Order 201 3

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- 4

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
Issued by the Department of Transportation on the 5 th day of February

, 201 3

Served: February 5 , 201 3

FINAL ORDER

SUMMARY

By this Order, we make final our tentative findings and conclusions set forth in Order 201 2

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- 12 , and grant the motion of Delta Air Lines, Inc. (Delta) to move its Detroit

- Haneda slot pair for scheduled combination services to Seattle

- Haneda, rather than select an alternative use for that slot pair.

BACKGROUND

Under the Memorandum of Understanding bet ween 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 By Order 2010

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- 2, issued July 6, 2010, we 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 Detroit

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

- 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) 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.
2 Not selected in that proceeding were American for one slot pair for Los Angeles

- Haneda service; Continental Airlines, Inc., for one slot pair for Newark

- Haneda service; Continental Micronesia, Inc., for one slot pair for Guam

Haneda service; Delta for one slot pair for Seattle

- Haneda and one slot pair for Honolulu

- Haneda services; Hawaiian for a second Honolulu

- Haneda service; and United Air Lines, Inc. (United) for one slot pair for San Francisco

Haneda service. Motion of

DELTA AIR LINES, INC.

in the matter of 2010 U.S.

- Haneda Combination Services Allocation Proceeding Docket DOT

- OST

- 2010

- 00182 On July 30, 2012, Delta filed a motion requesting authority to move its Detroit

- Haneda slot pair to the Seattle

- Haneda route and ask ed the Department to institute any necessary proceedi ngs to enable Delta to change gateways. By Order 201 2

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- 20 , issued August 17 , 201 2 , the Department instituted this proceeding to determine whether it is in the public interest to grant Delta’s motion to transfer its Detroit

- Haneda slot pair to the Seattle

- Haneda route, or whether the public interest would be better served by an alternative use of that slot pair. The Order set forth a procedural schedule and evidentiary requirements for the establishment of a record for the Department to make a deci sion in this case.

Four carriers

– American, Delta, Hawaiian, and United

– filed applications for the slot pair under consideration, to provide daily combination services in the U.S.

- Tokyo (Haneda) market.

American proposed daily service from Los Ange les using B

- 777 aircraft. Delta proposed daily service from Seattle using B

- 767 aircraft. Hawaiian proposed daily service from Kona using A

- 330 aircraft. United proposed daily service from San Francisco using B

- 777 aircraft.

Answers and replies were filed by each of the applicant carriers , and a number of civic parties filed formal pleadings in support of the various applicant carriers. Alaska Airlines, Inc. (Alaska), the Delta Master Executive Council of the Air Line Pilots Association (Delta MEC), and the Port of Seattle filed answer s in support of Delta’s proposal. The Continental Master Executive Council of the Air Line Pilots Association, the San Francisco International Airport (SFO) , and the United Master Executive Council of the Air Line Pilo ts Association filed in support of United’s proposal.

TENTATIVE DECISION

After examining the complete record of applications and responsive pleadings, by Order 201 2

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- 12 , issued November 15, 2012 , we tentatively decided to grant the motion of Delta to move its Detroit

- Haneda slot pair to provide daily scheduled services between Seattle, Washington and Tokyo’s Haneda International Airport, rather than select an alternative use for that slot pair. We allowed 10 calendar days for the filing of objections to our tentative decision and seven calendar days for answers to objections.

PLEADINGS FOLLOWING THE TENTATIVE DECISION

Delta and American filed comments in response to our tentative decision. United; SFO; and the Continenta l and United Master Executive Councils of the Air Line Pilots Association, International (Joint MEC) filed objections to our tentative decision. Delta and the Delta MEC filed answers to the objections of United, SFO, and the Joint MEC. United filed an an swer to the comments of Delta and American. The Port of Seattle also filed an answer in support of the Department’s tentative decision.

Delta agrees with the Department’s tentative decision , which it regards as sound and supported by the record

. It asks only that the Department accord Delta a start

- up period of 120 days instead3 of the tentative decision’s proposed 90 days. Delta states that this change would help Delta in the orderly and efficient introduction of this long

- haul international rout e. 3

American states that it does not object to our tentative decision and asserts that the Department should grant all U.S. carriers operating to Haneda the flexibility to shift U.S. gateways as market conditions warrant.

United contend s that the advantages offered by its San Francisco proposal outweigh the factors on which the Department based its tentative decision to grant Delta’s request

. United asserts that its San Francisco

- Haneda proposal would reach nearly three times the number of con sumers and provide first

- time one

- stop service to virtually the same number of U.S. points as Delta’s Seattle

Haneda service. 4 United further argues that San Francisco is the largest west coast

- Tokyo market without U.S. flag

- operated nonstop service and t hat Department precedent supports the selection of a larger Origin and Destination (O&D) market over the smaller Seattle market. United also contends that the Department overestimated the connecting benefits o f Delta’s proposal at Seattle, assert ing that it s San

- Francisco

- Haneda service would reach 600,000 more consumers than would Delta at Seattle, even when considering Delta’ s partnership with Alaska. 5

United further argues that selecting Delta’s proposal creates a competitive imbalance because Delta a lready holds the high est west coast

- Tokyo capacity share and

, with the award of its Seattle proposal, Delta is the only U.S. carrier permitted to serve the west coast

- Haneda market. United further argues that it is the only U.S. carrier serving Japan that is unable to operate at Haneda, and that only its San Francisco proposal would enhance intergateway and intragateway competition in the U.S.

- Haneda market.

United urges the Department to reconsider its tentative decision not to award it backup authority

, should the Department make final its tentative selection of Delta at Seattle

. United claims that, without awarding backup authority in this proceeding, there would be a significant delay in selecting a replacement should Delta seek to abandon its Seattle

- Haneda service

. 6 United also opposes Delta’s request for a 120

- day start

- up period instead of the 90

- day start

- up period tentatively proposed by the Department , saying it underscores the serious questions regarding Delta’s ability to sustain its proposed Seattle

- Haneda service

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The Joint MEC raises arguments similar to those of United and urges the Department to award the slot pair to United for its proposed San Francisco

- Haneda service. SFO argues that the Department gave undu e weight to the promotion of geographic diversity and the establishment of a new U.S. gateway for Haneda services while insufficiently crediting the benefits of enabling service at San Francisco where demand is greate r

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Delta asserts that there is no mer it to the objections of United, and that the Department’s tentative decision should be made final. Delta also opposes United’s request for backup

3 Delta Comments , at 2.
4 United Objection , at 2

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5 United Objection , at 4.
6 United Objection , at 8

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7 United Answer , at 2.
8 SFO Objection, at 1.4 authority, stating that a backup award would be inconsistent with Department precedent with respect to Haneda slots.

In supporting the Department’s tentative decision, the Delta MEC emphasizes that an award to United would merely duplicate existing San Francisco

- Haneda service offered by JAL and American, and the Port of Seattle points to Seattle’s geographical advantage and its history as a proven gateway with strong growth

.

DEC ISION

We have decided to make final our tentative decision to grant the motion of Delta to move its Detroit

- Haneda slot pair for scheduled combination services to Seattle

- Haneda, rather than select an alternative use for that slot pair.

As we noted in our tentative decision, we have the benefit of two years of U.S. carrier experience operating with in the limited arrival/departure

- time window at Haneda. We also have the benefit of knowi ng which U.S. gateways Japanese carriers have chosen to serve with their limited slot pair allocations

– Honolulu and Los Angeles for All Nippon Airways ( ANA ) ; and Honolulu and San Francisco for Japan Airlines ( JAL )

. Against that background, we tentativ ely concluded that Delta’s proposal would best serve the public interest by providing the first nonstop Haneda service on a significant mainland U.S.

- Tokyo route that currently lacks any such service, thereby establishing a new U.S. gateway to Haneda. We tentatively found that Delta’s proposed service would provide a number of western cities with a first one

- stop connecting opportunity to Haneda, and that other cities that now enjoy

one

- stop connections over more southerly gateways would gain the option of service over a less circuitous northwest gateway.

We also tentatively determined that an outcome that brings first

- time Haneda service and first U.S.

- flag Haneda service to the sixth

- largest O&D market, while also promoting the geographic diversity of the U.S.

- Haneda gateways, would be consistent with our established approach for the award of limited Haneda slot opportunities and would best serve the public interest.

H av ing reviewed the objections and answers filed by the parties to our tentative decision , we have d etermined that no party has brought to our attention any new argument that warrants a different conclusion.

W e recognize , as we tentatively found in the show

- cause Order, that United’s proposal would offer service in the sizable San Francisco

- Haneda market

, as well as provide extensive connecting opportunities

. We have also considered the comparatively smaller size of the Seattle

Tokyo market. G iven the limited number of nonstop Haneda opportunities available to the traveling public

, h owever , and the fact that American already offers daily U.S.

- flag San Francisco

- Haneda service through its code share with JAL

, we continue to believe that the establishment of a wholly new U.S. gateway for nonstop Haneda service

, i.e.

, Seattle, outweig hs the benefits of adding a second nonstop flight at San Francisco.5 We are cognizant of the fact that United remains the only carrier serving Japan without access to Haneda with its own aircraft . In the circumstances presented in this case , and as noted in our tentative decision , however , only Delta’s proposal would open Haneda access to a new region of the country and result in a greater number of geographic service options for the traveling public. 9 Regarding United’s assertions as to the sustainabili ty of the Seattle service, in our tentative decision we specifically noted support in the record for the viability of Delta’s proposed service

. 10 Having considered United’s submissions in response to our tentative decision, we are not persuaded to reach a different conclusion here.

We are also not persuaded by American that all U.S. carriers holding U.S.

- Haneda slot pairs should be granted the flexibility to shift U.S. gateways as market conditions warrant. As we said in our tentative decision, allow ing D elta to move its slot pair to Seattle is limited to the proposal and circumstances presented in this proceeding. 11 We believe that the public interest continues
to warrant our fresh examination of Haneda slot pair allocations as opportunities become availa ble and we see no compelling reason to change our stated policy.

Having carefully considered the re cord in this proceeding, we have decided to make final our tentative decision to grant the motion of Delta to move one slot pair, currently allocated for Detroit

- Haneda service, to the Seattle

- Haneda route

. For the reasons stated, we find that Delta’s proposal will offer significant public benefits that outweigh the benefits of the proposals we were not able to select

. TERMS, CONDITIONS, AND LIMITATION S

We have decided to impose a startup condition for this award

. After carefully reviewing the comments filed in response to our tentative decision, however, we have decided to grant Delta’s request to extend the startup period from 90 days to 120 days. Delta states that the additional time would assist Delta in establishing this new long

- haul service. 12 In the circumstances presented we do not regard this short extension as contrary to the public interest. Therefore, we will require Delta to institute its proposed services within 120 days after the service date of this order.

In addition, we finalize our decision to subject the slot pair allocated in this proceeding to a 90

- day dormancy condition, wherein 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.

BACKUP AWARD

We have considered United’s arguments with respect to backup authority ; however, we believe that the public interest continues to warrant ou r examination of Haneda slot opportunities on a

case

- by

- case basis , with a complete evidentiary record, consistent with the approach taken here

. Accordingly, we have decided not to award backup authority in this proceeding.

9 Order 2012

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- 12, at 6.
10 Id.
11 Order 2012

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12 Delta Comments , at 2.6 ACCORDINGLY,

1. We make final our tentative findings, conclusions, and decision set forth in Order 201 2

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- 12 , except as noted with respect to the startup condition , which will now be 120 days from the issuance of this final order ;

2. We grant the motion of Delta Air Lines, Inc. to move one slot pair, currently allocated for Detroit

- Haneda services, to the Seattle

- Haneda market, rather than select an alternative use for that slot pair;

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. 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 ina ugurated);

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 serve 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. Kurland Assistant Secretary for Aviation and Intern ational Affairs

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