BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C. 

____________________________________

)

Motions and Applications of )

)

HAWAIIAN AIRLINES, INC. )

) Docket DOT-OST-2010-0018

AMERICAN AIRLINES, INC. )

)

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

Combination Services )

Allocation Proceeding )

____________________________________)

OBJECTION OF HAWAIIAN AIRLINES, INC.

Communications with respect to this document should be addressed to:

Mark B. Dunkerley

President & Chief Executive Officer 

Peter Ingram

Executive Vice President and Chief

Commercial Officer

Hoyt H. Zia

Senior Vice President, General Counsel & 

Corporate Secretary

Hoyt.Zia@hawaiianair.com

Hawaiian Airlines, Inc.

P.O. Box 30008

Honolulu, HI 96820-0008

J. Parker Erkmann 

Jonathan B. Hill

Geoff Rapoport

Cooley LLP

1299 Pennsylvania Ave., NW

Suite 700

Washington, DC 20004

(202) 842-7800

(202) 842-7899 (fax)

perkmann@cooley.com

jhill@cooley.com

grapoport@cooley.com

Counsel for Hawaiian Airlines, Inc.

April 6, 2015
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 1 of 10

BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C. 

____________________________________

)

Motions and Applications of )

)

HAWAIIAN AIRLINES, INC. )

) Docket DOT-OST-2010-0018

AMERICAN AIRLINES, INC. )

)

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

Combination Services )

Allocation Proceeding )

____________________________________)

OBJECTION OF HAWAIIAN AIRLINES, INC. 

The Department’s Order 2015-3-171 granting Delta Air Lines (“Delta”) its third chance 

to fulfill promises to the Department to provide reliable service to Tokyo’s Haneda Airport 

(“Haneda”) is hard to fathom given the evidence that Delta’s scheduling practices reflect a 

deliberate strategy to play keep-away with these valuable service rights. More concerning is the 

Department’s expressed preference for “U.S. business travelers” even when the Department’s 

decisions adversely impact U.S. businesses:

Kona-Haneda service would largely benefit Japanese-originating leisure traffic, 

which, while important for promoting increased international tourism and economic 

activity in Hawaii, minimizes Haneda’s advantages to U.S. travelers in general, and 

U.S. business travelers in particular.

Show Cause Order at 9-10. In the name of promoting the interest of U.S. business, the 

Department action has the ironic effect of harming U.S. businesses that rely on tourism, 

 1

 See Order to Show Cause, DOT Order 2015-3-17 (issued Mar. 27, 2015) (hereinafter “Show 

Cause Order”).
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 2 of 10

including resorts, hotels, restaurants, other travel companies and retailers while providing no 

appreciable benefit to business travelers who have multiple options to fly to and from Haneda. 

The Department’s misguided preference finds no basis in the Department’s enabling statute, and

its application is not supported by the record of this proceeding. 

While Hawaiian Airlines, Inc. (“Hawaiian”) presented unrebutted evidence of the 

significant economic benefits of its service proposal, the competing service proposals of Delta 

and American Airlines (“American”) offered only a recipe for yet more service cutbacks and 

service failures. Indeed, despite requesting “a fresh evidentiary record”,2 the Department failed 

to evaluate the evidence submitted; ignored evidence that Delta’s and American’s proposed 

services would fail and did not explain why it disregarded the evidence.

In addition, the Show Cause Order reflects a misunderstanding of the State of Hawaii and 

its geography. The Department appears to simply conflate Kona with Honolulu,3 despite the fact 

that the two cities are on different islands separated by 170 miles and constitute two distinctly 

different communities. 

I. THE DEPARTMENT’S FAVORING OF “U.S. BUSINESS TRAVELERS” AT THE EXPENSE OF 

U.S. BUSINESS IS WITHOUT A STATUTORY BASIS.

In awarding back-up authority to American’s Los Angeles (“LAX”)-Haneda service, the 

Department expressed a preference for “U.S. business travelers in particular” over the “increased 

 2

 Order Instituting Proceedings and Requesting Applications, DOT Order 2014-12-9 (issued 

Dec. 15, 2014), at 5-6 (hereinafter, “Instituting Order”).

3

 Show Cause Order at 7 (“Consistent with the Department’s ongoing goal of using the limited 

Haneda rights to address a variety of public interest objectives, including the objective of 

geographically diverse gateways, the Department tentatively finds that maintaining the Seattle 

gateway to Haneda would make a better use of the limited Haneda opportunity and better 

maximize the public benefits, than would allocating a fourth Haneda route to Hawaii.”).
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 3 of 10

international tourism and economic activity” that would result from Hawaiian’s proposal.4 This 

preference finds no basis in the Department’s enabling statute. Section 40101 of the Transportation 

Code states the factors the Secretary shall consider in determining which policies are “in the public 

interest and consistent with public convenience and necessity”.5 None of the sixteen factors listed in 

Section 40101 mention the promotion of the interests of business travelers or leisure travelers. 

Instead, the statute directs the Department to develop an “air transportation system” to serve “the 

present and future needs of the commerce of the United States”.6

 The standard includes 

consideration of U.S. commerce overall, not a particular type of travel. Accordingly, there is no 

statutory directive for the Department’s subjugation of the U.S. commerce promoted by Hawaiian’s 

Kona service to the purported, unquantified benefits to “U.S. business travelers” to be served by 

Delta and, potentially, American. Moreover, the Department has not explained nor quantified the 

benefits to be realized, other than in the most general terms, while Hawaiian submitted specific 

quantification of the benefits of bringing foreign-originating travelers to Kona

The Department’s preference also lacks a rational basis in economic policy. While the 

Department fails to explain its rationale for favoring business travelers, a plausible assumption is that 

business travel to Tokyo will facilitate the interest of U.S. business in promoting exports, seeking

imports and promoting investment. But the Department’s decision not to select Hawaiian’s proposal 

has an immediate adverse impact on U.S. business. Every dollar spent by a Japanese-originating 

traveler is a U.S. export. The advantages to U.S. business are direct, immediate and substantial – not 

 4 See id. at 9-10. 

5 49 U.S.C. § 40101(a).

6 Id. at § 40101(a)(7)(A).
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 4 of 10

speculation – and worthy of the Department’s support. This benefit goes unaddressed in the Show 

Cause Order.

Favoring the interests of business travelers is particularly problematic in this case because the 

purported benefits of the competing services will not be realized. The incremental benefits of Delta’s 

service and American’s potential service are minimal. Hawaiian’s pleadings demonstrated that the 

competing service proposals are marginal and likely to result in service failures or cutbacks:

• Delta’s Seattle-Haneda Service is not Workable: The Haneda-Seattle market is too 

small to support Delta’s service.7

 Delta’s Seattle load factors have been lower than 

other failed Haneda gateways, and the purported increased connections will not 

appreciably increase traffic on the route.8

 Indeed, it is telling that the Department 

concluded it must impose strict usage requirements to ensure this valuable air service 

right will be used.

• Implementing American’s LAX Proposal Requires Service Cutbacks: LAX 

cannot support a third Haneda service, meaning that American’s service would either 

require service cutbacks or result in yet another Haneda service failure.

9

 Indeed, 

given the time required to identify a B777 to perform the service, schedule crews, reopen a new station and sell tickets, the only way American can pledge to start its 

service in 60 days is if it simply pulls down its current LAX service from Narita 

International Airport (“NRT”). As a result, there will be no incremental benefit to the 

commerce of the United States.

In contrast to the nebulous, unquantified benefits to business travelers resulting from these 

marginal services, Hawaiian proposed a service that will stimulate U.S. commercial activity. 

Consistent with the policy of the Obama Administration, Hawaiian’s proposed service will stimulate 

U.S. tourism and increase spending in the United States to the benefit of U.S. businesses and U.S. 

 7 See Consolidated Answer of Hawaiian Airlines, Inc., DOT-OST-2010-0018 (Jan. 12, 2015), 

hereinafter “Hawaiian Answer”, at 7.

8 See id. at 34-35.

9

 See id. at 44-48 (“Because LAX-HND has abundant capacity, introduction of American’s 

service will make all three of the services uneconomic.”).
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 5 of 10

workers.

10 Hawaiian’s estimates of the benefits of its service went unrebutted and unanalyzed by 

DOT. In particular, Hawaiian forecast that its service would increase:

• U.S. household earnings by nearly four times the amount of American’s proposal and 

more than fifteen times the amount of Delta’s proposal, see Hawaiian Answer at HA2015A-617;

• U.S. GDP growth of more than three times the increase of American’s proposal and 

more than fifteen times the amount of Delta’s proposal, see id. HA-2015A-616; and

• U.S. job growth of nearly four times the increase of American’s proposal and more 

than fifteen times the amount of Delta’s proposal, see id. HA-2015A-614.

Behind these statistics stands a panoply of resorts, hotels, restaurants, car rental companies, retailers,

tour operators, construction companies and their employees – all U.S. businesses and U.S. workers –

that stand to benefit from Hawaiian’s proposed service. Each dollar spent represents a U.S. export. 

The Department even credited the benefits of foreign-originating traffic11 before dismissing them in 

favor of business travelers. Hawaiian respectfully submits that Department policy should consider 

the broader range of factors that Congress directed, including “placing maximum reliance on 

competitive market forces and on actual and potential competition to provide the needed air 

transportation system,” developing an air transportation regulatory system that promotes “the 

commerce of the United States” and promoting “the continued strengthening of small air carriers to 

ensure a more effective and competitive airline industry.”12

 10 See Hawaiian Answer at 29-39. 

11 Order to Show Cause at 9-10 (foreign originating traffic is “important for promoting increased 

international tourism and economic activity in Hawaii”).

12 49 U.S.C. § 40101(a)(6)(A), (7)(A) and (13).
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 6 of 10

II. THE SHOW CAUSE ORDER FAILS TO EXPLAIN ADEQUATELY THE DEPARTMENT’S 

DECISION TO DISREGARD EVIDENCE PRESENTED BY HAWAIIAN IN THIS PROCEEDING.

In response to the Department’s request for a “a fresh evidentiary record” to determine 

“whether the public interest would be best served by allowing Delta to retain the currently 

allocated Seattle-Haneda slot pair or, instead, by an alternative disposition of the Seattle-Haneda 

slot pair”,

13 Hawaiian submitted evidence in this proceeding that the competing services will 

either fail or cause other competing Haneda services to become uneconomic.14 Indeed, in prior 

proceedings in this docket, Hawaiian’s predictions about the weakness of competing applications 

have proven prophetic.15 Yet, the Show Cause Order fails to address the evidence submitted by 

Hawaiian that there is inadequate demand to support the proposed services. The failure to 

consider critical evidence or explain its dismissal undermines the entire reason for refreshing the 

evidentiary record and violates the Administrative Procedure Act.

 13 Initiating Order at 5-6.

14 Hawaiian predicted Delta’s Seattle market will fail. See Hawaiian Answer at 34-40 and 

accompanying exhibits (“Since [the Department concluded the Seattle market was too small in 

2010], the Seattle market has not grown and is still too small to support the service and, like 

Detroit, has and will continue to fail.”). Hawaiian also predicted that the introduction of HNDLAX service also would cause a service failure. See id. at 41-54 and accompanying exhibits 

(“The [LAX-HND] market is simply not large enough for a third carrier. . . Hawaiian 

respectfully submits that an award to American will result in yet another Haneda reallocation 

proceeding in short order.”).

15 See Consolidated Answer of Hawaiian Airlines, Inc., DOT-OST-2010-0018, at HA-A-512 

(Mar. 1, 2010) (“DTW IS NOT LARGE ENOUGH TO SUPPORT HND SERVICE WITHOUT 

REDUCING SERVICE TO NRT OR CHARGING MUCH HIGHER PRICES”); See id. at HAA-508 (“SEA IS NOT LARGE ENOUGH TO SUPPORT HND SERVICE WITHOUT 

REDUCING SERVICE TO NRT OR CHARGING MUCH HIGHER PRICES”); see id. at HAA-305 (“JFK IS NOT LARGE ENOUGH TO SUPPORT HND SERVICE WITHOUT 

REDUCING SERVICE TO NRT OR CHARGING MUCH HIGHER PRICES”); Consolidated 

Answer of Hawaiian Airlines, Inc., DOT-OST-2010-0018 (Sep. 6, 2012), hereinafter “Hawaiian 

2012 Answer”, at 29 (“Seattle is still too small to support more service and, like Detroit, will not 

be rescued by connecting service from Delta, Alaska or anyone else.”).
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 7 of 10

III. THE SHOW CAUSE ORDER FAILS TO DISTINGUISH BETWEEN HONOLULU AND KONA.

The Show Cause Order reflects the Department’s misunderstanding of the State of 

Hawaii and its geography. In commenting on the need for geographically diverse gateways, the

Department appears to simply conflate Kona with Honolulu:

Consistent with the Department’s ongoing goal of using the limited Haneda rights 

to address a variety of public interest objectives, including the objective of 

geographically diverse gateways, the Department tentatively finds that 

maintaining the Seattle gateway to Haneda would make a better use of the limited 

Haneda opportunity and better maximize the public benefits, than would 

allocating a fourth Haneda route to Hawaii. 16

The Department’s conclusion is belied by the fact that the two cities are separated by 170 miles 

and are on different islands. To put this in perspective, the distance between Kona and Honolulu 

is approximately the same distance as the distance between New York and Boston, as reflected in 

the map below:

 16 Show Cause Order at 7.
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 8 of 10

Chart 1: Kona and Honolulu Are Nearly As Far Apart as New York and Boston
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 9 of 10

Just as no one would consider New York and Boston as part of the same market, Hawaiian 

respectfully submits that Honolulu and Kona should be considered separate markets for the 

purposes of allocating air service rights. Similarly, in assessing geographic diversity, the 

Department has lumped Kona together with Honolulu because they are in the same state.17 But 

no one would suggest that cities such as San Francisco and Los Angeles are the same market for 

the purposes of a route selection proceeding. The Department’s concern about four frequencies 

serving one state is even more puzzling when the start-up of American’s back-up authority 

would result in five frequencies being allocated to California. As the Department is undoubtedly 

aware, the O&D market between Hawaii and Tokyo is nearly twice the size of the O&D market 

between Tokyo and California.

18 

CONCLUSION

Hawaiian objects to the award of the frequency at issue in this proceeding and the award 

of back-up authority to American. As the Department recognized, Hawaiian “has fully delivered 

on its Honolulu-Haneda service promises”.19 Despite Hawaiian’s record and proposing a viable 

service in competition with proposals that are doomed to failure,20 the Department has selected 

the competing applications. Because the Show Cause Order fails to adequately explain its 

decision, Hawaiian respectfully submits that the Show Cause Order fails to comply with the 

 17 Even considering Haneda service to the State of Hawaii as a whole, the state is underserved 

relative to California given the demand for service to the two states. See Hawaiian Answer at 

HA-2015A-401.

18 Id. at 12-13, Exhibit HA-2015A-303-304.

19 Show Cause Order at 7.

20 See Hawaiian 2012 Answer at 12 (predicting failure of Delta’s Seattle service); Hawaiian 

Answer at 47 (predicting that American’s LAX service will cause all current HND-LAX services 

to become uneconomic).
DOT-OST-2010-0018

2015 Objection of Hawaiian Airlines, Inc.

Page 10 of 10

Administrative Procedure Act. If the Department considers the public interest, and specifically 

the economic impact, of the competing proposals and provides a reasoned analysis of the record 

evidence, as required by law, the Department would select Hawaiian’s application to serve Kona.

Respectfully submitted,

Dated: April 6, 2015

_____________________________________

J. Parker Erkmann 

Jonathan B. Hill

Geoff Rapoport

Cooley LLP

1299 Pennsylvania Ave., NW

Suite 700

Washington, DC 20004

(202) 842-7800

(202) 842-7899 (fax)

jhill@cooley.com

perkmann@cooley.com

grapoport@cooley.com

Counsel for Hawaiian Airlines, Inc.
CERTIFICATE OF SERVICE

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

served this 6th day of April 2015 via email transmission or U.S. mail on the following:

jeremy.ross@alaskaair.com

dheffernan@cozen.com

abigail.donovan@aa.com

francis.heil@aa.com

howard.kass@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

gmurphy@crowell.com

englets@state.gov

cristinasa@state.gov

info@airlineinfo.com

charles.hunnicutt@thompsonhine.com

patricia.snyder@thompsonhine.com

seth.waxman@wilmerhale.com

sseiden@crowell.com

robert.finamore@dot.gov

brett.kruger@dot.gov

paul.gretch@dot.gov

todd.homan@dot.gov

brian.hedberg@dot.gov

peter.irvine@dot.gov

john.s.duncan@faa.gov

glindsey@lawa.org

ejames@jamhoff.com

ishiwata.k@portseattle.org

safora.i@portseattle.org

Mike.Donatelli@alpa.org

Ambassador Kenichiro Sasae

Embassy of Japan

2520 Massachusetts Ave., NW

Washington, DC 20008

__________________________

Erin Combs

115766047