BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

______________________________ ) In the matter of ) ) Docket DOT-OST-2010-0018 2010 U.S.-Haneda Combination ) Services Allocation Proceeding )

______________________________ )
ANSWER OF HAWAIIAN AIRLINES, INC.
Communications with respect to this document should be addressed to: Jonathan B. Hill J. Parker Erkmann Dow Lohnes PLLC 1200 New Hampshire Ave., NW Suite 800 Washington, DC 20036 (202) 776-2000 (202) 776-4725 (fax) jhill@dowlohnes.com perkmann@dowlohnes.com Counsel for Hawaiian Airlines, Inc.

June 14, 2011BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

______________________________ ) In the matter of ) ) Docket DOT-OST-2010-0018 2010 U.S.-Haneda Combination ) Services Allocation Proceeding )

______________________________ ) ANSWER OF HAWAIIAN AIRLINES, INC. Hawaiian Airlines, Inc. (“Hawaiian”) s ubmits this Answer in response to the Motion of Delta Air Lines, Inc. (“Delta”) filed June 3, 2011 in the above-captioned docket. For the third time, Delta has re quested relief from the dormancy condition applicable to its service from Detroit to T okyo’s Haneda Airport. Specifically, Delta has asked the Department to grant it authority to stop and start the service at its discretion, calling for what appears to be unlimited “fle xibility” in providi ng its proposed service between Detroit and Haneda. Conversely, Ha waiian has upheld the commitments it made in the route proceeding by initiating its Hane da service without delay and maintaining that service since its incepti on. In addition, consistent with its application for initial approval of the Haneda routing, Hawaiian rema ins willing to add an additional frequency between Haneda and Honolulu starting in December 2011. Hawaiian therefore opposes Delta’s third Motion for delay a nd requests that it be denie d, while also requesting that the Department award the Haneda-Detroit frequency to Hawaiian for the additional Haneda-Honolulu service. 1

1 Given the distribution channels within Japan, commencement of a second route to Hawaii from Haneda by December of 2011 is a significant and complex undertaking that usually would require several more months of preparation. Should DOT give it the2 Hawaiian Has Sought Two Daily Haneda Slot Pairs. Since its initial application in this proceeding, Hawaiian has sought the award of two daily slot pairs for service between Haneda and Honolulu. See Application of Hawaiian Airlines, DOT-OST-2010-0018, (Feb. 16, 2010), at ¶ 5. Although the final order in this proceeding awarded Hawaiian only one daily slot pair, see Order 2010-7-2 (the, “Final Order”), Hawaiian was the first U.S. carrier to start service to Haneda on November 17, 2010. Hawaiian also will be the firs t carrier to take advantage of the open skies opportunities to other Japanese destin ations, commencing service from Honolulu to Osaka on July 12, 2011. Of the carriers awarded a daily slot pair in the Final Order, Hawaiian is the only carrier that has not delayed and / or down-gauged its service in contravention of the commitments made in the route proceedings. Delta and American Airlines, Inc., the other two U.S. carriers awarded Haneda au thority, delayed starting their service to Haneda. On September 7, 2010, Delta reques ted a 30-day extensi on of the start-up condition that the Final Order placed on its service between Haneda and both Detroit and Los Angeles. See Motion of Delta Air Lines for a 30-Day Startup Extension, DOT-OST2010-0018 (Sep. 7, 2010). On December 20, 2010, American requested a 28-day extension of the start-up condi tion on its service between Haneda and New York’s JFK airport in a “me-too” filing after the Depart ment granted Delta an extension requiring them to start service no later than March 1, 2011. See Motion of American Airlines, Inc. for 28-Day Start-up Extension (JFK-Han eda), DOT-OST-2010-0018 (Dec. 20, 2010).

opportunity, however, Hawaiian is prepared to start its additional service by December of this year.3 Each time, Hawaiian filed an answer inform ing the Department that it was ready to initiate a second Haneda to Honolulu daily f light should Delta or American fail to abide by the start-up conditions in the Final Order. See Answer of Hawaiian Airlines, Inc. to Motion of Delta for Startup Extensio n, DOT-OST-2010-0018, (Sep. 15, 2010); Answer of Hawaiian Airlines, Inc. to Motion to American for Startup Extension, DOT-OST2010-0018, (Dec. 21, 2010). 2 The Department granted the request of De lta and American for the initial delays. Hawaiian’s Commitment to its Haneda Service is Unique. Despite the effects of the March 11, 2011 earthquake and tsunami, Hawaiian has maintained its Haneda-Honolulu service at the le vels and with the aircraft it committed to undertake in its origin al application to the Department . The other carriers awarded Haneda rights in the Final Order cannot make that statement. Even before the earthquake, Delta planned to reduce capaci ty on its Detroit-Haneda route by downgauging its aircraft from Boeing 747s to Boeing 777s, 3 reducing capacity by approximately 120 seats per fli ght. On or about March 17, 2011, Delta announced that it

2 Hawaiian was not the only carrier concerne d by the repeated requests for delay. On March 24, 2011, United filed a motion to be awarded backup author ity given Delta’s repeated failure to start and continue service in a timely manner. Hawaiian also filed an application asking that it be awarded backup authority. See , Application and Consolidated Answer of Hawaiian Airl ines, Inc. DOT-OST-2010-0018 (Apr. 7, 2011).

3 See Things in the Sky – Delta Seek s Flexibility on Haneda Slots , USA T ODAY (Jun. 6, 2011), http://travel.usatoday.c om/alliance/flights/boardi ngarea/post/2011/06/Things-inthe-Sky---Delta-Seeks-Flexibili ty-on-Haneda-Slots/173222/1). The pledge to use Boeing 747 aircraft on the Detroit-Haneda route was a factor in the Department’s awarding the route: “Delta’s proposed use of B747 aircraft for its Detro it service would also maximize use of its hub gateway in serving Haneda, enabling it to accommodate traffic from both the Detroit-Tokyo local market and its catchment area.” Order 2010-5-7.4 was suspending its Haneda service as of March 24, 2011. American subsequently announced that it was also suspending its Haneda service. The Haneda-Detroit Service Is Not Viable. Hawaiian has presented to the Departme nt clear and convincing evidence that Delta’s Detroit-Haneda service, even prior to the earthquake, was not developing into a sustainable operation. As stated in paragr aphs 5 and 6 of Hawaiian’s April 7, 2011 filing in this docket: Delta had over 10,000 advance bookings [from ] Narita to Detroit, but only approximately 4,200 advance bookings to Haneda. See MIDT Advance Bookings Data for DTW-NRT and DTW-HND on Delta for March 2011 (as of Feb. 28, 2011). Although Delta wa s offering service with the same aircraft capacity on both routes, its b ookings to Haneda from Detroit were only 41.8% of its bookings to Narita fr om that same U.S. gateway. Moreover, given Delta’s load factors on its Detroit-Narita route in March 2010, and assuming the same ratio of Haneda to Narita bookings for its flights from Detroit, Delta was facing the prospect of a dìsastrous 38% load factor for its Detroit-Haneda flights in March 2011. The outlook for those flights beyond March was similarl y grim, as Delta’s total advance bookings for its Detroit Haneda flight s for all periods after March were only 15.7% of its Detroit-Nari ta flights. In fact, Delta’s combined DetroitNarita and Detroit-Haneda booki ngs for March 2011 were only 5.5% higher than Delta’s March 2010 bookings for Detroit-Narita alone, even though Delta was offering twice as many seats in March 2011. This confirms Hawaiian’s earlier economic an alysis in this proceeding that Delta’s Haneda service would simply shift passengers from its Narita flights and that operating to both Tokyo airports from Detroit would not be sustainable. Delta’s advance bookings for its Los Angeles-Narita and Los Angeles-Haneda flights paints a sim ilarly grim picture of the lack of demand and unsustainability of Delta’s Los-Angeles-Haneda service. See MIDT Advance Bookings Data fo r LAX-NRT and LAX-HND on Delta for March 2011 (as of Feb. 28,2011). Application and Consolidated Answer of Hawaiian Airlines, Inc. DOT-OST-2010-0018 (Apr. 7, 2011), at ¶¶ 5-6 (footnote omitted). Delt a has failed to present evidence that its Haneda-Detroit route will ever lead to a sustainable service.5 The Award of a Second Honolulu-Haneda Frequency is a Better Use of Valuable Haneda Slots. Due to the lack of demand for Hane da-Detroit service (even prior to the earthquake and tsunami), the Department shoul d reallocate that frequency. Even now, Delta cannot commit to operating that frequency in accordance with the Final Order’s grant of these rights. The Department accordingly should award that frequency to Hawaiian so it can initiate its proposed sec ond service to Honolulu. Because of the strength of the Tokyo-Honolulu market and Hawa iian’s Haneda service in particular, that reallocation would be a better use of the scarce operating rights between Tokyo and the United States for several reasons. First, as Hawaiian pointed out in the original proceeding, Honolulu is by far the largest gateway between T okyo and the United States. See Consolidated Answer of Hawaiian Airlines, Inc., DOT-OST-2010- 0018 (Mar. 1, 2010), at Exhibit HA-A-210 (attached hereto as Exhibit HA-1 ) (stating that 25% of a ll Tokyo O&D passengers use Honolulu as their gateway). Honolulu is also the largest U.S. O&D passenger market to and from Tokyo. Id. at HA-A-211 (attached hereto as Exhibit HA-2 ). By comparison, Honolulu is more than 3000% larger than Detroit. See id. Given the overwhelming popularity of the Honolulu-Tokyo market, the award of a second daily slot pair to Hawaiian for an additional Honolul u frequency would be justified. Second, even after the earthquake a nd tsunami, the Tokyo-Honolulu market remains very strong. As demonstrated in Exhibit HA-3 , Honolulu bookings are down less in the Honolulu-Tokyo market than in the overall U.S.-Tokyo market. After an initial impact period, Hawaiian’s bookings fo r its Haneda-Honolulu se rvice have not only rebounded but now exceed pr e-earthquake levels. See Exhibit HA-4. Hawaiian isDocket OST-DOT-2010-0018 

# HAWAIIAN AIRLINES, INC.
EXHIBIT HA-1

### 25% OF ALL U.S. – T OKYO O&D PASSENGERS USED HNL AS THEIR GATEWAY

HNL 25%

GUM 21%
LAX 13% SFO 8% JFK 6% SPN 5%

IAD 2% DTW 2% SEA 2% Others 10%

ORD

5%

Source: MIDT, via TravelPort, CY 2009. Exhibit HA-A-210 Docket OST-2010-0018 Page 1 of 1

Page 63Docket OST-DOT-2010-0018 

# HAWAIIAN AIRLINES, INC.
EXHIBIT HA-2

### HNL IS THE LARGEST U.S. O&D PA SSENGER MARKET TO/FROM TOKYO

1.04

0.90

0.45
0.36
0.25 0.24

0.05 0.05 0.04 0.04 0.04 0.03 0.10 0.07 0.09 0.07 0.09

0.00 0.20 0.40 0.60 0.80 1.00 1.20

HNL*GUM* L.A. Area* NYC* Bay Area* SPN CHI LAS SEA* KOA IAD BOS MCO SAN ATL PDXDTW* CY 2009 MIDT (Millions)

*Service to gateway requested by applicant carrier. L.A. Area includes LAX,BUR,ONT, and SNA. Bay Area = SFO, OAK, SJC.

CHI = ORD and MDW, NYC=EWR,JFK,LGA. Source: MIDT, via TravelPort, CY 2009. Exhibit HA-A-211 Docket OST-2010-0018 Page 1 of 1

Page 64Docket OST-DOT-2010-0018 

# HAWAIIAN AIRLINES, INC. EXHIBIT HA-3

### PASSENGER BOOKINGS BETWEEN HONOLULU AND TOKYO ARE DOWN LESS THAN THE U.S. AVERAGE CITED BY DELTA Exhibit HA-3 Docket OST-2010-0018



### -15%

-25%
-30.0% -25.0% -20.0% -15.0% -10.0%

-5.0%

0.0% HNL-Tokyo Bookings /1 U.S. - Tokyo Bookings /2 % Year Over Year Change (June 2011 Compared to June 2010)

1/ MIDT, as of May 31, 2011. Includes passengers onboard NRT and HND flights. 2/ Docket OST-2010-0018, Motion of Delta Air Lines, June 3, 2011, Exhibit DL-1.Docket OST-DOT-2010-0018 

# HAWAIIAN AIRLINES, INC.
EXHIBIT HA-4

### HAWAIIAN’S HANEDA SERVIC E HAS FULLY RECOVERED Exhibit HA-4 Docket OST-2010-0018



### 413

304 343 393 456

0 50 100 150 200 250 300 350 400 450 500

Prior Impact Period Rebound 1 Rebound 2 Rebound 3 Average Passengers Per Day

Source: Hawaiian Airlines. (11/17-3/10) (3/11-5/19) (5/20 -6/2) (6/3-6/16) (6/17-6/30)