BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

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 :

Motion of :

 :

 DELTA AIR LINES, INC. : Docket DOT-OST-2010-0018

 IN THE MATTER OF THE 2010 COMBINATION : 

 SERVICES ALLOCATION PROCEEDING :

 :

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OBJECTIONS OF

UNITED AIR LINES, INC.

Communications with respect to this document should be sent to:

Hershel I. Kamen

Senior Vice President-Alliances,

 Regulatory and Policy

Daniel A. Weiss

Managing Director-International

 Affairs and Regulatory

UNITED AIR LINES, INC.

77 West Wacker Drive

HDQIZ

Chicago, IL 60601

(312) 997-7573

hershel.kamen@united.com

dan.weiss@united.com

Steve Morrissey

Managing Director-Regulatory Affairs 

 and Policy

Karine R. Faden

Managing Counsel-Regulatory, Antitrust & 

Competition

UNITED AIR LINES, INC.

1225 New York Avenue, N.W.

Suite 1100 DCAIZ/DCALD

Washington, DC 20005

(202) 521-4373

(202) 521-4363

steve.morrissey@united.com

karine.faden@united.com

November 26, 2012

Thomas Newton Bolling

Vice President and Deputy General Counsel

Jonathan T. Linde

Senior Counsel-Regulatory, Antitrust & 

Competition

UNITED AIR LINES, INC.

77 West Wacker Drive

HDQLD

Chicago, IL 60601

(312) 997-8341

thomas.bolling@united.com

jonathan.linde@united.com

Lorraine B. Halloway

Gerald F. Murphy

Steven J. Seiden

CROWELL & MORING LLP

1001 Pennsylvania Avenue, N.W.

Washington, DC 20004

(202) 624-2500

lhalloway@crowell.com

gmurphy@crowell.com

sseiden@crowell.com

Counsel for

United Air Lines, Inc.
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

--------------------------------------------------------------------

 :

Motion of :

 :

 DELTA AIR LINES, INC. : Docket DOT-OST-2010-0018

 IN THE MATTER OF THE 2010 COMBINATION : 

 SERVICES ALLOCATION PROCEEDING :

 :

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OBJECTIONS OF

UNITED AIR LINES, INC.

I. INTRODUCTION

United1objects to the Department’s tentative decision to allow Delta to move its DetroitTokyo Haneda slot pair to the small Seattle gateway, rather than grant United’s application to 

initiate first-ever U.S.-flag nonstop service to Haneda in the much larger San Francisco-Tokyo 

market and enhance competition for Tokyo Haneda service. United’s proposal to offer service 

from its San Francisco hub gateway should be selected under the Department’s well-established 

public interest standards. United also objects to the Department’s failure to award United backup authority in the event the tentative decision granting Delta’s motion is not reversed. 

Setting aside its tentative decision and selecting United’s proposed San Francisco-Tokyo 

Haneda service would be consistent with the Department’s long established policy for awarding 

valuable limited entry rights that has served consumers, communities and the industry well. 

The Department should select United at San Francisco over Delta at Seattle because United: (1) 

offers a proposal that will benefit the greatest number of consumers; (2) will introduce new U.S.-

flag competition at a highly restricted airport; (3) will provide a meaningful amount of online 

beyond connecting service; (4) will be accountable for its capacity and frequency commitments; 

 

1 Common names are used for airlines.
Objections of United

Page 2

and (5) has been forthright about potential service reductions that may result if its proposal is 

selected. 

Had the Department adhered to its longstanding policy and precedent, there would have 

been no basis for its tentative selection of Delta at Seattle over United at San Francisco:

 United’s proposed San Francisco-Tokyo Haneda service will reach nearly three times the 

number of consumers and provide first-time one-stop service to virtually the same 

number of U.S. communities and Tokyo Haneda passengers as Delta at Seattle, thus 

maximizing public benefits. 

 Selecting United would level the competitive playing field among U.S. carriers by 

allowing United to compete with Delta and American, which already have Haneda 

access, and by establishing first-ever U.S. flag-operated nonstop service to Haneda from 

San Francisco.

 United’s proposal offers the proven benefits of its San Francisco hub gateway, while 

Delta’s underutilization of valuable Haneda slots at Detroit – a hub airport with 

geographic attributes arguably far superior to Seattle – raises serious questions about the 

viability of Delta’s proposed Seattle-Haneda service.

The Department’s tentative decision is inconsistent with its analysis in similar limited-entry route

cases. Reexamination of the benefits offered by United’s San Francisco-Tokyo Haneda service 

relative to Delta at Seattle compels the Department to select United at San Francisco.

II. THE ADVANTAGES OFFERED BY UNITED AT SAN FRANCISCO 

OUTWEIGH THE FACTORS ON WHICH THE DEPARTMENT BASES ITS 

TENTATIVE SELECTION OF DELTA AT SEATTLE

A. United’s San Francisco-Haneda Service Will Maximize Public Benefits By 

Reaching Far More Consumers and Offering Just As Many First One-Stop 

Connecting Opportunities As Delta at Seattle

At nearly three times the size of the Tokyo-Seattle market, new Haneda service at 

United’s San Francisco hub gateway will offer far more public benefits than Delta at Seattle. 

San Francisco is not only the “second largest U.S.-Tokyo O&D market in this case” (Order 

2012-11-12 at 6), but also is the second largest West-Coast Tokyo market overall and the biggest 

West Coast-Tokyo market without U.S. flag-operated nonstop service. Exhibit UA-R-100. The 
Objections of United

Page 3

Department’s well-established precedent in limited-entry route cases consistently supports 

selection of a larger O&D market like San Francisco over a smaller market like Seattle, which 

the Department recognizes is only the “sixth largest O&D market.” See, e.g., Order 2005-2-14 

(tentatively selecting American’s proposed Chicago-Shanghai service as a second carrier in that 

larger market over Delta’s proposed new-gateway Atlanta-Beijing service); and Order 96-5-21 at 

7 (“The selection of Continental also offers the competitive benefit of introducing a new U.S. 

flag carrier that does not now serve the U.S.-Toronto market with its own 

aircraft...[and]...provides competitive U.S. flag service at the largest local U.S.-Toronto market 

currently unserved by U.S. flag carriers.”). Instances in which the Department has chosen a 

smaller O&D market are also distinguishable from this case, and do not support giving Delta 

more Haneda slots to be used at the small Seattle gateway over United at the larger San 

Francisco gateway while United remains locked out of Haneda. See, e.g., Order 2001-1-14 

(selecting Delta’s proposed new-entrant, new-gateway service to Argentina in the smaller 

Atlanta-Buenos Aires market over United’s proposed first U.S.-flag service in the larger Los 

Angeles-Buenos Aires market where entry was highly restricted and United was already 

operating several U.S.-Argentina routes). The Department should select the largest U.S.-Tokyo 

market to maximize the number of passengers who will benefit from the introduction of nonstop 

Tokyo Haneda service at the gateway supporting the largest traffic volume to meet its “principal 

objective” in allocating slots to “maximize public benefits...that will likely result in service that 

best meets the needs of the traveling and shipping public.” Order 2012-8-20 at 3.

The Department’s tentative decision also overestimates the connecting benefits of Delta’s 

proposed Seattle-Tokyo Haneda service. The Department’s recognition that “United’s San 

Francisco hub might arguably reach more passengers than the combined hub at Seattle” (Order 
Objections of United

Page 4

2012-11-12 at 6-7) is an understatement. Even considering Delta’s codesharing with Alaska,2

United’s San Francisco-Haneda service would reach more than 600,000 more consumers than 

would Delta at Seattle; that figure jumps to 1.5 million when points that connect to Delta’s 

existing Los Angeles-Haneda service are excluded. Exhibit UA-R-108. In terms of unique 

points, Delta/Alaska at Seattle would only reach 2,511 more Tokyo passengers (of 13,954 total) 

than United at San Francisco. Exhibit UA-R-108; and Reply of Delta, Exhibit DL-R-201. Yet, 

that figure drops by approximately 1,400 (10%) passengers when Orange County and Burbank 

are removed from the list – as they should surely be, since both airports are less than an hour’s 

drive to Los Angeles where Delta already offers nonstop service to Haneda. Further, 4,223 

(30%) of the Tokyo passengers reached by Delta at unique points would also be served by 

United via San Francisco. Id. That means that the Department’s finding that “other cities that 

now enjoy one-stop connections over more southerly gateways would gain the option of service

over a less circuitous northwest gateway” would not apply to 40% of the Tokyo connecting 

passengers that would purportedly benefit from Delta’s proposal at Seattle. 

B. Preserving the Competitive Balance of U.S.-Japan Services Compels Selection of 

United at San Francisco and Serves the Public Interest

The record shows that the Department’s tentative decision would produce negative 

competitive effects among U.S. carriers, and why assigning appropriate weight to the enhanced 

intergateway and intragateway competition that would flow from United’s proposed San 

Francisco-Tokyo Haneda service will lead the Department to set aside its tentative decision. 

Delta already holds the highest West Coast-Tokyo capacity share of any carrier (Exhibit UA-R-

 

2

Even to the extent Delta’s “marketing relationship [with Alaska] is more 

comprehensive than traditional codesharing arrangements, and...Alaska and Delta regularly 

adjust their schedules to facilitate effective connections” (Order 2012-11-12 at 6), they cannot 

coordinate with each other on pricing and revenue management. See Order 87-10-10 at 4 (“Any 

[such] agreement between [Delta and Alaska] would be a per se violation of antitrust laws.” Id. 

(emphasis in original)). 
Objections of United

Page 5

106), and is the only U.S. carrier currently permitted to serve Haneda from the West Coast. 

Delta and its SkyTeam immunized partner Korean also already hold the largest West CoastTokyo capacity share among global alliances. Exhibit UA-R-107. Yet United remains the only 

U.S. carrier serving Japan that is unable to operate at Tokyo Haneda with its own aircraft and 

coworkers. Rather than providing intergateway competition for Haneda service with 

Delta/SkyTeam at Los Angeles and American/oneworld at New York (JFK) and intragateway 

competition with JAL/oneworld at San Francisco, selecting Delta at Seattle would perpetuate an 

imbalance among U.S. carriers in the West Coast-Tokyo market. 

The Department’s failure to account for the intergateway and intragateway competition 

that would flow from United’s proposed San Francisco-Tokyo Haneda service is also at odds 

with longstanding precedent and the Department’s own policy criteria for selecting carriers in 

limited-entry markets. See 51 Fed. Reg. 43180 (Dec. 1, 1986). Indeed, the Department has 

previously used these criteria to reverse its tentative decision in a route proceeding on the basis 

that the tentatively selected carrier’s behind-gateway services did not outweigh the advantages 

the ultimately-selected carrier had to compete more effectively in the local market. See Order 

87-7-53; aff’d by Horizon Air Industries, Inc. d/b/a Horizon Air, v. U.S. Dept. of Transp., 850 

Fed. Reg. 775 (D.C. Cir. 1988).

To evaluate market structure, a “primary criterion” in route selection cases (50 Fed. Reg. 

38539, 38545 (Sep. 23, 1985), “the Department looks at potential intergateway competition – the 

competitive effect of the proposed service on flights offered to the same destination at possible 

alternative gateways. [It] also examine[s] the degree to which each applicant might increase 

competition with existing services at the same gateway.” 51 Fed. Reg. at 43186-43187. As the 

Department has properly recognized, a U.S. carrier with the highest current West Coast-Tokyo 

capacity share (Exhibit UA-R-106) and sole rights to serve Haneda from the West Coast being 
Objections of United

Page 6

given expanded and “exclusive authority to serve [the only] two [West Coast] gateways...would 

be under far less pressure to offer competitive fares and services.” 50 Fed. Reg. at 38546. In 

formulating its policy on consideration of market structure, the Department also recognized that 

“the Board sought to increase competition...through increasing the number of U.S. carriers 

operating to a particular country or region,” and that “[i]njecting a new carrier was deemed most 

likely to enhance competition in [the] broader market.” Id. (“[O]ne reason for Continental’s 

selection...was that it was the only viable applicant not already providing service in the U.S.-

South America market.” Id. (citing Order 83-4-49). 

The Department in limited-entry route cases has maintained a consistent policy of 

enhancing competition, favoring new entrants, and benefiting the largest number of passengers. 

See, e.g., Order 2008-5-27 (“Delta’s New York (JFK)-Bogota proposal would add U.S.-flag 

nonstop service in the large but underserved New York (JFK)-Colombia market, and would 

furnish meaningful competition with the daily JFK-Bogota services offered by the Colombian 

carrier, Avianca, as well as competition with the Newark-Bogota services of Continental.” Id. at 

8) None of these objectives will be achieved by selecting Delta’s proposed Seattle-Tokyo 

Haneda service. Moreover, the Department stated that its decision in the 2010 U.S.-Haneda 

Combination Services Allocation Proceeding would “address[] a variety of important public 

interest objectives” by: “introduc[ing] new competition in the U.S.-Tokyo market, address[ing]

the need for U.S.-Haneda service in the largest mainland U.S.-Tokyo O&D markets, and 

enhanc[ing] competition in the U.S.-Tokyo and U.S.-Asia markets.” Order 2010-5-7 at 8. With 

only one Haneda slot pair available in this proceeding, selecting United at San Francisco is the

only way for the Department to further these goals – none of which would be realized by leaving 

United as the only U.S. carrier serving Japan that cannot operate at Haneda with its own aircraft 

and crews. The significant consumer benefits and enhanced competition that will result from 
Objections of United

Page 7

United’s new entrant Haneda service in the large San Francisco-Tokyo market must be given 

considerable weight under the Department’s longstanding policy and precedent and compel the 

selection of United in this proceeding.

C. The Proven Benefits Of United’s San Francisco Hub Gateway Will Fully Utilize 

These Valuable Haneda Slots – Unlike Delta at Detroit or Seattle

The Department’s tentative decision leaves the impression that its central “public interest 

goal[]” is “promoting geographic diversity of U.S.-Haneda gateways.” Order 2012-11-12 at 6.

The proper implementation of that policy, however, would be requiring Delta to maintain its 

existing service at Detroit. Under this criterion, Delta’s much-lauded Detroit hub is in a better 

position to serve significantly more states, more destinations and more consumers. Exhibit UAR-108; Reply of Delta, Exhibit DL-R-102; and Application of Delta dated Feb. 16, 2010, Exhibit 

DL-112, in this docket. Yet Delta’s request to transfer its Haneda slots from Detroit to Seattle, a 

major hub gateway where it is unable to sustain service (see Motion of Delta dated July 30, 2012 

in this docket), illustrates why the Department employs interdependent criteria in evaluating 

limited-entry route cases.

The Department’s tentative decision would also paradoxically reward Delta for failing to 

fulfill its promises for Detroit-Haneda service. Just as Delta’s inability to sustain its DetroitTokyo Haneda service at a hub gateway that serves 17 more states, 58 destinations and 467,000 

more Tokyo passengers than Delta/Alaska at Seattle (Exhibit UA-R-108; Reply of Delta, Exhibit 

DL-R-102; and Application of Delta dated Feb. 16, 2010, Exhibit DL-112, in this docket), the 

Department must weigh Delta’s adherence to the commitments it made with respect to its 

Detroit-Tokyo service more generally. Delta promised to operate daily flights from Detroit to 

both Tokyo Narita and Haneda with B-747 aircraft (see Application of Delta dated February 26, 

2010 in this docket), none of which happened at Haneda as promised in the 22 months since 

Delta was required to begin operating its Detroit-Haneda service. Exhibit UA-R-110; see also
Objections of United

Page 8

OAG 2012. Delta has also provided only 40% of the capacity it promised with its Los AngelesHaneda service (by downgauging from B-747 to A-330 aircraft). Exhibit UA-R-111. Yet, Delta 

criticizes United for being up front about service levels for its current year-round San FranciscoTokyo Narita operation in the event the Department selects United’s proposal. See Application 

of Delta at 6. United believes that it is necessary to be forthright with respect to the operational 

realities of carrier service proposals, as it has recently demonstrated in this proceeding and in 

seeking startup extensions for its San Francisco-Guangzhou service. See Motion of United dated 

Jun. 14, 2011 in Docket DOT-OST-2007-28567. Examination of Delta’s operating history at 

Haneda and questions as to the sustainability of its Seattle-Tokyo services as described in this 

proceeding caution against finalizing the Department’s tentative decision and instead support the 

selection of United.

III. UNITED SHOULD BE AWARDED BACK-UP AUTHORITY IN THE EVENT 

THE DEPARTMENT MAKES FINAL ITS TENTATIVE SELECTION OF 

DELTA AT SEATTLE

The Department should, at the very least, award back-up authority to United in the event 

that it refuses to set aside its tentative selection of Delta’s Seattle-Tokyo Haneda proposal and 

Delta fails to institute as promised or terminates its Seattle-Haneda flights. The Department has 

already recognized that United’s proposed San-Francisco Haneda service is superior to either 

American’s at Los Angeles or Hawaiian’s at Kona. See Order 2012-11-12 at 6-7. Even if the 

Department elects to finalize its tentative selection of Delta’s Seattle-Haneda proposal, these 

valuable Haneda slots will have been squandered for more than two years.3 Without a back-up

carrier in place, if Delta again seeks to abandon its Haneda service, there will be a significant 

 

3 Delta filed its motion seeking the transfer of its Detroit-Tokyo Haneda slot pair 

nearly four months ago, on July 30, 2012. See Motion of Delta dated July 30, 2012 in this 

docket. These valuable slots had previously gone unused for approximately 11 of the preceding 

20 months since Delta was first required to begin service, and were underutilized for the rest of 

the time. A final order confirming the Department’s tentative selection of Delta’s SeattleHaneda proposal would not require Delta to begin service until at least March 2013.