BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________) Motion of ) ) Delta Air Lines, Inc. ) ) in the matter of 2010 U.S.-Haneda Combination ) Docket DOT-OST-2010-0018 Services Allocation Proceeding ) __________________________________________)

ANSWER OF ALASKA AIRLINES, INC.

Communications with respect to this document should be sent to the following:
Megan Lawrence, Esq. Managing Director, Government and Community Relations Megan.Lawrence@alaskaair.com ALASKA AIRLINES, INC. 19300 Pacific Highway South Seattle, WA 98188 Kyle B. Levine, Esq. Deputy General Counsel & Managing Director, Legal Kyle.Levine@alaskaair.com ALASKA AIRLINES, INC. 19300 Pacific Highway South Seattle, WA 98188

September 5, 2012BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________) Motion of ) ) Delta Air Lines, Inc. ) ) in the matter of 2010 U.S.-Haneda Combination ) Docket DOT-OST-2010-0018 Services Allocation Proceeding ) __________________________________________)
ANSWER OF ALASKA AIRLINES, INC.
Alaska1 answers and reaffirms its strong support for Delta’s proposal to offer the first Seattle-Haneda nonstop service by transferring its two Detroit-Haneda slots to the Seattle gateway. The Department’s instituting order states that its proposed objective is to select the gateway that will provide the maximum public benefits and the greatest convenience to travelers and shippers.2 Delta’s proposed Seattle-Haneda service, combined with Alaska’s ability to provide substantial traffic support for that service, make the Seattle gateway far superior to the other proposed alternative gateways. Alaska supports Delta’s nonstop Seattle-Haneda proposal because:

 Alaska has a major hub presence at Seattle from which Alaska serves 70 cities in the U.S., Canada and Mexico.

 Seattle is the largest U.S. mainland city without nonstop service to Haneda, the close-in and increasingly preferred Tokyo Airport.

 Seattle enjoys a geographic advantage as the most direct and least circuitous gateway to Tokyo for broad expanses of the U.S.

 Alaska connected 200,000 passengers at Seattle to Delta’s international flights under the longstanding Alaska-Delta marketing alliance. The addition of a

1 Common airline names appear throughout. 2 DOT Order 2012-8-20, dated Aug. 17, 2012, at 3.- 2 - nonstop flight between Seattle and Haneda will increase Alaska’s international connecting traffic.

 Alaska’s extensive Seattle network will offer much improved service benefits to connecting Tokyo passengers from no fewer than 40 cities.

 Alaska and its employees will benefit from the increased traffic and operational levels flowing from the opportunity to connect Alaska’s Seattle network to the first Seattle-Haneda nonstop service.

 Los Angeles and San Francisco already receive Haneda nonstop service. Authorizing Delta to provide the first Seattle-Haneda nonstop service will greatly enhance West Coast-Japan intergateway competition, as well as enhance competition among the major global alliances. Alaska welcomes the Department establishing an expedited schedule for reaching a final decision in this selection proceeding. Seattle is the largest U.S. mainland city without nonstop service to Haneda. 3 Haneda’s close-in proximity to Tokyo makes Haneda the preferred airport for travel to Tokyo. These considerations underscore the importance of the Department’s decision to adopt expedited procedures and, for the reasons highlighted above, to select the Seattle gateway. I. Alaska’s Seattle Hub Network Will Provide Substantial Connecting Traffic for Delta and Will Improve Haneda Passenger Service from Forty (40) Cities. A. Alaska’s Seattle Hub The Department’s objective to maximize public benefits and offer improved service to the greatest number of travelers overwhelmingly favors the selection of the Seattle gateway. Alaska now enplanes eight (8) million passengers a year at Seattle, 50.3 percent of all enplaned
passengers.4 Alaska serves 70 cities from Seattle to points in the U.S., Canada and Mexico, and regularly adds new Seattle markets. 5

3 Based on U.S. gateway-Tokyo O&D traffic. Exb. DL-201. 4 Alaska Answer dated Aug. 8, 2012, at 1. 5 Id.- 3 -

Alaska’s leading presence at Seattle positions Alaska to seamlessly exchange large volumes of connecting traffic with Delta. For the twelve month period ended June 30, 2012, Alaska connected 200,000 Seattle gateway passengers to Delta’s international flights. 6 Adding a nonstop market as significant as Haneda will certainly increase Alaska’s international connecting traffic. B. Alaska’s Marketing Alliance with Delta Alaska’s marketing relationship with Delta is more than a “vanilla” codeshare agreement. Under the longstanding Alaska-Delta marketing alliance, both carriers offer reciprocal frequent flyer and airport lounge access benefits. The alliance permits Alaska and Delta to review connecting flight schedules and make timing adjustments to shorten passengers’ connecting times. This degree of cooperation has led to the substantial volume of international connectingtraffic described above, which will be further enhanced by the addition of the proposed SeattleHaneda nonstop flight. C. Delta’s Seattle-Haneda Proposal Confirms the Breadth of Alaska’s Network Feed at Seattle as Well as Seattle’s Unmatched Geographic Advantage for Service to Japan Alaska’s connecting traffic in no fewer than forty (40) beyond markets will support Delta’s Seattle-Haneda proposal.7 These forty beyond markets include cities such as Anchorage, Calgary, Chicago, Dallas/Ft. Worth, Denver, Las Vegas, Oakland, Los Angeles, Phoenix, Reno, San Diego, San Francisco and Vancouver. 8 Alaska’s track record for supporting Delta’s international flights assures that Alaska’s multiple daily frequencies in these beyond Seattle markets will generate substantial connecting passengers for Delta’s Seattle-Haneda service.

6 DL Applic, dated Aug. 27, 2012, at 5. 7 Exb. DL-401. 8 Id.- 4 -

Seattle’s natural geographic location as the closest “Lower 48” gateway to Japan is an equally important “public benefit” and “traveler convenience” consideration. The Great Circle route between many “Lower 48” cities and Haneda traverses the Pacific Northwest. 9 Comparing the elapsed travel times for passengers traveling to Seattle from cities common to both Delta’s Seattle and United’s San Francisco proposals highlights the elapsed time advantage of using the Seattle gateway for travel to Tokyo. Travelers using Alaska’s flights to Seattle from eleven (11) of the twenty (20) common beyond-cities would have shorter elapsed travel times. 10 Those shorter elapsed times via Seattle cities include Chicago, Las Vegas, Orange County, Phoenix, Portland and Vancouver. 11 Similarly, Pacific Northwest passengers traveling to Haneda could now avoid the more than one-thousand (1,000) backhaul miles in each direction required for Haneda travel via San Francisco. 12 Combining Alaska’s connecting flights in forty (40) beyond Seattle markets with the inherent elapsed time geographic advantage that Seattle enjoys over any other West Coast gateway makes Seattle the clear choice for new Haneda service. Neither Los Angeles nor San Francisco would generate the same level of public benefits and improved passenger convenience as Seattle. II. The Department Has an Opportunity to End Seattle’s Status as the Largest U.S. Mainland City Without Nonstop Service to Haneda. The Department stated that it will consider the competitive effects of the different Haneda proposals on the “overall competitive environment,” “market structure” and on

9 Exb. DL-203. 10 These elapsed time comparisons are based on westbound peak season schedules. Compare Exb. DL-401 with Exb. UA-115. 11 Id. 12 Exb. DL-204.- 5 -

“competition in the U.S.-Japan markets.” 13 Delta’s Seattle proposal better enhances competition than would United’s or any other pending Haneda proposal. Delta’s proposed Seattle-Haneda service will bring an end to Seattle’s status as the largest U.S. mainland city without nonstop service to Haneda. 14 Los Angeles currently receives Haneda nonstop service from both ANA and Delta. San Francisco enjoys Haneda nonstop service from JAL. Initiating Haneda nonstop service from Seattle will materially enhance West Coast-Haneda intergateway competition among the three major West Coast gateways. 15 Selecting Delta to provide the first Seattle-Haneda service will also improve the overall level of competition among the three major global alliances in the important U.S.-Japan market. Delta does not have a Japanese carrier partner. 16 American and United, on the other hand, partner with JAL and ANA, with which they also have antitrust immunity, including the right to conduct metal neutral joint venture service. 17 The scope of the antitrust immunity means that American and United may share equally in the economic benefits of flights operated on a metal neutral basis with their Japanese carrier partners. 18 For competitive purposes, the Department should recognize the financial benefits that American and United are already entitled to receive from the Los Angeles-Haneda and San Francisco-Haneda services operated by ANA and JAL, respectively. Awarding Seattle-Haneda service to Delta will lessen the West Coast-Japan and

13 Order 2012-8-20, supra at 3. 14 Exb. DL-201. 15 The Department has often stated that enhancing intergateway competition is a principal competitive objective in limited entry route proceedings. See e.g., U.S.-Colombia Combination Service Proceeding (2000), Order 2000-7-19 at 6 (July 14, 2000); U.S.-Ecuador Applications, Order 96-7-4 at 4 (July 2, 1996); U.S.-London Gateways Case, Order 87-5-5 at 10 (Apr. 22, 1987); Seattle/Portland-Japan Service Review Case, Order 86-9-92 at 3 (Sept. 30, 1986); Limited Entry Market Policy Statement, Sept. 25, 1985 at 12-13. 16 Exb. DL-301. 17 Exb. DL-303. 18 The Department expressly conditioned the grant of antitrust immunity to American-JAL and United-ANA on the carriers implementing their metal neutral operations before May 10, 2012. Order 2012-11-10, dated Nov. 10, 2012, at 4.- 7 - CERTIFICATE OF SERVICE A copy of the foregoing document has been served this 5th day of September, 2012, upon the following persons via email: carl.nelson@aa.com Francis.Heil@aa.com Robert.Wirick@aa.com dan.weiss@united.com thomas.bolling@united.com howard.kass@usairways.com benjamin.slocum@usairways.com jhill@dowlohnes.com paul.gretch@dot.gov keith.glatz@dot.gov esta.rosenberg@dot.gov todd.homan@dot.gov urskr@state.gov eugene_alford@ita.doc.gov info@airlineinfo.com