Order 201 4

- 4

- 6

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 4 th day of April

, 201 4

Served: April 4 , 201 4

FINAL ORDER

SUMMARY

By this Order, we make final our tentative findings and conclusions set forth in Order

201 4

- 2

- 23 , and allocate one U.S.

- Haneda slot pair to United Airlines, Inc. (United) for daily scheduled combination services between San Francisco, California, and Tokyo’ s Haneda Airport.

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 Un ited States and Tokyo’s Haneda Airport. 1 As a result of two prior proceedings, by Orders 2010

- 7

- 2 and 2013

- 2

- 4, we allocated the four slot pairs as follows: 1) one slot pair to Hawaiian Airlines, Inc. (Hawaiian) for Honolulu

- Haneda service; 2) two slot pa irs to Delta Air Lines, Inc. (Delta), one for Los Angeles

- Haneda and one

for Seattle

- Haneda services; and 3) one slot pair to American Airlines, Inc. (American) for New York (JFK)

- Haneda service.

On October 23, 2013, American advised the Department that i t would discontinue its New York (JFK)

- Haneda service on December 1, 2013, and that American was returning to the Department

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) departures 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. Applications of

HAWAIIAN AIRLINES, INC.

UNITED AIRLINES, INC.

in the matter of 2010 U.S.

- Haneda Combination Services Allocation Proceeding Docket DOT

- OST

- 2010

- 00182 the slot pair allocated to it by Order 2010

- 7

- 2, effective December 2, 2013. United and

Hawaiian each filed an application for the available slot pair. In light of the competing applications of Hawaiian and United, by Order 2013

- 11

- 9, issued November 14, 2013, the Department instituted this proceeding to allocate the one available slot pair.

A pplications , answers, and replies wer e filed by Hawaiian and United for the slot pair under

consideration. 2 Hawaiian proposes daily service from Kona beginning on or about April 1, 2014, using A

- 330 aircraft. United proposes daily service from San Francisco beginning within 180 days of the beginning of the 2014 IATA Summer season using B

- 777 aircraft, and later using B

- 787 aircraft as they are added to United’s fleet. In addition, the United Master Executive Council of the Air Line Pilots Association and the San Francisco International Airp ort filed in support of United’s proposal. 3

TENTATIVE DECISION

After examining the complete record of applications and responsive pleadings, by

Order 201 4

- 2

- 23 , issued February 28, 2014 , we tentatively decided to allocate the one available slot pair to United for daily scheduled combination services between San Francisco and Tokyo’s Haneda Airport

. We allowed 10 calendar days for the filing of objections to our tentative decision and seven calendar days for answers to objections.

PLEADINGS FOLLOWING T HE TENTATIVE DECISION

On March 10, 2014, Hawaiian filed an objection to the Department’s tentative decision, and United filed comments supporting the tentative decision. No replies were filed to the March 10, pleadings of Hawaiian or United.

United requ ests that the Department issue an order confirming the tentative decision, enabling United to begin making the necessary arrangements well in advance of its start

- up date

.

Hawaiian urges the Department to reverse its tentative decision and award the slot pair to Hawaiian for its proposed Kona

- Haneda service. Hawaiian specifically objects to the Department’s conclusion that the tentative selection of United would best benefit the U.S. traveling public. Hawaiian argues that by focusing on the origin of Uni ted’s traffic, the Department has “moved the goal posts

, ” because the Order instituting this proceeding stated the Department’s principal objective would be to maximize public benefits

, without reference to the origin of the traffic to be served. 4 Hawaiia n asserts that because the bulk of its Kona passengers would originate in Japan, it s proposed service would result in more traffic stimulation and more economic growth than would United’s San Francisco service.

Hawaiian further asserts that the Department should , in its final order, affirm the public interest benefits of foreign

- originating traffic and the tourism it facilitates. Hawaiian argues that U.S.

-

2 Hawaiian also filed a surreply and motion for leave to file, which the Department granted.

3 Delta also filed a petition for reconsideration and additional pleadings supporting the position set forth in its petiti on

. S ee Order 2014

- 1

- 3 regarding resolution of the issues raised by Delta.

4 Hawaiian Objection , at 1

- 2.3 originating passengers spend dollars overseas, while foreign

- originating passengers spend dollars

in the United States, thereby increasing U.S. exports.

DEC ISION

We have decided to make final our tentative decision to allocate the one available slot pair to United for daily scheduled combination services between San Francisco and Tokyo’s Haneda Airpo rt.

O ur tentative decision , contrary to Hawaiian’s assertion, focused on much more than the origin

of United’s traffic. We highlighted that the Department has historically given considerable weight to new entrant applicants in carrier selection proceedings

, and that introducing United as

a new entrant at Haneda would make the best use of the one available slot pair. 5 We also tentatively found that selection of United’s San Francisco

- Haneda proposal would provide intra

gateway competition at San Francisco by introducing the first U.S. carrier

- operated service in the Haneda market, while enhancing inter

- gateway competition in the West Coast

- Tokyo market by giving consumers an additional choice for connecting service to Haneda over United’s well

est ablished San Francisco hub. W e tentatively found that the benefits to the traveling public of United’s proposal outweigh the potential benefits associated with Hawaiian’s proposal.

We have considered Hawaiian’s various objection s to our tentative decis ion

, as well as the merits of its Kona proposal, and do not find that a different outcome is warranted

. Hawaiian argues that its propos ed Kona

- Haneda service would generate greater economic benefits than would additional Tokyo service from San Francisco. Notwithstanding the positive attributes of new

Kona

- Haneda service, we find that those factors are outweighed by the aggregate of benefits to

be derived from United’s San Francisco

- Haneda proposal. W e acknowledge that Hawaiian’s proposal would likely pr ove beneficial to the local and State economies ; however

, o n balance

,

we find that the competitive benefits of new United service to Haneda from its San Francisco

hub would make better use of the one available slot pair

, and is likely to attract the divers e mix

of business and leisure traffic

, originating in the U.S. and in Japan

, that will benefit from access to Tokyo’s downtown Haneda airport

.

H aving carefully considered the re cord in this proceeding, we have decided to make final our

tentative selection of United for daily combination services between San Francisco and Tokyo’s Haneda Airport.

TERMS, CONDITIONS, AND LIMITATIONS

We have decided to impose a start

- up condition for this award

. We finalize our tentative

decision to require United to institu te its proposed services within 180 days of March 30, 2014, the date on which the IATA 2014 summer traffic season begins, consistent with United’s proposed start

- up date.

5 Hawaiian serves Haneda from Honolulu.4 In addition, we finalize our decision to impose a 90

- day dormancy condition on t he slot pair allocated in this proceeding ; if the slot pair is not utilized for a period of 90 days (once inaugurated) , it w ill be deemed dormant and revert to the Department.

ACCORDINGLY,

1. We make final our tentative findings, conclusions, and decision set forth in Order

201 4

- 2

- 23 ;

2. We allocate United Airlines, Inc. one slot pair for its proposed San Francisco

- Haneda service ;

3

. The slot pair allocat ion will remain in effect indefinitely, provided that the holder continues to hold the necessary underlying authority to serve the markets authorized; and provided further

that the slot pai r will become dormant and will revert automatically to the Department if it is not used for a period of 90 days (once inaugurated);

4 . To the extent not granted, we deny the remaining applications and requests in this proceeding;

5 . We will not entertain petitions for reconsideration of this order; and

6 . We will ser ve this order on the parties to the captioned docket of the order, the Japanese Ambassador to the United States in Washington, DC, the Federal Aviation Administration, and the U.S. Department of State (Office of Aviation Negotiations).

By:

Susan L. Kurla nd 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