BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C. 

____________________________________

)

Applications of )

)

HAWAIIAN AIRLINES, INC. )

) Docket DOT-OST-2010-0018

UNITED AIRLINES, INC. )

)

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

Combination Services )

Allocation Proceeding )

____________________________________)

CONSOLIDATED REPLY OF HAWAIIAN AIRLINES, INC.

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@hawaiianair.com

Mark K. Arimoto

Associate 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

Dow Lohnes LLP

1200 New Hampshire Ave., NW

Suite 800

Washington, DC 20036

(202) 776-2000

(202) 776-4725 (fax)

jhill@dowlohnes.com

perkmann@dowlohnes.com

bberlin@dowlohnes.com 

Counsel for Hawaiian Airlines, Inc.

December 16, 2013
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 1 of 13

BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C. 

____________________________________

)

Applications of )

)

HAWAIIAN AIRLINES, INC. )

) Docket DOT-OST-2010-0018

UNITED AIRLINES, INC. )

)

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

Combination Services )

Allocation Proceeding )

____________________________________)

December 16, 2013

CONSOLIDATED REPLY OF HAWAIIAN AIRLINES, INC.

In its Answer, United makes an appeal to the Department’s sense of fairness, arguing that 

it should receive the award because “United is the only applicant in this proceeding that has not 

been given the opportunity to serve Tokyo Haneda.”1 This is not a reason to award the single 

available slot pair to serve Tokyo International Airport (“Haneda” or “HND”) to United. 

In the order instituting this proceeding, the Department stated that its “principal objective 

[is] to maximize public benefits.” 2

 In response, United has made the same inferior proposal 

(San Francisco (“SFO”)-to HND) that the Department has rejected in two prior proceedings. Not 

surprisingly, scrutiny of the arguments in United’s application and answer demonstrates that the 

 1 In re 2010 U.S.-Haneda Combination Services Allocation Proceeding, Docket DOT-OST2010-0018, Answer of United Airlines, Inc., at 1 (Dec. 9, 2013) (“United Answer”) 2 In re 2010 U.S.-Haneda Combination Services Allocation Proceeding, Docket DOT-OST2010-0018, Order 2013-11-9, at 6 (Nov. 14, 2013).
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 2 of 13

purported benefits of its proposed SFO-Haneda service are illusory and that only Hawaiian’s 

proposal to serve Haneda from Kona will maximize the public benefits.3

 The reasons for this 

stem from the fact that the size of the Hawaii-Tokyo market overwhelms the size of the market

between Tokyo and California and the Bay Area in particular. 

HA-2013A-306. The introduction of service between Haneda and Kona will attract many more 

passengers than United’s proposal to add yet another daily nonstop between Tokyo and SFO, a 

 3 As the DOT has concluded before, consistently high load factors on a route clearly make that 

route “the most certain to be able to economically sustain additional service.” U.S.-Japan Serv. 

Case, DOCKET 46438, 1990 WL 308304, *19 (DOT Feb. 8, 1990).
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 3 of 13

market that is both overwhelmed with capacity and already dominated by United and its Star 

Alliance partner ANA. United’s answer makes a number of illogical or misleading claims, 

including that its proposed SFO service will introduce competition, that Kona-Tokyo is “much 

smaller” than SFO-Tokyo and that its proposed connecting services will generate public benefits. 

None of these arguments hold water. 

I. The Tokyo-Kona Market is Significant and Will Attract More Passengers than 

United’s Proposed Haneda Service.

Because Kona on the Island of Hawaii has a small population compared to San Francisco, 

United attempts to characterize the Tokyo-Kona market as small by focusing its analysis on 

U.S.-originating traffic, the current size of the market and population.

4

 See United Answer at 2-

3; UA-A-107, 108. The Department should not be misled by United’s mischaracterizations. 

Because Tokyo-Kona currently lacks nonstop service, the Department must consider the size of 

the Tokyo-Kona market after nonstop service and the size of the overall Tokyo-Hawaii market in 

assessing the passenger potential for Hawaiian’s proposed service.5 This market is huge and 

dwarfs the Tokyo-California market of which the Tokyo-SFO market is only a fraction – and not 

even the largest fraction at that.

 4 Moreover, in evaluating competing route proposals for service to Japan, the DOT has 

concluded that “considerations of traffic nationality are not relevant to the relative service and 

fare benefits and competitive impact offered by the applicants in the markets in which each 

proposes service.” U.S.-Japan Serv. Case, DOCKET 46438, 1990 WL 308304, at *22 (DOT 

Feb. 8, 1990).

5

 It is also important to note that there are more Japanese visitors to the Big Island alone than to 

the Bay Area (see Exhibit HA-2013A-509).
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 4 of 13

HA-2013A-303. The Department must account for the fact that the introduction of the first 

Kona-Haneda service will stimulate the market6 and that the addition of another SFO-Haneda 

frequency into an already saturated market will have minimal, if any, stimulative effects. Kona 

will be underserved relative to the Bay Area. Indeed, Hawaiian projects that the gap in O&D

 6

 As shown in Exhibit HA-2013A-510, the projected stimulation in the KOA-TYO market is

based on KOA’s share of the Hawaii-TYO market when JAL operated directional nonstop 

service in the past. This total stimulation is conservative given the share of Japanese travelers 

that go to the Big Island (See Exhibits HA-2013A-506-509). 
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 5 of 13

passengers per flight will be significant—Kona will have 2.3 times as many or 132 percent more

O&D passengers than SFO:

7

HA-2013R-2. Even without stimulation, Kona-Haneda flights will have more O&D passengers 

per flight than the Bay Area with United’s proposed service. See HA-2013R-1. 

 7 As discussed below, United would attract very limited flow passengers and far fewer than 

would be needed to overcome Hawaiian’s huge local market superiority. 
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 6 of 13

Under United’s own standard for measuring the public benefits, the Haneda frequency 

must be awarded to Hawaiian. United concedes that the Department should “maximize the 

number of passengers who will benefit from the introduction of nonstop Tokyo Haneda service 

at the gateway supporting the largest traffic volume.” United Answer at 2-3. There is no 

question that Hawaiian’s proposed HND-KOA service will generate higher traffic volume than 

United’s proposal to inject more service into the already saturated SFO-HND market. See HA2013A-512, 613.

In apparent desperation to support its flagging application, United astonishingly interjects 

ethnicity and ancestry into these proceedings. In doing so, it paints an eloquent picture of 

profound ignorance of geography, race and ethnicity in Asia which, if anything, adds weight and

credibility to Hawaiian’s application. United points out that the Asian population of San 

Francisco and California are larger than the Asian population of Kona and Hawaii. See UA-A107, 108. For this statistic to have so much as a scintilla of relevance in this proceeding (and 

graciously to United we would be happy to stipulate that it does not), implies that those of Asian 

ancestry living in San Francisco have a greater propensity to travel to Japan than do the residents 

of Hawaii. However, Asia and Japan are not synonymous, as is readily discernible with 

reference to a map,—there being many other countries with many ethnic and cultural groups of 

their own in what constitutes Asia. Americans of Filipino, Korean, Chinese, Vietnamese, Indian, 

Nepalese, Pakistani, or Thai descent, for example, are no more likely to visit Tokyo than are 

Italians likely to visit Copenhagen, Egyptians to visit Cape Town and Brazilians to visit 

Tegucigalpa. Nor does United explain why it assumes Americans of Asian descent whose 
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 7 of 13

families have lived in the United States for generations would have a strong desire to visit 

Tokyo. Assuming arguendo that the size of the Asian-American population has any relevance to 

the number of passengers who would fly to Japan, it would seemingly make more logical sense 

to count the number of Asian Americans of Japanese ancestry in those population areas. On that 

score, more than two times as many Americans of Japanese ancestry live in Hawaii than in the 

San Francisco Bay Area.8 In terms of California’s population, Americans of Japanese ancestry 

rank a distant fifth behind those of Chinese, Filipino, Korean and Vietnamese ancestry. This 

perhaps explains why United chose to highlight all Asians in making its case. But highlighting 

the overall number of people of Asian ancestry makes no sense in an application to serve HND, 

as passengers will not be flowing beyond HND to other Asian points. Such traffic flows occur at 

NRT where United already has service and does not require an HND slot.

Instead, the Department should rely of the verifiable fact that the 13 million residents of

the Tokyo metropolis and more than 35 million residents of the greater Tokyo catchment area9

have demonstrated a strong preference for traveling to Kona over San Francisco—as Kona, 

without nonstop service, already attracts more visitors than the Bay Area. See HA-2013A-509. 

II. United’s Contention that It Will Bring New Competition to Tokyo is Absurd.

United’s Answer contains the remarkable assertion that grant of its application “can bring 

new competition to Tokyo Haneda.” United Answer at 1. This contention reflects a 

fundamental failure to understand the competitive dynamic between Tokyo and the United 

States. As Hawaiian pointed out at length in its Answer, United and its immunized Star Alliance 

 8

 See U.S. Bureau of the Census, 2012 American Community Survey 1-Year Estimates.

9

 See Statistics Japan, Statistical Handbook of Japan, Table 2:10.
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 8 of 13

partner ANA have the highest Tokyo-U.S. market share and dominate approximately half the 

capacity at Haneda. See HA-2013A-704, 706. ANA already has two Haneda slot pairs, which 

ANA and its Star Alliance partners have elected to use to serve Honolulu and Los Angeles. In 

this proceeding, United proposes to introduce service on a route to Tokyo that the Star Alliance 

already serves 28 times per week and on which Star Alliance already has an 80 percent market 

share:

HA-2013A-110; see HA-2013A-905 (depicting Star Alliance’s 21 weekly roundtrips to SFO and 

7 to nearby San Jose). Far from increasing competition, grant of United’s application would 

strengthen the dominant alliance in the Tokyo-SFO market. This additional capacity may be 

sufficient to drive JAL, which already has taken down its NRT-SFO service and down-gauged 
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 9 of 13

HND-SFO to its smallest transpacific aircraft, from the market completely, leaving United/Star 

with a monopoly in the entire Bay Area – Tokyo (Japan) market.

10

Instead, awarding the available frequency to Hawaiian would bring Hawaiian to parity 

with the Star Alliance’s two Haneda slots and actually reduce concentration in the U.S.-Japan 

market. In other proceedings, United has assured the Department of the benefits of its 

immunized alliances and that those flights will be “metal neutral.” United cannot have it both 

ways. If the alliance flights are metal neutral, than the Department must attribute ANA’s 

significant existing Tokyo-SFO service to United, and an award to United will not increase 

competition.

III. The Purported Public Benefits of United’s Connections Are a Myth.

As Hawaiian predicted, United has attempted to tout the benefits of its connecting service 

at SFO. Hawaiian’s Answer dispels the notion that the public will benefit from these 

connections. See Hawaiian Answer at 45-47. First, United proposes few connections that are 

not offered by Delta through its existing LAX and SEA service. See HA-2013A-908. Second, 

the HND traffic between the unique connecting points is minimal and does not warrant any 

consideration in the Department’s analysis. See HA-2013A-909. At bottom, three years of 

experience have demonstrated that successful Haneda service depends on the origin and 

destination market with connecting service being of little value. Delta did not succeed at its 

gateway hub in Detroit, nor American in New York. Here, United simply proposes to repeat 

what already has failed twice before.

 10 JAL withdrew from the SFO-NRT market when it began HND service. Delta has announced 

that it will discontinue SFO-NRT service in March 2014.
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 10 of 13

United also disparages Hawaiian’s proposal by pointing out that Hawaiian’s proposed 

Haneda service would be its first Asian service from Kona, touting the fact that United is 

supposedly growing its Asia/Pacific operations from SFO. See United Answer at 3, UA-A-105. 

Hawaiian gladly embraces this comparison. Hawaiian has led U.S. carriers in growing capacity 

to Asia, while United’s capacity to Asia has remained flat or even declined. Indeed, in the last 

year, Hawaiian has grown its ASMs to Asia by 19.4 percent and United has decreased capacity 

by almost 1 percent. See HA-2013R-3. To the extent the Department considers which applicant 

is committed to growing capacity to Asia, that factor overwhelmingly favors Hawaiian. 

IV. The Department Cannot Grant the Relief Requested by Delta in this Proceeding.

In a pleading styled an “Answer”, Delta again requests the relief it initially sought in its 

Petition for Reconsideration of Order 2013-11-9—the flexibility to ignore the Department’s prior 

decisions to award Haneda slots to serve particular gateways. See In re 2010 U.S.-Haneda 

Combination Services Allocation Proceeding, Docket DOT-OST-2010-0018, Answer of Delta 

Air Lines, Inc. (Dec. 9, 2013) (“Delta Answer”). 

Should the Department determine to consider this issue in this proceeding, Hawaiian files 

the following as a contingent response to the issue:

The Department cannot grant Delta the requested relief in this proceeding for a number of 

independent reasons. First, the Department has given no indication that it will consider Delta’s 

roaming proposal, so granting Delta’s requested relief would be without notice to the participants 

in this proceeding and in violation of the Administrative Procedure Act. 
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 11 of 13

Second, any change in the conditions applicable to previously-awarded slot pairs requires 

that the Department give notice to those carriers and reconsider the carriers it chooses to receive 

those awards. In prior proceedings, the Department awarded Haneda slot pairs in consideration 

of the public benefits it expected would be derived from service to a particular gateway. Delta 

seeks to brush aside the Department’s careful consideration of these issues and leave the decision 

to the slot holder. If the Department decides to pursue that approach, it should do so, as 

Hawaiian has previously argued, in a new, separate proceeding. In that proceeding, following

consultations with the Government of Japan, the Department should reallocate all the Haneda 

slots free of other restrictions, such as on the hours of operation, and all prior awards should be 

re-allocated by the Department.

Third, Delta’s reliance on the Department’s decision in the Brazil proceeding is 

misplaced. As Hawaiian has noted, that case is distinguishable because the Department sought 

to correct a competitive imbalance among U.S. carriers. Here, there is no competitive imbalance 

among U.S. carriers, which all have the same slot rights at Haneda. Moreover, the Department 

took care in order 2004-6-25 to confine its precedential effects to the specific facts at issue in 

that case:

While we would not necessarily be prepared to follow this same approach in other 

markets, we believe that the disparate treatment of otherwise similarly-situated 

carriers in the Brazil market, along with the particularities of the current market 

environment, call for our according a greater degree of flexibility here than might 

be the case in other circumstances or settings. Thus, limited to the specific 

circumstances and context before us, we find that our decision here is consistent 

with the public interest.
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 12 of 13

U.S. Passenger Carriers, DOT-OST-2003-15021, Order 2004-6-25 at 2 (Jun. 28, 2004)

_(footnote omitted). Hawaiian also has found no indication that Order 2004-6-25 was appealed, 

and it therefore does not stand for the proposition that changing the conditions on previously 

granted authority complies with the Administrative Procedure Act. 

Fourth, Delta cannot seek relief in this adjudicatory proceeding to allocate one available 

Haneda slot pair because it has not submitted an application. Order 2013-11-9 set forth the 

criteria for submitting an application and participating in this proceeding. Delta elected not to 

submit a compliant application, yet seeks relief related to authority issued by the Department in 

prior proceedings. Without a compliant application, Delta’s requested relief is beyond the scope 

of this proceeding, and any relief granted to Delta would be improper.
DOT-OST-2010-0018

2013 Reply of Hawaiian Airlines, Inc.

Page 13 of 13

Conclusion

Because the award of the Haneda frequency to Hawaiian’s proposed Kona service will generate 

the most traffic and the most public benefits, the Department should grant Hawaiian’s 

application as quickly as possible.

Respectfully submitted,

___________________________ __________/s/_________________

Jonathan B. Hill

J. Parker Erkmann

Benjamin Berlin

Dow Lohnes LLP

1200 New Hampshire Ave., NW

Suite 800

Washington, DC 20036

(202) 776-2000

(202) 776-4725 (fax)

jhill@dowlohnes.com

perkmann@dowlohnes.com

bberlin@dowlohnes.com

Hoyt H. Zia

Senior Vice President, General Counsel 

& Corporate Secretary

Hawaiian Airlines, Inc.

P.O. Box 30008

Honolulu, HI 96820-0008

Hoyt.Zia@hawaiianair.com

 Counsel for Hawaiian Airlines, Inc.
CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing Reply of Hawaiian Airlines, Inc. was served 

this 16th day of December 2013 via email transmission or U.S. mail on the following:

francis.heil@aa.com

Robert.wirick@aa.com

sascha.vanderbellen@delta.com

chris.walker@delta.com

dan.weiss@united.com

Thomas.bolling@united.com

steve.morrissey@united.com

lhalloway@crowell.com

gmurphy@crowell.com

esta.rosenberg@dot.gov

robert.finamore@dot.gov

brett.kruger@dot.gov

paul.gretch@dot.gov

todd.homan@dot.gov

john.s.duncan@faa.gov

urskr@state.gov

cristinasa@state.gov

info@airlineinfo.com

Ambassador Kenichiro Sasae

Embassy of Japan

2520 Massachusetts Ave., NW

Washington, DC 20008

_/s/____________________

Benjamin Berlin
REPLY

EXHIBITS OF HAWAIIAN AIRLINES
THE KONA-TOKYO MARKET BEFORE STIMULATION IS

25% LARGER PER FLIGHT THAN THE BAY AREA-TOKYO MARKET

87

109

0

20

40

60

80

100

120

Kona (Excludes Stimulation) Bay Area (Excludes Stimulation)

YE September 2013 Tokyo* Adjusted MIDT Passengers per Flight

Adjusted MIDT Passengers/1: 79,443 341,446

Passengers per Day Each Way/2: 109 468

Daily Roundtrips (Including Proposed)/3: 1.0 5.4 

Ave. Passengers per Flight: 109 87

Exhibit HA-2013-R-1

Docket OST-2010-0018

Page 1 of 1

• Includes HND and NRT.

1/ MIDT has been expanded by 35% to account for direct bookings. This factor has been used in all Haneda proceedings.

2/ Annual One-Way Passengers / (365 days * 2 directions)

3/ Includes proposed United and Hawaiian service and announced schedule changes in 2014. Base annual flights from U.S. DOT, T-100, 

YE April 2013.

Source: MIDT, via Travelport.

+25%
THE KONA-TOKYO MARKET AFTER STIMULATION WILL BE

132% LARGER PER FLIGHT THAN THE BAY AREA-TOKYO MARKET

95

220

0

50

100

150

200

250

Kona (Includes Stimulation) Bay Area (Includes Stimulation)

YE September 2013 Tokyo* Adjusted MIDT Passengers per Flight

Adjusted MIDT Passengers/1: 79,443 341,446

Including Stimulation/2: 160,664 374,022

Passengers per Day Each Way/3: 220 512

Daily Roundtrips (Including Proposed)/4: 1.0 5.4 

Ave. Passengers per Flight: 220 95

Exhibit HA-2013-R-2

Docket OST-2010-0018

Page 1 of 1

• Includes HND and NRT.

1/ MIDT has been expanded by 35% to account for direct bookings. This factor has been used in all Haneda proceedings.

2/ See Exhibits HA-2013-A-619-20 for stimulation calculations.

3/ Annual One-Way Passengers / (365 days * 2 directions)

4/ Includes proposed United and Hawaiian service and announced schedule changes in 2014. . Base annual flights from U.S. DOT, T-100, YE 

April 2013.

Source: MIDT, via Travelport.

+132%
HAWAIIAN IS GROWING RAPIDLY TO ASIA MARKETS

WHILE UNITED’S CAPACITY IS REMAINING FLAT

19.4%

-0.9%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Hawaiian United

2012- 2013 ASM Change from U.S. to Asia

.

Source: Innovata Schedule Data.

Exhibit HA-2013 R-3

Docket OST-2010-0018

Page 1 of 1