CBP Headquarters in Washington, D

. C. Over one year later, there has been no grant of this waiver, and there likely will not be. As explained in the letter:

Until I hear from CBP Headquarters about the waiver request, CBP will continue to provide general aviation arrivals, cruise vessel arrivals and limited cargo

- relat ed clear ance services to Kona. Since the 2010 termination of international commercial arrivals in Kona, CBP has maintained a small staff to perform these limited operations, while the majority of the pre

- 2010 staff was reassigned to other locations at agency expense. 39

37 Hawaiian’s omission is surprising given the issue was raised in the last Haneda Proceeding. E.g. , Order 2012

- 11

- 12 at 4. 38 Letter from Brian J. Humphrey, U.S. Customs & Border Protection, to Mayor Kenoi, County of Hawaii, Dec. 24, 2013. Ex. AA

- SR

- 101. 39 Id.21

Based on its own inquiries to CBP, American believes that CBP has taken no action on the waiver request. A January 28, 2014 and a January 7, 2015 article confirm American’s belief

. 40 In addition, assuming arguendo that a waiver would be granted, which is not likely, there remains the serious question of staffing, resources (human and technological) and the time that it would take CBP to allocate (actually, reallocate) resources within its already strained budgetary constraints. And, staffing Kona would be only one of the many demands or requests of airport s and airlines for increased CBP staffing and resources elsewhere

. While Hawaiian surely knows the status of the State of Hawaii’s waiver request (and has not been forthcoming about it), the Department may wish to undertake its own inquiry of whether Kona could have the necessary FIS facility and staffing to support scheduled international service and, if so, by when

. If the Department concludes that Kona will not have suitable facilities to support international service in a timely fashion , Hawaiian’s application should be dismi ssed without prejudice to re

- file it when appropriate CBP/FIS facilities are online and a nother Haneda opportunity becomes available

. 41 Even assuming that the CBP/ FIS issue could be resolved to the Department’s satisfaction, Hawaiian’s proposal remains far less valuable to U.S. consumers and shippers than American’s proposal , and far less beneficial to the United States, in general

.

40 Jason Ubay, Opening Hawaii’s Kona Airport for International Flights Has Benefits, but Obstacles Remain , Pacific Business News (January 7, 2015), available at http://www.bizjournals.com/pacific/news/2015/01/07/opening

- hawaiis

- kona

- airport

- for

- international.html?page=all ; Ex. AA

- SR

- 102. Na ncy Cook Lauer, County Seeks International Flights to Kona , W. Hawaii Today (Jan. 28, 2014), available at http://westhawaiitoday.com/news/local

- news/county

- seeks

- international

- flights

- kona; Ex. AA

- R

- 211. 41 The unavailability of Kona CBP/FIS facilities for a long time in the future may explain, in part, Hawaiian’s desire to “reserve the right to ask for delay of the startup date should any court proceeding be instituted to review an award of the frequency to Hawaiian until such time as the case is resolved.” Hawaiian Application 7 n.6.22

B. Valuable National Resources Should Be Used to Provide Benefits Throughout the United States 1. Hawaiian’s and Hawaii’s Unique Characteristics Only Benefit Hawaiian and Hawaii The State of Hawaii has unique charac teristics that set it apart from the continental United States. These characteristics clearly work to the benefit of Hawaiian and Hawaii , but offer almost no benefit s to the other 49 S tates. Indeed, Hawaiian admits that the money spent by Japanese touris ts will be “spent in the United States, and more specifically on the island of Hawaii

. ” 42 While true that Hawaii is the largest origin and destination market to Japan, it is also the most imbalanced with a one

- way directional flow of 95 % Japan

- originating traffic ( Ex. HA

2015A

- 409 )

. American is not denying that t here are benefits from this unidirectional flow (in the form of service exports) and that they are significant for the State of Hawaii , but they benefit only the State of Hawaii and no other State

. Furthermore, even within the State of Hawaii, there are great imbalances, as discussed in Section IV.E.2 , below

.

2. American’s Service Proposal Provides Benefits Throughout the United States and Better Shares the Economic Benefits Associated with These Valuable National Resources A lmost all Japanese tourists traveling beyond Kona today remain within Hawaii

. By contrast, almost two

- thirds of Japanese visitors to Los Angeles travel to oth er communities, visit multiple S tates, and spread the economic benefits far beyond the gateway city. In 2013, 66 % of Japanese visitors to Los Angeles reported also traveling to other U.S. destinations, including

42 Hawaiian Ans. 31 (emphasis added).23

34 % who traveled to S tates other than California. 43 Such a more b alanced relationship of Japan

originating and U.S.

- originating passengers promotes a much fairer distribution of the economic benefits associated with a national resource throughout many more communities, and a much larger portion of the country. C. Kona Service Would Provide Virtually No Benefits to U.S. Consumers 1. Only Japanese Tourists Benefit from Hawaiian’s Proposal Hawaiian’s Answer focuses on its successful Honolulu

- Haneda service and what a great destination the State of Hawaii is for inbound Japan ese visitors. Yet, Hawaiian’s Answer spends very little time specifically discussing Kona and the Island of Hawaii and the consumer benefits to their residents. Indeed, out of 169 Exhibits in Hawaiian’s Answer, Kona i s only mentioned in 37 of them. Hawaii an’s Application and Answer carefully skirt the decades of cases, decisions and learning on Department decision criteria in carrier selection cases. It is uncontestable precedent that, when the Department talks about the public benefits of a service propo sal, it is the benefit to the U.S. traveling and shipping public on whom the Department is primarily focused. Indeed, specifically with respect to Hawaii and Hawaiian’s most recent effort to gain Kona

- Haneda service, the Department stated:

We have conside red Hawaiian’s various objections to our tentative decision, as well as the merits of its Kona proposal, and do not find that a different outcome is warranted. Hawaiian argues that its proposed Kona

- Haneda service would generate greater economic benefits t han would additional Tokyo service from San Francisco. Notwithstanding the positive attributes of new Kona

- Haneda service, we find that those factors are outweighed by the aggregate of benefits to be derived from United’s San Francisco

- Haneda proposal. We acknowledge that Hawaiian’s proposal would likely prove beneficial to the local and State economies; however, on balance, we find that the competitive benefits of new

43 Los Angeles Tourism and Convention Board, Characteristics of Travelers from Japan to Los Angeles 6, Sept. 2014 [hereinafter “Japan

- L.A. Visitor Profile”].24 United service to Haneda from its San Francisco hub would make better use of the one avai lable slot pair, and is likely to attract the diverse mix of business and leisure traffic, originating in the U.S. and in Japan, that will benefit from access to Tokyo’s downtown Haneda airport. (See Order 2014

- 4

- 6 at 3 ) Although Japanese visitors do benefit the local Hawaiian economy, when 96% of the traffic originates in Japan, U.S. travelers do not benefit

.

2. Hawaiian Neglects Exports of Actual Goods In proceedings such as this one, the Department places significant reliance on the importance and value of cargo and the public benefits derived therefrom

. 44 Cargo is an important component of the public benefits. Thus, where possible, the Department always analyzes the cargo carrying potential of each applicant’s proposed service and what benefits th at new service would offer shippers. In its direct case, American responded to the Department’s evidentiary request on cargo, including providing the cargo capacity on American’s B

- 777 aircraft at different load factor assumptions

. American also provided cargo capacity data on the connecting aircraft that will feed the Los Angeles

- Haneda service. As noted earlier, Hawaiian provided no cargo information in either its Application or Answer. In 2013, Hawaii exported less than $600 million in total merchan dise , and just $86 million of goods to Japan

. 45 In comparison, California exported over $168 billion of merchandise, including exports to Japan total ing $12.7 billion

— over 145 times as much as Hawaii. 46 These exports represent U.S. jobs and U.S. income and wages for the U.S. citizens responsible for creating the exports, the surface transport to get the cargo to L os Angeles , etc.

44 Orders 90

- 8

- 57 at 10, and 86

- 5

- 43 at 3. 45 See http://www.trade.gov/mas/ian/statereports/states/hi.pdf 46 See http://www.trade.gov/mas/ian/statereports/states/hi.pdf , http://www.trade.gov/mas/ian/statereports/states/ca.pdf , and http://www.commerce.gov/news/press

releases/2014/02/11/sixteen

- states

- achieve

- record

- export

- levels

- 2013 . California was one of 16 different States that set export records in 2013. Ha waii was not one of them. Also, the Los Angeles metropolitan area alone was responsible for exports of over $76 billion

— over 125

- times the amount of exports as the entire State of Hawaii.25

These are meaningful and real U.S. public benefits, and American’s service proposal provides a cargo shipment benefit to U.S. shippers and expor ters and Hawaiian’s proposal does not and
cannot

. That American’s service proposal provides substantially superior benefits for U.S. consumers is clear, as shown in Figure 2

. Figure 2 : American’s Service Proposal Provides Superior Benefits to U.S. Travelers and Shippers

Summary o f Consumer Benefits b etween Hawaiian’s Proposed Kona Service a nd American ’s Proposed Los Angeles Service Benefit/Beneficiary Hawaiian (Kona) American (Los Angeles) Travelers 4 % U.S.
- originating 34 % U.S.
- originating Business Travelers 6% 48% Leisure Travelers > 90% 33% States Hawaii 16 States with online connecting services Communities 2 25 summer/32 winter Cargo Exports $86 million $4.6 billion Cargo Imports Negligible ~ $3 billion Source: Hawaiian Tourism Authorit y 2013 Visitor Research Report, Japan

- L.A. Visitor Profile , http://www.lawa.org/welcome_lax.aspx?id=776

. D. Reliance on the Japanese Economy and Japanese Tourists Is a Risky Proposition Although it is true that , when tourists spend money in Hawaii, or anywhere else in the United States, it is considered a “ service export , ” but it could be a problematic proposition for Hawaiian’s proposed Kona

- Haneda service to rely almost exclusively on Japanese tourists.

1. The Currency Exchange Rate Works Against Hawaiian Hawaiian goes to great lengths to demonstrate the large number of Japanese tourists that will visit Hawaii, the amount of money these Japanese tourists will spend, and the resulting26 70 80 90 100 110 120

1/1/2010 4/1/2010 7/1/2010 10/1/2010 1/1/2011 4/1/2011 7/1/2011 10/1/2011 1/1/2012 4/1/2012 7/1/2012 10/1/2012 1/1/2013 4/1/2013 7/1/2013 10/1/2013 1/1/2014 4/1/2014 7/1/2014 10/1/2014 Number of Japanese Yen to One U.S. Dollar

Date

Hawaiian Begins HNL - HND Service effects on the U.S. economy. 47 However, Hawaiian ignores the recent strength of the U.S. Dollar

— strength which suggest s neither the number of tourists, nor the amount of money they spend , will be as high as Hawaiian predicts. The U.S. Dollar is 45 % strong er now against the Japanese Yen than it was when Hawaiian commenced its Honolulu

- Haneda service in November 2010

. Indeed, as shown below , for much of the time Hawaiian has operated its Honolulu

- Haneda service, it has benefited from a weak U.S. Dollar against the Yen , which made it much cheaper for Japa nese tourists to visit Hawaii. Figure 3: The U.S. Dollar I s Much Stronger Now T han When Hawaiian Commenced Honolulu - Haneda Service

Source: http://www.oanda.com/currency/historical

- rates/ The much stronger D ollar makes it much more expensive for Japanese tourists to visit the United States. While Hawaii no doubt will remain popular with Japanese tourists, there will likely be fewer visitors , who stay for fewer nights and who spend less. In fact, contrary to

47 Ex. HA

- 2015

- 600 Series.27

Hawaiian’s claim that Hawaii

- Tokyo traffic is growing, that traffic is less today than it was 14
years ago (Ex. AA

- SR

- 104 )

.

2. Contrary to Hawaiian’s Assertions, When All Reasons for Travel are Included, Japanese Visitors Actually Spend Less Money in Hawaii than in Los Angeles and the Continental United States With a service proposal designed to serve Japanese tourists almost excl usively, 48 Hawaiian focuses its claims of economic benefits on Japanese tourist spending. 49 This may be understandable given that nearly 90 % of Japanese travelers to Hawaii go there for pleasure , while only 5. 6% travel to Hawaii for business

- related reasons. 50 By contrast, nearly half of all Japanese travel to Los Angeles is business

- related (48 % ) , with only one - third of travel being for leisure. 51 When all Japanese visitors to the United States are considered, regardless of the reason for their trip, Japanese visitors to Los Angeles actually spend 46% more per trip t han Japanese visitors to Hawaii: Figure 4: Japanese Travelers to Los Angeles Spend More Money per Trip than

Japanese Travelers to Hawaii Japanese Traveler to Hawaii Japanese Traveler

t o Los Angeles Average stay in the U.S. 5.94 days 9.9 days Average spend per day $276 $242 Total spend during trip $1,639 $2,396
Sources: Japan

- L.A. Visitor P rofile , supra n. 36 at 6

- 7 ; Hawaii Tourist Authority , 2013 Annual Visitors Research Report 43

.

48 See, e.g., 2015 Answer of Hawaiian Air lines, Inc., p. 6 (discussing the economic benefits of Japanese tourists), p. 9

- 11 (discussing the number of Japanese tourists visiting Hawaii), and Exhibits HA

- 2015A

- 602,

- 603, and

- 606. See also Exs. AA

- R

- 206 and

- 207. 49 Ex. HA

- 2015A

- 600 Series. 50 Hawa ii Tourist Authority 2013 Annual Visitors Research Report, p. 43. 51 Japan

- L.A. Visitor Profile, supra n. 43 at 3.28

E. Tokyo

– Kona Did Not Work f or a Japanese Carrier w ith Fewer Operations, Fewer Seats , and Better Access to Japanese Consumers 1. Hawaiian’s Numbers Don’t Add Up Hawaiian’s proposed Kona

- Tokyo service has been tried before

— and failed. All of the metrics indicat e that Hawaiian’s service proposal sounds eerily like JAL’s failed Kona effort, but will be even less successful than the previous failed service. As described in Ex

. AA

- R

- 208, and as shown in Figure 5 , below, JAL and JALways (JAL’s low

- cost subsidiary ) previously attempted Kona

- Tokyo service from June 1996 to October 2010. JAL and JALways , of course, are Japanese carriers serving Japanese citizen s , and they have extensive relationships and tie

- ins with tour group operators and wholesalers in Japan, from where 9 6 % of the passengers would originate

. Figure 5: Kona - Tokyo Service Failed with Less than Half the Capacity Proposed by Hawaiian JAL/JALways Service Hawaiian

Service Proposal Frequency 15/ 16X per month Daily Aircraft Size 237 seats 294 seats Monthly Seats (each direction ) 3,792 8,820 Average Load Factor 62% actual (31 months under 50%) 75 % projected Monthly Passengers Each Way 2,350 6,692 projected
Sources: Ex. AA

- R

- 208; Application and Consolidated Answer of Hawaiian If Hawaiian carried the same number of passengers as actually carried by JAL/JALways, Hawaiian would achieve just a 27 % load factor on its service. T o achieve just the 62% average load factor that JAL and JALways experienced , Hawaiian would need to carry over 5,400

m onthly passengers each way

— more than double what JAL and JALways carri ed. Yet, Hawaiian is projecting to carry nearly triple JAL/JALways experience.29

Why Hawaiian believes it could succeed where JAL failed, with a larger aircraft than JAL (24 % larger) and double the number of flights operated by JAL/JALways, is unfathomable. Hawaiian ’s market projections of a sustainable service are highly unlikely or, as Hawaiian stated, academic as opposed to real world

. 52

2. The Success of the Honolulu

- Haneda Service Cannot Be Replicated in Kona Hawaiian point s to the success of it s Honolulu

- Haneda service to justify its Kona

- Haneda service proposal. Indeed, it brags that “ an award of the Kona route to Hawaiian will replicate the unparalleled success that Hawaiian has had at Honolulu

. . . . ” 53 But Hawaiian is not applying for another Honolulu

- Haneda slot pair , and the two markets are vastly different , as shown in Figure 6: Figure 6: Kona is NOT Honolulu

Honolulu (O’ahu Island) Kona

(Hawaii Island) Total visitors in 2013 5 million 1.4 million Percent of visitors staying exclusively on island 75% 45% Largest group of tourists Japanese (28%) American (68%) Growth rate of Japanese tourism 3.5% increase 2 .0 % decrease Average length of stay 5.49 days 3.44 days Source: Hawaii Tourism Authority, 2013 Annual Visitor Report 79

. Kona is simply not as strong a tourist destination as Honolulu , with Honolulu’s fabled and varied attractions and shopping ( opportunities particularly important to Japanese visitors)

. Kona has a much smaller share of tourists than Honolulu, and a much smaller percentage of Japanese visitors, t hat is only declining further

. 54

52 Ex. HA

- 2015A

- 508. 53 2015 Answer of Hawaiian Airlines, Inc., p. 13. 54 Hawaii Tourism Authority, 2013 Annual Visitor Report, 83

- 84.30

In light of this, Hawaiian’s assertion that its proposed Kona

- Haneda service would bring comparable traffic to its well

- established Honolulu

- Haneda service is illogical, strains credulity , and ignores the fact that Japanese tourists are not travelling in droves to Kona or the Island of Hawaii. A ccordingly, the Department should dismiss Hawaiian’s fantastical claims th at Ko na will be the next Honolulu. F. Successful Services Between the Mainland U.S. and Haneda Exist The success of Hawaiian’s Honolulu

- Haneda service does not mean that service from the continental United States cannot be successful. Hawaiian suggests that “operating a successful flight from the continental United States [is] difficult, if not impossible , ” 55 then supports this assertion with only a disingenuous examination of the five continental U.S. gateways that have been awarded Haneda service. 56 American agrees that Delta’s Seattle

- Haneda service has not been remotely successful

. Yet a review of the California services offered by both Japanese and U.S. carriers shows high load factors and continuous operations by ANA, Delta and JAL. 57 The facts s tarkly contradict Hawaiian’s statement. 58
G. Hawaiian Misunderstands Alliances For a substantial portion of its Answer, Hawaiian paints itself as the underdog , leading the fight against the large alliances and their member carriers. 59

55 2015 Answer of Hawaiian Airlines, Inc., p. 3. 56 See Ex. HA

- 2015A

- 104. 57 See Ex. AA

- R

- 107, p. 3. United’s SFO

- HND service is less than 90 days old and there is no public operating data about the route. 58 Haneda servi ces to New York was not successful, as American has explained, because the Haneda curfew creates very unattractive

— and commercially unviable

— operating times for that service from the U.S. East Coast (not the entire continental U.S.). This, above all else, led to the decision of American to end JFK

- Haneda service. But, Hawaiian’s assertion that service to Haneda from anywhere in the continental U.S. cannot be successful is just wrong. 59 Answer of Hawaiian, p. 56 (“willingness to challenge the global behemot hs”); Ex

. HA

- 2015A

- 700 Series.31

Hawaiian is a small carrier by its own design, filling the niche of bringing people to and from Hawaii, and connecting them on a large intra

- island route network

. Comparisons of its size to American are no more relevant than comparing a local restaurant c hain to a global restaurant franchise. The idea that Hawaiian needs the Department’s assistance as a small, vulnerable carrier is unbelievable given Hawaiian’s position in Hawaii

. Hawaiian serves more continental U.S. airports to Hawaii than any other ai rline including, or course, all the U.S. alliance airlines

. 60 Moreover, Hawaiian has a virtual monopoly on inter

- island service , operating over 84.5 % of intra

- Hawaii seats

. 61 Finally, in stating that “JAL and American function as a single economic entity and have every advantage of incumbency, including two Haneda

- U.S. frequencies , ” 62 it is evident that Hawaiian misunderstands the unique operating conditions at Haneda

. Haneda is different. Alliance cooperation that routinely takes place in global hubs such as London Heathrow, New York

- JFK, Paris

- CDG, and even Tokyo

- Narit a cannot take place at Haneda. Like Delta and United, American works with its alliance partners at airports around th e gl obe to optimize schedules. Frequently this means pooling or sharing slots at these airports for the benefit of the immunized relationship. None of this is possible at Haneda. Both Japanese and U.S. carriers are each limited to a total of four flights per side with strict restrictions on operating times. There is no ability of alliance partners to trade, swap out of curfew , sell , or othe rwise improve their schedules.

60 Source: Diio Market share data 61 Ex. AA

- SR

- 105. 62 2015 Answer of Hawaiian Airlines, Inc., p. 43.32

The only relevant measure at Haneda is which U.S. carrier s have slots and which do not

. In this case, Hawaiian already serves its primary international gateway at Honolulu , while American has no nonstop servic e from its only West Coast U.S. gateway. H. Hawaiian Could Start Service Today If It Were Truly Committed to Serving Kona - Tokyo ( A nd, of C ourse, Assuming the Existence of CBP/FIS F acilities at Kona) Hawaiian states multiple times that its lack of service to Narita gives it incentive to make its Kona

- Haneda service work. 63 Hawaii an has it completely backward. If Hawaiian truly believes what i t has stated about the prospects for Kona service to Tokyo

— how large the market is, how successful it will be, how strong the local demand is

— it can fly that route , from Narita today

– or as soon as there were operational CBP/FIS facilities open at K ona. Unlike Haneda, access to Narita is not foreclosed, and Hawaiian is not without the means to obtain the authority. In fact, today, Hawaiian is the only U.S. carrier in the U.S.

- Japan mark et that does not fly to Narita. If Hawaiian believes in the mer its of its Kona

- Tokyo proposal, it should start service to Narita without delay once appropriate CBP/FIS facilities were in place at Kona.

V. Seattle Will Continue to Be Well Served to Tokyo If the Department Determines t hat It Is in the Public Interest to Re allocate the Seattle
- Haneda Slot Pair To be sure, a reallocation of the Haneda slot pair would result in Seattle losing nonstop service to Haneda. This is an outcome American wishes could be avoided , and , o n e day , airlines will be free to make those types of decisions without requiring a carrier selection proceeding

. But, where there are only four Haneda slot pairs available for all U.S. airlines and all of the United States, the Department, as it is rightfully doing in this proceeding, must assess w hat use of that scarce resource max imizes overall public benefits. In American’s view, the objective

63 See 2015 Answer of Hawaiian Airlines, Inc., pp. 8, 62

- 63.33

evidence of record in this case is that the use of this Haneda slot pair to maximize those overall public benefits requires the reallocation of that Haned a slot pair to American to fly the Los Angeles

- Haneda route. It seems beyond the pale to argue, however you look at it, whatever perspective you may have, that Seattle, unlike the other communities that do have Haneda service, has not responded

w ell to Delta’s Haneda service. There should be no attempt to lay blame on anyone

— Delta or the community

— but the facts are unassailable that Seattle has not responded well to Delta’s service :

 It is not because no U.S. gateway has responded well to Haneda s ervice

— all

current U.S. carrier and Japanese carrier load factors on their Haneda services are substantially higher than Seattle

- Haneda

. (Ex. AA

- R

- 1007, p. 3) And the Seattle

- Haneda load factor is the lowest by a significant margin of any international route operated by Delta today ( Ex. AA

- R

- 108 )

.

 It is not because the aircraft operating on the route is too large because Delta is using the smallest aircraft possible capable of flying nonstop to Haneda

— small er than any other carrier operating U.S.

- Haneda service ( Ex. AA

- R

- 109 )

.

 It is not because Delta was not flying its own metal connections to Seattle because, throughout the history of the Seattle

- Haneda route, Delta had abundant connections on Seattle’s hometown airline renowned for its service

— Alaska Ai rlines (Ex AA

- R

- 107 at 1)

— and Delta’s own metal buildup has added only a single unique (non

- overlap with Alaska) market

— Jackson Hole

— with less than one P PDEW to Tokyo (Ex. AA

- R

- 102 )

.

 It is not because Delta was not flying its own metal connecting services because all other Delta international services at Seattle (including Seattle

Narita) experienced high load factors without Delta’s own metal (Ex. AA

- R

10 7 at 4)

.

 It is not because Seattle

- Tokyo traffic has d eclined because it has not (Ex. AA

- R

- 107 at 2), and, indeed, Delta’s Seattle service to Tokyo’s other airport

— Narita

—had the highest load factor of all of Delta’s long

- haul international services at Seattle ( Ex. AA

- R

- 107 at 4)

.

 It is not because Seattle is a seasonal market as Delta tries to allege ( Ex. DL

A

- 302 ). All other Delta Seattle flights operate daily , year - round service ( AA An swer, p. 4 )

.34  It is not because Seattle

- Tokyo is seasonal because Delta’s own metal Seattle

Narita flight operate s daily , year - round ( Ex. AA

- 324 )

. C ertainly not to ascribe blame, but, for whatever reason, Seattle, singularly and exclusively, has not responded well (indeed, has responded quite poorly) to service to Haneda. Delta’s commitment to daily , year - round service beginning “March 29, 2015 and b eyond” 64 is premised on Delta’s own

- metal co nnections making a difference. The evidence has shown that not having own

- metal connections did not in any way produce unsatisfactory results for Delta on any other Seattle international route, so there is no reason to believe that having

own - m etal connections will magically repair the 56 % load factor of Seattle

- Haneda service to any position of profitability. There is also the troubling fact, as American previously stated , that whatever the evidence demonstra tes, Delta may actually believe its position that Seattle

- Tokyo Haneda is a highly seasonal market. If that is indeed the case, what does that really portend for daily , year round service beginning “March 29, 2015 and beyond ”? And, what does “beyond” mea n and for how long? Most importantly, if the Department were to determine to reallocate this Haneda slot pair, Seattle would not lose nonstop service to Tokyo. Quite to the contrary, it would continue to enjoy double

- daily , year - round Seattle

- Tokyo Narita service, operated by Delta and ANA, and have access to both those carriers’ alliances, SkyTeam and Star, respectively. Having double

daily , year - round service by two airlines is a benefit that only six continental U.S. airp orts can claim (LAX, SFO, JFK, ORD, IAD , and SEA ) and is a benefit not currently enjoyed by even

64 Consolidated Answer of Delta, p. 1.35

substantially larger U.S. airports and communities, such as ATL, IAH, DFW , and DTW. 65 Thus, while Seattle would lose access to Haneda, it would continue to enjoy double

- daily , two

- carrier access to Tokyo, a still enviable position.

VI. Conclusion As the Department stated in its Instituting Order, the purpose of this proceeding is to “maximize the benefits of a scarce resource”

– one of four Haneda slot pairs. A merican has proven that the Haneda slot pair’s current usage by Delta for Seattle

- Haneda service has not and does come close to that objective and that, of the three applicants’ proposals in this case, American’s proposed Los Angeles

- Haneda service offers substantially superior benefits than Delta’s and Hawaiian’s proposals and fulfills the Department’s objective of maximizing the public benefits of this Haneda slot pair.

65 The Port of Seattle’ s Answer largely describes Seattle’s economic strength and growth

– positions with which American is in agreement. However, with respect to Ex

- SEA

- 103, American notes that loss of Delta’s Haneda service would not deprive the Pacific Northwest (or Seattle ) of a “low

- circuity” connection to Haneda. Indeed, three other very low circuity options are available: (1) Delta’s Seattle or Portland service to Narita; (2) ANA’s Seattle

- Narita service; and (3) ANA’s Vancouver

- Haneda service, with abundant connections from the U.S. Pacific Northwest to Vancouver. Additionally, Seattle’s claim that “SEA is the fastest growing large airport in the U.S.” (Ex

- SEA

- 106) may be accurate on a percentage basis, but not on an absolute (numbers) basis. On an absolute numbers bas is, Los Angeles is the fastest growing airport in the U.S. year over year

– 3 million new passengers in 2013 over 2012 for Los Angeles compared to 1.6 million for Seattle in the same period

– an indication of the need for more Haneda service at Los Angeles (ACI 2013 North American Airport Traffic Summary (Passengers), Ex. AA

- SR

- 106 ).36

For all the reasons set forth in American’s Application, Answer , and Reply , American respectfully requests that the Department allocate to American one Haneda slot pair for Los Angeles

- Haneda service.
Respectfully submitted,

Howard Kass Robert A. Wirick Abigail Donovan1 

# SURREBUTTAL EXHIBITS OF AMERICAN AIRLINES
2010 U.S.

- HANEDA COMBINATION SERVICES ALLOCATION PROCEEDING (HANEDA 2014)
Docket DOT

- OST

- 2010
- 0018 January 20, 2015



## Tokyo Haneda Los Angeles2 #LetAAFlyHaneda Exhibit Number Title

AA

- ST

- 1 Testimony of Suzanne Boda AA

- SR

- 101 U.S. Customs and Border Patrol Has Denied Hawaii Island’s Request to Reopen the International Arrivals Facility at Kona AA

- SR

- 102 At Least for the Foreseeable Future, Kona Could Not Accommodate a HND

- KOA Flight Because It Does Not Have Federal Inspection Services AA

- SR

- 103 The Public Benefits Substantially Favor American’s 15/16 States Over Delta’s and Hawaiian’s Smaller Populations Served AA

- SR

- 104 Contrary to Hawaiian’s Assertion About the Growth of the Hawaii

- Tokyo Market, That Market Is Smaller Today Than It Was 14 Years Ago AA

- SR

- 105 Talk About a True “Domination”

– It’s Not Alliances but Hawaiian’s Virtual Monopoly on Inter

- Island Hawaii Service AA

- SR

- 106 LAX’s Increase in Passengers in 2013 Was 86% Larger than Seattle’s

– Nearly 1.4 Million More Growth Passengers AA

- SR

- 107 Americans Proposed Los Angeles

- Haneda Service Covers More States and Communities Than Does Delta’s Seattle

- Haneda Service Letter of Support 

# Surrebuttal Exhibits of American Airlines DOT Docket OST

- 2010
- 0018 Table of Contents Page 1 of 1Testimony of Suzanne Boda Senior Vice President, Asia, Canada, Europe and Cargo

January 20, 2015
My name is Suzanne Boda and I am the Senior Vice Presiden t of Asia, Canada, Europe and Cargo at American Airlines, Inc. (“American”). In my role, I am responsible for all aspects of American’s operation at airports in Asia, Canada and Europe . Prior to assuming my current role in December 2013, I served as the Senior Vice President, Airport Customer Service, International and Cargo for US Airways since 2008. Before that, I spent nearly 25 years in leadership roles at Northwest Airlines (“Northwest”), including working and living in Tokyo supporting Northwest’s (now Delta’s) operations in Asia . I have lived in Japan for over five years and am fluent in Japanese. I submit this testi mony in support of American’s Application to begin Los Angeles

- Tokyo Haneda service and to respond to the questions raised by Delta and Hawaiian about American’s p roposed startup date of 60 days after issuance of a Final Order by the Department . As a long

- time visitor and former resident of Japan , I am very excited about the prospects of American returning to Haneda and fully share Messrs. Kirby’s and Nocella’s vie w (expressed in their earlier testimony) that the four Haneda slot pairs available to U

. S . carriers are valuable national resource s that cannot be waste d through underutilization. I also hope that the Department recognizes the important consumer benefits of having American operate its own aircraft to Haneda. A s the Department has known for some time, American’s return to Haneda is our top corporate priority in Asia. With my own personal experience in the region, I fully understand the importance of hav ing a strong presence in Japan as a cornerstone to growing and strengthening American’s competitive position throughout Asia. In fact, this is how both Delta (Northwest) and United (Pan Am) began decades ago when they established their own Tokyo services. American did not get its first Tokyo service until 1987 and even today remains at a substantial competitive disadvantage to Delta and United in Asia. As part of the Department’s required evidentiary elements, American was asked to propose a start date for beginning Los Angeles

- Haneda service should the Department award American the valuable Haneda operating rights

. American’s Application states that , “

... American recognizes the value of this scarce resource and commits to start s ervice 60 days after the issuance by the Department of a Final Order.” Contrary to the allegations of Delta and Hawaiian , the 60

- day start

up language is real and achievable. I personally approved the inclusion of a 60 - day start condition because I know , based on my professional experience in Japan that it can be achieved. I have tremendous confidence in the American team in Japan and other colleagues upon whom I will rely to make the start date a reality.Page 2 of 2

I selected a 60

- day start up condition because I know that it is important to move fast to get American’s proposed Haneda service operating as soon as possible given then there are so few Haneda options available for U.S. consumers . Under a different set of circumstances, I might have sought a longer start

- up date for service, but unlike other new routes , American presently operates to Tokyo and has been absent from Tokyo

- Haneda for just under two years and thus would not be starting from scratch

. Moreove r, American’s Asia headquarters is located in Tokyo and the critical teams to initiate service such as sales, marketing, re venue management, cargo, maintenance, technology, station operations, and premium services staff are already in Tokyo supporting curr ent operations

. Additionally, many of the vendors that American will need to support a Haneda operation already provide service to American in Tokyo . For those service providers who are unique to Haneda, we are confident they would welcome American back to Haneda, as many were utilized during American’s pr ior Haneda service. Given the importance of a new Haneda service to American, I have already begun to plan for what I hope will be a mid

- 2015 service launch. I have asked my “station start

- up” team to begin reviewing American’s new station checklist. Among the requirements already being reviewed are :

 Automation/IT requirements ;
 Support space needs ;
 Catering ;
 Customs/Immigration ;
 Licensing and permitting requirements ;
 Maintenance ; and
 Cargo

. Additionally, we have already begun discussion with our former ground handler at Haneda

– Japan Air Lines

– about ground handling a potential flight. We won’t enter into any formal agreements prior to a final Department order , but we want to be prepared to memorialize the terms should there be a Department decision to allocate this slot pair to American. Finally, because the overall Tokyo market is not new to American and American has served Haneda in the past, many of the cu rrent American employees in Tokyo have experience working at Haneda and are very excited about the prospect of restarting Haneda service. A number of these employees have already volunteered to work at Haneda to ensure a smooth start to start this important service

. During my o ver 30 years in the airline industry , I have opened dozens of new stations

. I fully understand the work required for a successful launch. I am confident that American will be prepared to reestablish Haneda service within 6 0

- days of a final Department decision

.
Respectfully Submitted,

Suzanne Boda3 #LetAAFlyHaneda 

# U.S. Customs and Border Patrol Has Denied Hawaii Island’s Request to Reopen the International Arrivals Facility at Kona DOT Docket OST

- 2010
- 0018 Exhibit AA

- SR

- 101 Page 1 of 1



### In Surrebuttal to Hawaiian Answer4 #LetAAFlyHaneda 

## At Least for the Foreseeable Future, Kona Could Not Accommodate a HND

- KOA Flight Because It Does Not Have Federal Inspection Services

Opening Hawaii's Kona Airport for international flights has benefits, but obstacles remain Jan 7, 2015 , Jason Ubay , Pacific Business News
Japan Airlines last flew to the then

- Kona International Airport in 2010. Uchiyama said the industry did not optimize it at the t ime. "Kona was sold as the destination, but this needs to be sold as a Maui, Lanai and Molokai itinerary," he said. Uchiyama said he would like to discuss with interisland carriers like Hawaiian Airlines, Ohana by Hawaiian, Mokulele Airlines and Island Air to try to sync outbound flights to coincide with international arrivals. In addition, JAL was the only airline operating an international flight from Kona, and this time around, more than one carrie r w ill need an international route to make it viable, he said.

. . . . Kona's airport still needs to clear a few obstacles. The U.S. Customs and Border Protection stopped inspecting commer cia l flights at the airport in December 2012, in part because of an outdated Federal Inspection Service site. For international flights to work, the airport would need to be exempt. The state DOT has petitioned Customs and Border Protection for an exemption while it modernizes the airport. DOT Docket OST

- 2010
- 0018 Exhibit AA

- SR

- 102 Page 1 of 1



### In Surrebuttal to Hawaiian Answer5 #LetAAFlyHaneda 

# The Public Benefits Substantially Favor American’s

15/16 States Over Delta’s and Hawaiian’s Smaller Populations Served Population of States Served

State Population 2014 Estimate State Population 2014 Estimate State Population 2014 Estimate Hawaii 1,419,561 Alaska 736,732 Arizona 6,731,484 Arizona 6,731,484 California 38,802,500 California 38,802,500 Colorado 5,355,866 Colorado 5,355,866 Florida 19,893,297 Georgia 10,097,343 Georgia 10,097,343 Idaho 1,634,464 Illinois 12,880,580 Michigan 9,909,877 Massachusetts 6,745,408 Minnesota 5,457,173 Nevada 2,839,099 Nevada 2,839,099 New York 19,746,227 New York 19,746,227 North Carolina 9,943,964 Ohio 11,594,163 Oregon 3,970,239 Oregon 3,970,239 Pennsylvania 12,787,209 Utah 2,942,902 Tennessee 6,549,352 Washington 7,061,530 Texas 26,956,958 Utah 2,942,902 Virginia 8,326,289 Total 1,419,561 Total 126,879,599 Total 194,568,717 Percent of U.S. Population .04% Percent of U.S. Population 39.8% Percent of U.S. Population 61.0%

Source: U.S. Census and OAG schedules 

### In Surrebuttal to Exhibits HA

- App2015

- 3

Hawaiian American Delta DOT Docket OST

- 2010
- 0018 Exhibit AA

- SR

- 103 Page 1 of 16 #LetAAFlyHaneda 

## Contrary to Hawaiian’s Assertion About the Growth of the Hawaii

- Tokyo Market, That Market Is Smaller Today Than It Was 14 Years Ago In Surrebuttal to Exhibit HA

- 2015A

- Series 400

Hawaii - Tokyo Market (Years Ending June) Year Onboards 2001 1,010,337 2014 1,003,762



## There has been no growth in the Hawaii

- Tokyo market in 14 years

Source: U.S. DOT T

- 100 1,000 1,002 1,004 1,006 1,008 1,010 1,012

2001 2014Thousands 

### Onboards

Onboards DOT Docket OST

- 2010
- 0018 Exhibit AA

- SR

- 104 Page 1 of 17 #LetAAFlyHaneda 

# Talk About a True “Domination”

– It’s Not Alliances but Hawaiian’s Virtual Monopoly on Inter

- Island Hawaii Service

Hawaiian

84.8% Mokulele, Island Air,

Mesa 15.2%

Hawaiian 89.3% Mokulele, Island Air,

Mesa 10.7% 

## Seats - 2014 ASMs - 2014

Note: Hawaiian share includes Empire Airlines which operates O’hana for Hawaiian Source: OAG CY 2014 

### In Surrebuttal to HA

- 2015A

- Series 700 DOT Docket OST

- 2010
- 0018 Exhibit AA

- SR

- 105 Page 1 of 18 #LetAAFlyHaneda 

# LAX’s Increase in Passengers in 2013 Was 86% Larger than Seattle’s

– Nearly 1.4 Million More Growth Passengers In Surrebuttal to Exhibit SEA

- 106, Port of Seattle Consolidated Answer

Passengers 2013 Passengers 2012 Percentage Change Passengers Change Seattle 34,826,741 33,223,111 +4.8 +1.6 million Los Angeles 66,667,619 63,688,121 +4.7 +3.0 million

Source: ACI 2013 North American Airport Traffic Summary (Passengers) DOT Docket OST

- 2010
- 0018 Exhibit AA

- SR

- 106 Page 1 of 19 #LetAAFlyHaneda 

## Americans Proposed Los Angeles

- Haneda Service Covers More States and Communities Than Does Delta’s Seattle

- Haneda Service

Source: OAG, Airline Schedules and Exhibit AA

- 107. 

### In Surrebuttal to Exhibits DL

- A

- 202 and DL

- A

- 203

American’s LAX - HND Service Summer

15 States 23 U.S. Communities (plus 2 Canadian markets) Delta’s SEA - HND Service Summer

14 States 22 U.S. Communities (plus 2 Canadian markets) American’s LAX - HND Service Winter

16 States 30 U.S. Communities (plus 1 Canadian and 1 Brazilian market) Delta’s SEA - HND Service Winter

10 States 14 U.S. Communities (plus 1 Canadian market) DOT Docket OST

- 2010
- 0018 Exhibit AA

- SR

- 107 Page 1 of 1CERTIFICATE OF SERVICE

I, Abigail Donovan, certify that, on January 20, 2015, I ca us ed to be served a copy of the foregoing Reply of American Airlines, Inc. to the Answers of Delta Air Lines, Inc. and Hawaiian Airlines, Inc

. by email upon those addressees listed below:
paul.gretch@dot.gov (DOT) brian.hedberg@dot.gov ( DOT) brett.kruger@dot.gov ( DOT) todd.homan@dot.gov (

DOT) peter.irvine@dot.gov ( DOT) EngleTS@state.gov (

Dep’t of State ) cristinasa@state.gov ( Dep’t. of State ) eugene.alford@ita.doc.go v ( Dep’t. of Commerce) ejames@jamhoff.com (

Allied Pilots Association ) seth.waxman@wilmerhale.com ( Delta ) sascha.vanderbellen@delta.com (Delta) chris.walker@delta.com (Delta) Mike.Donatelli@alpa.org ( Delta MEC/ALPA) john.allen@faa.gov ( FAA ) jhill@cooley.com (Hawaiian) Perkmann@cooley.com ( Hawaiian) Robert.Lamansky@hawaiianair.com (Hawaiian) glindsey@lawa.org ( Los Angeles World Airports) ishiwata.k@portseattle.org ( Port of Seattle) safora.i@portseattle.org (P ort of Seattle) dan.weiss@united.com ( United) stev e.m orrissey@united.com ( United) gmurphy@crowell.com ( United) sseiden@crowell.com ( United) i nfo@airlineinfo.com (AirlineInfo.com)

_________________________________ Abigail Donovan