BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

____________________________________ ) Motion and Answer of ) ) HAWAIIAN AIRLINES, INC. ) ) Docket DOT

- OST

- 2010

- 0018 ) in the matter of 2010 U.S.

- Haneda ) Combination Services ) Allocation Proceeding ) ____________________________________)

Hawaiian Airlines’ Motion to Reopen Order 2013

- 2

- 4 and Answer to the Motion and Application o f American Airlines

Communications with respect to this document should be addressed to:

Mark B. Dunkerley President & Chief Executive Officer

Hoyt H. Zia Senior Vice President, General Counsel & Corporate Secretary Hoyt.Zia@hawaiianai r.com

Mark K. Arimoto Deputy General Counsel Mark.Arimoto@hawaiianair.com

Hawaiian Airlines, Inc. P.O. Box 30008 Honolulu, HI 96820

- 0008 Jonathan B. Hill J. Parker Erkmann Benjamin Berlin Cooley LLP 1299 Pennsylvania Ave., NW Suite 700 Washington, DC 20004 (202) 842

- 7800 (202) 842

- 7899 (fax)

jhill@cooley.com perkmann@cooley.com bberlin@cooley.com

Counsel for Hawaiian Airlines, Inc.DOT

- OST

- 2010

- 0018 Motion and Answer of Hawaiian Airlines

1 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

____________________________________ ) Motion and Answer of ) ) HAWAIIAN AIRLINES, INC. ) ) Docket DOT

- OST

- 2010

- 0018 ) in the matter of 2010 U.S.

- Haneda ) Combination Services ) Allocation Proceeding )

____________________________________)

Hawaiian Airlines’ Motion to Reopen Order 2013

- 2

- 4 and Answer to the Motion and A pplication of American Airlines

Delta Air Line’s (“Delta”) approach to route cases can be summed up with the old proverb “ i f at first yo u don’t succeed, try, try again. ” Having repeatedly made promises to the Department of Transportation (“Department” or “DOT”) that it has failed to deliver, Delta continues to undermine the Department’s goal of expanding U.S. air carrier access to Tokyo’s Haneda Airport ( “Haneda”) . B y converting , without DOT approval, its recently

- awarded frequency between Haneda and Seattle to a seasonal route and flying just the minimum number of flights to avoid triggering the 90

- day dormancy condition , Delta has demonstrated that it i s not committed to Haneda service but to wa rehousing frequencies and protecting its hub at Narita International Airport from the diversion of passengers through Haneda

. To avoid the warehousing of this valuable Haneda frequency, Hawaiian Airlines, Inc. (“Hawaiian”) files this pleading to: (1) request that the Department reopen the grant of authority in Order 2013

- 2

- 4 (the “Order”) , which approved Delta’s request to move its Detroit

- Haneda frequency to Seattle , and modify the dormancy condition to require meaningful year

- round service ; (2) support the motion of American Airlines , Inc. (“American”) to withdraw Delta’s Haneda slot pair award ed in the Order; (3) oppose the Application of American Airlines to start its own service from Los Angeles to Ha neda; (4) request that the Department notice a new proceeding to develop the factual record before reallocating Delta’s Seattle

- Haneda frequency; and (5) inform the Department that, in the event the Department elects to ini tiate a reallocation proceeding, Hawaiian will submit an application to provide year

- round service in full utilization of the allocated frequency.

1. Delta h as Abused the Department’s Procedures for Allocating Haneda Slots.

Delta’s recent scheduling sleight of hand is just the latest indig nity that Delta has heaped upon the Department’s policy of expanding Haneda access for U.S. carriers

. In the initialDOT

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- 2010

- 0018 Motion and Answer of Hawaiian Airlines

2 Haneda allocation proceeding, Delta a ssur ed the Department that its proposed Detroit service

was an absolute winner

. 1 That didn’t work ve ry well

. Despite promising to accept the Department’s startup condition for any slot award, 2 Delta requested, and received, a 30

- day startup extension. 3 After a little more than a year of starting up the Detroit service and after

rece i ving a waiver of the dormancy condition, 4 Delta abandoned Detroit and requested that the Department transfer the frequency to Seattle. 5

Next, Delta told the Department and the competing applicants that Seattle would be a great market for Haneda service

. 6 T hese assurance s of success were given even though others, including Hawaiian, pointed out that S e attle was the smallest market proposed in the proceeding and warned that it would not succeed :

The Seattle market is ... simply not large enough to support Delta’s proposed Haneda service . . . and [the proposed Seattle] service, like Detroit, will not be rescued by connecting service from Delta, Alaska or anyone else.

Consolidated Answer of Hawaiia n Airlines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding , DOT

- OST

- 2010

- 0018 (July 30, 2011), at 29. Delta’s sleight of hand stands in star k

1 Answer of Delta Air Lines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding

, DOT

OST

- 2010

- 0018 (March 1, 2010) , at 11, D112 (“Delta’s Detroit hub is the largest and most effective U.S. airline hub for service to Asia, and will provide nonstop

- to nonstop Han eda service for 106 U.S. points

. In addition, Detroit boasts a large local market to Tokyo with 33,000 annual O&D passeng ers.”)

. 2 Application of Delta Air Lines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding

, DOT

- OST

- 2010

- 0018 (Feb. 16, 2010), at Interrogatory Answer (a) (“Delta will accept a condition requiring the institution of service on October 31, 2010, at t he start of the IATA winter traffic season, or within 120 days of the effective date of the 2009 MOU, whichever is later.”).

3 Motion of Delta Air Lines, Inc. for a 30 Day Startup Extension, 2010 U.S.

- Haneda Combination Services Proceeding , DOT

- OST

- 2010

- 0 018 (Sep. 7, 2010) . The Department approved the motion on September 27, 2010.

4 Motion of Delta Air Lines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding , DOT

OST

- 2010

- 0018 (June 3, 2011) (requesting waiver of dormancy condition until June 1, 201 2); Notice of Action Taken, DOT

- OST

- 2010

- 0018 (issued June 29, 2011) (granting Delta’s motion ).

5 Motion of Delta Air Lines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding , DOT

OST

- 2010

- 0018 (July 30, 2011), at 1 (“Based on its actual operating experience, Delta has found that Eastern U.S.

- Haneda service is underperforming relative to the West Coast

- Haneda service.”)

. 6 Consolidated Answer of Delta Air Lines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding , DOT

- OST

- 2010

- 0018 ( Sep. 6, 2012 ), at 2 (“The Department can improve market

based competition at Haneda

– and generate important new nonstop and network service benefits

– by allowing Delta the flexibility to operate from its preferred U.S. mainland gateway at Seattle.”).DOT

- OST

- 2010

- 0018 Motion and Answer of Hawaiian Airlines

3 contrast to American ’s decision to return its Haneda frequency to the Department for reallocation once American concluded that continued operations were uneconomic. 7

Now

, Delta h as unilaterally cut its use of this valuable Haneda slot pair without even acknowledg ing that Department approval of such a change might be required. Indeed, Delta’s public statement about its decision was cavalier : “‘Delta will reduce the level of service between Seattle and Tokyo

- Haneda beginning in October due to low seasonal demand, a scheduling practice that is common for all airlines, including American ’. . . . ” 8

Delta’s public position fails to show an ounce of sensitivity to the context in which the Department award ed the Seattle

- Haneda frequency. The Department relied upon Delta’s statements in the record . Delta presented Seattle as a year round market, never suggest ing it was

a seasonal market

. 9 Before representing that Seattle would be a sure

- fire success, Delta had

r epresent ed that Detroit would be a sure

- fire success

. Neither of these representations proved remotely true. By reducing its service to the minimum level to avoid the impact of the dormancy condition, Delta ’s unilateral action violates the spirit, if not the letter

, of Order 2013

- 2

- 4 awarding the Seattle frequency

. At some point, the Department needs to call a hal t to this charade and award this frequency to a carrier, such as Hawaiian

, that will use it . Delta’s Haneda strategy is not about providing service or competition but playing keep away with valuable air service rights

– all to protect its Narita hub

. The Department should not countenance such blatant flaunting of its processes and procedures

, especially when the conduct undermines the Department’s effort to expand access to Haneda.

Delta’s conduct is at odds with the Department’s principle objective in awarding Haneda slot pairs

– maximizing the public benefits by awarding slot pairs to carriers that “will most likely offer and maintain service that best meets the needs of the traveling and shipping public.” 10 Delta’s conduct is also at odds with longstanding Department policy favor ing the use of operating rights, as t he Department stated when initiating a proceeding to reallocate unused Brazil combination frequencies :

As we have stated m any ti m es before, it has b een the Department’s l ongstanding policy not to per m it valuable operating rights to re m ain unused for an extended period of ti m e, particularly when another carrier has firm plans to use the m , and the carrier holding the authority does not. 11

7 See Letter o f Francis Heil to Esta Rosenburg, 2010 U.S.

- Haneda Combination Services Proceeding , DOT

- OST

- 2010

- 0018 (Oct. 23, 2013).

8 Madhu Unnikrishnan, American: Delta “Squandering” Haneda Slots from Seattle, Aviation Daily (Oct. 6 , 2014) (quoting Delta spokesman T rebor Banstetter).

9 Supplemental Application of Delta Air Lines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding , DOT

- OST

- 2010

- 0018 (Aug. 27, 2012), at Exhibits DL

- 101,102.

10 Order 2010

- 1

- 17, at 1

- 2.

11 Order 2008

- 10

- 20

, at 3 (opening proceeding to reallocate Brazil combination frequency).DOT

- OST

- 2010

- 0018 Motion and Answer of Hawaiian Airlines

4 To maximize the public benefit, valuable air s ervice rights must be awarded to carriers that plan to use them.

2. Hawaiian’s Record of Using and Seeking Haneda Authority is Unparalleled.

No carrier can match Hawaiian ’ s record of using the single Haneda frequency awarded in the initial 2010 proceeding. Upon receiving authority to operate Haneda

- Honolulu service in 2010, Hawaiian started its service early. When other carriers requested permission to reduce or stop service during the aftermath of the 2011 tsunami , Hawaiian continued its service without interruption. Indeed, the load factor for Hawaiian’s Haneda service remains higher than that of all the other U.S. carriers serving Haneda.

Not only has Hawaiian consistently used its Haneda authority, it has requested more authority from the Department at every single opportunity. In the initial 2010 proceeding, Hawaiian requested two Haneda

- Honolulu frequencies. 12 In the Department’s contested proceeding that resulted in the tra nsfer of Delta’s Detroit service to Seattle, Hawaiian applied to serve Kona. 13 And in the proceeding to reallocate the New York frequency re turned to the Department by American, Hawaiian again sought an award of Kona service. 14 Hawaiian also has been consi stent in recommending that the U.S. government bargain for any incremental Haneda authority available

– efforts that Hawaiian understands have been opposed by Delta. Instead, Delta has favored U.S. carrier expansion at Haneda only if the unattainably high hurdle of moving its Narita hub to Haneda can be obtained. 15

3. The Department Should Re open the Order and Modify its Dormancy Condition.

Delta’s cynical and calculated effort to thumb its nose at the Department and the intent of the O rder should be rejected. By filing schedules that keep just enough service to comply with the Order’s dormancy condition, 16 Delta is making a joke of the route proceeding. Delta’s winter schedule for HND

- SEA provide s : (1) no service from Oct ober 5 throug h November 9, 2014; (2) daily frequencies the week of November 16 , 2014 ; (3) no service from November 23

, 2014 through February 8, 2015; (4) 2 frequencies the week of February 8 , 2015 and 5 frequencies the week of February 15 , 2015 ; and (5) no service unti l the week of March 29 , 2015

, when it will operate 3 frequencies

. That’s 1 7 planned operations for the entire winter season.

12 Application of Hawaiian Airlines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding

, DOT

- OST

- 2010

- 0018 (Feb. 16, 2010).

13 Application of Hawaiian Airlines, Inc., 2010 U.S.

- Haneda Combination Services Proceeding

, DOT

- OST

- 2010

- 0018 (Aug. 27, 2012).

14 Request of Hawaiian Airlines, Inc. for Incorporation of Previous Application, 2010 U.S.

- Haneda Combination Services Proceeding , DOT

- OST

- 2010

- 0018 (Nov. 26, 2013).

15 See Azusa Uchikura, Delta CEO calls for open skies in Japan (July 31, 2013) (available at: http://cnsnews.com/news/article/delta

- ceo

- calls

- open

- skies

- japan).

16 See Order 2013

- 2

- 4 (Feb. 5, 2013)

, at 5

.DOT

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- 2010

- 0018 Motion and Answer of Hawaiian Airlines

5 Who knows what Delta will offer in the summer season? It’s clear, however, what Delta’s plan is. Having resisted the incrementa l opening of Haneda to U.S. carriers, Delta intends to warehouse the frequencies awarded by the Department. This strategy may be beneficial to Delta’s Narita hub operation, but it is not in the public interest. 17 Nor does it advance the Department’s goal of expanding U.S. carrier access to Haneda.

The Department should reopen th e Order and clarify that the recipien t is to provide consistent year

- round service in accordance with the representations made in the proceeding leading up to the issuance of the Order. Indeed, Delta itself has argued in this proceeding that “the Department has discretion to consider a wide range of public interest factors” in determining the conditions upon which the awarded frequencies can be operated. 18 In a new proceeding, t he Department should make plain that it expects the participants’ representations to be fulfilled rather than rendered expedient platitudes

– only to be later reneged

. In the instant case, it is clear that Delta’s Seattle service is not sustainable

. 19 If the service cannot be provided, Delta should
return the frequencies as American did with its New York service

– or the Department should require Delta to do so.

4. Hawaiian Supports American’s Motion but Opposes its Application.

For the reasons stated above, Hawaiian fully supports American’s M otion to withdraw Delta’s daily Haneda

- US service due to Delta’s failure to utilize the awarded frequency

. Acceptance of additional Haneda frequencies in the near term has been and continues to be Hawaiian’s obje ctive, and Hawaiian firmly believes that the available Haneda frequencies should be allocated to carriers that will use them. Hawaiian, however, opposes American’s proposal to serve Los Angeles from Haneda. As acknowledged in American’s application, its proposed service would be the third frequency between Haneda and LAX. Just as the Seattle market was not large enough to support Delta’s service, the Haneda

- LAX market is simply not large enough to support a third carrier on the route

. Given the passage of time and the potential for another failed service, Hawaiian believes that the Department must develop, as it has in prior Haneda slot allocation proceedings , the necessary evidentiary record before making any reallocation decision. 20 To develop the reco rd, the Department should follow its past practice of noticing a

17 The Department has recognized that the hoarding of slots at capacity

- constrained airports in the United States is anticompetitive. See, e.g., Department of Transportation, Petition for Waiver of the Terms of the Order Limiting Scheduled Operations at LaGuardia Airport, 75 Fed. Reg. 7306, 7308 (Feb. 18, 2010).

18 Petition f or Reconsideration of Order 2013

- 11

- 9, 2010 U.S.

- Haneda Combination Services Proceeding , DOT

- OST

- 2010

- 0018 (Nov. 19, 2013), at 2.

19 Recent data indicates that Delta experienced load factors of less than 35% in October and November of 2013 on the HND

- SEA route, resulting in Delta largely cancelling its 2014/15 winter season. See U.S. DOT, T

- 100 data.

20 See Order 2012

- 8

- 20 ( “We have th erefore decided to institute a proceeding to develop the necessary record and to determine the disposition of the Detroit

- Haneda slot pair that would best serve the public interest.”).DOT

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- 2010

- 0018 Motion and Answer of Hawaiian Airlines

6 proceeding where the competing applications can be evaluated in light of current market developments. 21

5. In any Reallocation Proceeding, Hawaiian Will Submit an Application to Provide Year

- Round Service.

Hawaiian remains as committed as ever to increasing its frequencies to Haneda. Should the Department issue a notice commencing a reallocation proceeding, Hawaiian will file an application to serve Haneda in opposition to American’s Ap plication for Los Angeles service and any other applications that may be submitted

. Hawaiian’s application will be for year

- round service and full utilization of the available frequency, which is consistent with Hawaiian’s record of utilizing its current Haneda

- Honolulu frequency. Delta, like all other airlines, would be free to reapply for Seattle service.

Conclusion

For the forgoing reasons Hawaiian urges the Department to cease Delta’s warehousing of valuable Haneda frequencies and requests the foll owing relief:

1. The Department should reopen its consideration of the Order to clarify that the awarded Haneda service is not seasonal and that it must be used on a year

- round basis to be retained;

2. American’s motion to reallocate the Haneda

- Seattle frequency should be granted;

3. The Department should notice a new proceeding, consistent with past practice, to develop the evidentiary record necessary to evaluate which of the competing applications best serves the publi c interest; and

21 See Order 2010

- 1

- 7 (initiating initial Haneda allocation proceeding) ; Order 2012

- 8

- 20 (initiating proceeding to consider applications competing with Delta’s proposal to move its service from Detroit to Seattle); Order 2013

- 11

- 9 (instituting proceeding to consider competing applications for the Haneda

- New York frequency ret urned to the Department by American).DOT

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- 2010

- 0018 Motion and Answer of Hawaiian Airlines

7 4. Consideration of American’s application to serve Los Angeles should be deferred until the full evidentiary record has been developed and competing applications have been submitted

.

Respectfully submitted,

___________________________ Jonathan B. Hill J. Parker Erkmann Benjamin Berlin Cooley LLP 1299 Pennsylvania Ave., NW Suite 700 Washington, DC 20004 (202) 776

- 2000 (202) (fax) jhill@cooley.com perkmann@cooley.com bberlin@cooley.com

Counsel for Hawaiian Airlines, Inc.DOT

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- 2010

- 0018 Motion and Answer of Hawaiian Airlines

8 CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing Motion and Answer of Hawaiian Airlines, Inc. was served this 9 th day of October 2014 via email transmission on the following:

h oward.kass@aa.com francis.heil@aa.com

a bigail.donovan@aa.com

r obert.wirick@aa.com

c harles.hunnicut@thompsonhine.com
p atricia.snyder@thomsponhine.com sascha.vanderbellen@delta.com chris.walker@delta.com dan.weiss@united.com
t homas.bolling@united.com steve.morrissey@united.com lhalloway@crowell.com gmurphy@crowell.com robert.finamore@dot.gov brett.kruger@dot.gov paul.gret ch@dot.gov todd.homan@dot.gov brian.hedberg@dot.gov john.s.duncan@faa.gov

e nglets @state.gov finstonma@state.gov cristinasa@state.gov glindsey@lawa.org info@airlineinfo.com

_ /s/

____________________ Benjamin Berlin