Order 20 1 5

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- 1 4 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 1 5 th day of J anuary , 20 1 5

Served: J anuary 15 , 201 5

ORDER ON RECONSIDERATION

Summary

By this order the Department gran t s the petition of Delta Air Lines, Inc. (Delta) for reconsideration of Order 201 4

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- 9 in the above captioned proceeding. On reconsideration, the Department den ies the relief requested.

Background

Under the Memorandum of Understanding between the United States and Japan signed on October 25, 2010, four daily slot pairs are available to carriers from each country to provide scheduled combination services between the United States and Tokyo’s Haneda Airport. 1 As a result of three prior proceedings, by Orde rs 2010

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- 2, 2013

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- 4, and 2014

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- 6, the Department has now allocated the four slot pairs as follows: 1) one slot pair to Hawaiian Airlines, Inc. (Hawaiian) for Honolulu

- Haneda service; 2) two slot pairs to Delta, one for Los Angeles

- Haneda and one for Sea ttle

- Haneda services; and 3) one slot pair to United Airlines, Inc. ( United ) for San Francisco

- Haneda service. 2

1 The scheduled operations are subject to the following conditions: 1) U.S. operations at Haneda are permitted between 2200 and 0700 hours local time; 2) depart ures from Haneda to a point in the 48 contiguous U.S. states are not permitted prior to midnight; and 3) extra sections are not permitted.
2 F ollowing a carrier route selection proceeding, t he Department initially allocated the four U.S.

- Haneda slot pairs as follows: Delta at Detroit, Delta at Los Angeles, Hawaiian at Honolulu, and American at New York (JFK). See Order 2010

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- 2. In 2012, Delta applied to relocate its Detroit

- Haneda service to the Seattle

- Haneda market

. Following a second carrier selectio n proceeding, in which competing proposals were submitted by American, Hawaiian, and United, the Department awarded Delta authority to provide service between Seattle and Haneda. See Order 2013

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- 4. Subsequently, in 2013, American ended its New York

- Hane da service, and returned the slot pair to the Department for reallocation. Following a Petition of

DELTA AIR LINES , INC.

in the matter of 2010 U.S.

- Haneda Combination Services Allocation Proceeding Docket DOT

- OST

- 2010

- 00182 On October 2, 2014, American Airlines, Inc. (American) filed a motion asserting that Delta intends to operate limited winter season service in the Seattle

- Haneda market, and that Delta plans to serve the market for one week every 90 days, which is just enough to prevent the slot pair from automatically reverting to the Department bas ed on the dormancy condition imposed by the Department on the slot pair. 3 Based upon those circumstances, American request ed (1) that the Department withdraw Delta’s daily U .S.

- Haneda slot pair that was awarded for Seattle

- Haneda s ervices; and (2) reallocation of that slot pair to American for Los Angeles

Haneda services

.
On October 9, 2014, Hawaiian filed a motion to reopen Order 2013

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- 4, and an answer to the motion and application of American. Hawaiian specifically request ed that the Department (1) reopen the case where Delta was awarded Seattle

- Haneda authority and modify the dormancy condition to require meaning ful year

- round service; (2) grant American’s motion to withdraw the Seattle

- Haneda slot pair from Delta; and (3) institute a new proceeding to develop a factual record before reallocating the slot pair

. By Order 2014

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- 9, the Department instituted this proceeding to determine the disposition of the Seattle

- Haneda slot pair, currently allocated to Delta. I n light of Delta’s extensive winter

season Seattle

- Haneda service cutbacks, the submissions of American and Hawaiian and the responses thereto, the Dep artment found that the public interest require d a fresh examination of whether the best use of the Seattle

- Haneda opportunity is to allow Delta to retain the slot pair for Seattle

- Haneda service, or whether the public interest would be better served by rea llocating the slot pair for service from another U.S. city by another U.S. carrier or by Delta.

The Order set forth a procedural schedule and evidentiary requirements for the establishment of a record for the Department to make a decision in this case. Pursuant to the procedural schedule, petitions for reconsideration were due December 22, 2014; and answers to petitions were due January 2, 2015. 4

Petition of Delta

On December 22 , 201 4 , Delta filed a petition for reconsideration of Order 2014

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- 9

, ar gu ing that the Department’s decision to institute this proceeding is arbitrary and capricious. Delta contends that the Seattle

- Haneda slot pair was awarded indefinitely, subject to two conditions: (i) that Delta retain the necessary underlying authority to serve the markets authorized, and (ii) that the slot pair will become dormant and will revert automatically to the Department if it is not used for a period of 90 days. Delta argues that it is in full compliance with those conditions, and that Order 20 13

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- 4, where Delta was allocated the slot pair, contains no other notice or grounds for revocation of that authority.

carrier selection proceeding involving United and Hawaiian, the Department selected United for Haneda service from San Francisco. See Order 2014

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- 6.
3 The allocation of the U.S.

- Haneda slot pair to Delta is subject to the Department’s standard condition pertaining to dormancy, whereby the slot pair will be deemed dormant and will revert automatically to the Department if it is not used for a period of 90 days. See Ord er 2013

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- 4, at 5.
4 The procedural schedule set forth in Order 2014

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- 9 also established due dates for applications/supplements/amendments, answers, and replies. This order addresses only the petition of Delta and the answers filed thereto.3 Delta further contends that the Department has not adequately supported its authority to reallocate frequencies to ensure they are used effectively and in a manner that promotes competition and otherwise best serves the public interest. Delta asserts that the two orders cited by the Department as precedent do not, in fact, support its decision here. Delta argues that those orders 5 estab lished procedures for the return of unused frequencies and placed the carrier being awarded authority ( Evergreen ) on notice that unused frequencies could be reallocated. Delta argues that those orders demonstrate that in this instance, the Department must follow the procedures that it establishe d in O rder 2013

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- 4, and that the Seattle

- Haneda slot pair may be reallocated only if Delta were to violate the dormancy condition. 6

Delta also argues that the Department has permitted o ther similarly situated carriers to retain limited

- entry authority that has not been used for much longer periods , while this proceeding subjects the Seattle

- Haneda slot pair to reexamination on the basis of single season cutbacks

. Delta again argues that it has firm plans to provide Seattle

- Haneda service daily as of March 29 through the summer season. 7

Lastly, Delta argues that the Department ignored proposed alternatives to this proceeding, by not considering the proposal to consider amending the dorma ncy condition. 8

Responsive Pleadings

On January 2, 2015, American and Hawaiian each filed answers to Delta’s petition.

American asserts that Delta’s contentions are legally incorrect, and that the Department has inherent power to review prior decisions, so long as Delta is given notice and a hearing, which is exactly the purpose of this proceeding. In response to Delta’s arguments that it has complied with the dormancy condition, American contends that the condition only specifies the basis for automatic revocation, while saying nothing about other, non

- automatic grounds for revocation. American argues that Delta has severely cut back its Seattle

- Haneda service, that the Department is righ t in holding this proceeding, and that Delta’s petition should be denied.

Hawaiian also contends that the Department has the power to reallocate the Seattle

- Haneda slot pair, despite Delta’s compliance with the dormancy condition. Hawaiian argues that th e Department’s instituting order is not arbitrary and capricious because this proceeding provides Delta with notice and an opportunity for a hearing, where Delta can present any concerns it may have.

Decision

The Department ha s decided to grant Delta’s petition for reconsideration, and on reconsideration,
to deny the relief requested.

In reaching this result, we are following a longstanding Department precedent. Specifically, in O r der 97

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- 35 we instituted the 1997 U.S.

- Argentina All

- Cargo Frequenc y Proceeding to

5 Order 9 5

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- 30, at 5 and Order 94

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- 7, at 8.
6 Delta Petition , at 3.
7 Delta Petition , at 6.
8 Delta Petition , at 6

- 7.4 consider, among other things, whether we should reallocate frequencies then held by Challenge Air Cargo, Inc. (Challenge). Challenge argued that it had “used [its] frequencies within the 90

- day dormancy period, which is the only established requirement, and that the Department can not now impose additional standards to establish whether the frequencies are dormant.” Order 97

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- 35 at 5. The Department rejected Challenge ’ s position and maintained the proceeding, saying it need not make a determination regarding the dormancy condition because “we are instituting this proceeding under our general powers to review the public interest bases of the current awards.” Id

. a t 6, n. 12. Challenge petitioned for reconsideration, seeking res cission of the instituting order or modification of the proceeding. On reconsideration, the Department granted Challenge’s petition and denied the requested relief. Order 97

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- 19. We see nothing in Delta’s petition that would cause us to follow a diffe rent course here.

As indicated in Order 2014

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- 9, the Department has determined that, in light of Delta’s extensive winter

- season cutbacks, and the submissions filed on the record in this case, the public interest requires a fresh examination of whether the best use of the Seattle

- Haneda opportunity is to allow Delta to retain its underlying authority to operate the slot pair for Seattle

- Haneda service, or whether the public interest would be better served by reallocating the slot pair for service from an other U.S. city by another U.S. carrier or by Delta. Delta has presented no information that would lead the Department to alter that conclusion. 9

The Department has instituted this proceeding under its general powers to review the public interest bases of current awards

. The Department believes that procedures established in Order 2014

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- 9, will provide Delta, as well as any other interested carriers, ample opportunity to argue its position and present any evidence it may wish to present. 10

The Department, therefore, denies Delta’s request to vacate Order 2014

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- 9.

ACCORDINGLY,

1 . We grant Delta Air Lines, Inc. (Delta)’s petition for reconsideration of Order 201 4

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- 9, and upon reconsideration we deny the relief requested ; and

9 We note Delta’s assertions that certain U.S.

- Brazil frequencies have gone unused for periods of time with no action by the Department to reexamine those frequencies . Delta, however, has not brought to our attention any Brazil cases where the Department took no action in the face of a challenge to such frequencies by a carrier with firm plans to use them

. 10 With regard to Delta’s assertion that the Department consider modifying the standard dormancy condition, as we noted in the instituting order, parties are free raise this issue on the record of this proceeding.5 2 . We will serve this order on all parties to the proceeding

. By:

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.gov