United applies for San Francisco – Tokyo Haneda slots (surprise, surprise)
Not even 36 hours after American Airlines announced it was canning its New York JFK – Tokyo Haneda nonstop flight as part of a major Asian network overhaul, United Airlines submitted an application to the U.S. Department of Transportation requesting for authority to launch a nonstop service from its San Francisco hub to Tokyo Haneda using the landing slot pair allocated to American. In a press release issued by United this morning, the carrier intends to launch a daily service between the two cities effective summer 2014.
I’ve been blogging a lot recently focusing on the ever-evolving dynamics of the volatile US to Asia transpacific flight market, and once again, another day passes, another shake-up occurs. The happenings from this past week alone further underscore the variegated approaches the top three US carriers (American, Delta and United) are adopting towards US – Asia network development. To that end, the drama surrounding the once-coveted Tokyo Haneda slots represents a mere slice of the frenzied pie as the plot continues to thicken.
For US carriers, the battle for Haneda has yet to prove whether it is a sinking ship or magic hat trick
Amid all of the drama and excitement taking place across the Pacific Ocean with respect to the top three US carriers, American, Delta and United, the clamor for Tokyo Haneda continues to present itself as an elusive puzzle for all parties involved.
Whereas at one point it seemed like all-hands were on deck in an arms race to submit applications to the US DOT to receive coveted landing slots at Haneda, this time, American appears to have thrown in the towel, whereas United wants to step up its ante. In the initial round of awardings granted in 2010, only three applicants received allocations: American, Delta and Hawaiian, whereas United (and then pre-merger Continental) were denied.
American and Hawaiian each received a single pair, and proceeded with American launching New York JFK – Haneda and Hawaiian commencing Honolulu – Haneda. Delta, interestingly, received TWO slot pairs, and in an overly zealous move, launched two daily nonstops from its Detroit mega hub and Los Angeles to Haneda, initially using large-density Boeing 747-400s it received from its merger with Northwest Airlines.
The disappointing fact was, despite the attractiveness of Haneda as a much more centrally-located airport to Tokyo’s business district over the more commonly-used, yet further displaced Narita airport, the US carriers were awarded inconvenient departure and arrival times for their respective flights.
For instance, the New York to Tokyo Haneda flights were scheduled as such:
AA135 JFK1810 – 2215+1HND 777 D
AA134 HND0650 – 0520JFK 777 D
Whereas most US-Asia flights depart anywhere from noon to midafternoon, arriving in Asia the following day in the evening, the outbound departure left JFK in the evening and arrived at Haneda at night. Not too shabby for traffic terminating journeys in Tokyo, but unsustainable for onward connections on American’s JV partner Japan Airlines.
The return sector was worse. A 7 AM departure time from Haneda facilitated few domestic or international connections on the inbound, and prevented Tokyo-originating local traffic from taking public transportation to the airport.
Furthermore, the flights were fatefully expected to launch just around the time of the 2011 Japanese earthquake, which tanked any long-term hope of achieving healthy load factors and yields in the interim. American was forced to suspend its JFK-HND flight for a brief period of time in the aftermath while the Japanese market recovered.
Meanwhile, Delta quickly down-gauged capacity on the DTW-HND and LAX-HND routes from 747s and 777s to Airbus A330s, citing sub-par performances from the ill-conceived times. Eventually, the situation became so dismal that Delta relinquished its Detroit – Haneda slot and re-applied with the US DOT to move the allocation to launch from its Seattle hub, which, to the surprise of many, was actually granted by the DOT.
With the aircraft sitting on the ground overnight in Tokyo, American had to allocate two 777s to fly an unprofitable route. For Delta, even with the massive feed it commands from its Detroit hub, the same issue with resources ultimately plauged the success of its DTW-HND flight. Hence, Delta was willing to make a second attempt from another west coast gateway at Seattle, which can capably fly transpacific with a single dedicated aircraft as opposed to Detroit, Minneapolis, Atlanta, or any of its other inner-coastal hubs.
American will not likely re-apply for another HND slot to use elsewhere
Some speculation continues to surround American’s next course of action concerning its future relationship with Haneda. One possibility is that American might pull a move similar to Delta and re-apply to the DOT to move its relinquished slot from JFK to LAX. American applied for a LAX-HND flight last year against Delta for SEA-HND, as well as Hawaiian for a Kona – Haneda flight and United for an SFO-HND flight, but ultimately, Delta emerged as the sole victor in the race.
However, the more likely scenario is that American is ready to wash its hands of Haneda in the near-term, and instead re-focus its priorities on strengthening its existing structure at Narita, while also leveraging its relationship with joint-venture partner Japan Airlines to maintain a virtual presence at Haneda, where JAL operates a hub.
At least in the interim, even American’s operations at Narita aren’t withstanding yield pressures well at the moment. When it opened up operations at Haneda, American pulled the aircraft deployed on an existing route from New York JFK to Narita. While it seemed logical that American would reinstate its nonstop link to Narita from JFK after pulling out of Haneda, the carrier has made no indication that this will take place.
American also pulled its Chicago O’Hare to Tokyo Narita flight down from a daily frequency to 5-weekly in the Northern Winter 2013/2014, while Star Alliance competitors United, along with its JV partner All Nippon Airways, are increasing capacity in the ORD-TYO market. ANA added a second daily flight on a high-density 777-300ER this fall, and United will be up-gauging its daily ORD-NRT route from a 777-200 back to a 747-400 next spring.
Given these considerations, it is therefore unlikely that American is interested in conducting further experimentations in Japan right now, focusing instead on Korea, mainland China and Hong Kong. This will probably remain the case until market conditions improve in Japan, or more convenient slot times become available at Haneda.
Also worth mentioning is Japan’s own recent slot allocations at Haneda to domestic network competitors ANA and JAL. In the proceeding, JAL received a mere half the number of ANA’s awardings, thereby further decreasing connection opportunities for OneWorld carriers in favor of Star Alliance partners at HND.
Right now, it is more critical for United, rather than American, to fight for its chance at Haneda
Japan Airlines, which operates a base at HND in addition to NRT, recently launched a flight from Haneda to San Francisco on a 787-800 aircraft, thereby securing OneWorld presence from the SFO to the Asia-Pac region via Haneda, even though SFO is not a OneWorld hub. However, bearing this in mind, it is likely more imperative for United to secure a presence in the coveted SFO-HND market versus American in the LAX-HND market, as SFO is UA’s premier gateway to Asia.
Several reasons support this notion: for one, the LAX-HND market is fragmented, as-is, with SkyTeam presence via Delta’s LAX-HND flight, as well as Star Alliance via All Nippon Airways. As a Japanese carrier, ANA received a more favorable departure and arrival slot time into Haneda on its LAX flight, operating as a midnight departure on the Eastbound flight to LAX, and returning as an early morning 5 AM arrival into HND on the Westbound sector, allowing bi-directional connections.
However, in the opposite vein, Delta not only faces a competitive disadvantage without a hub on the Tokyo end out of Haneda, but also offers limited connections beyond LAX as the return segment arrives into LAX in the evening. Nevertheless, by virtue of being located on the West Coast, as well as catering to a large amount of Origin and Destination traffic between the US and Japan, Delta is more likely to stay committed in fighting it out for LAX-HND. The slot times, while not ideal, are also not as terrible as they were for Detroit on Delta or New York JFK for American.
Morever, Delta CEO Richard Anderson has been bullish about not only securing improved hours, but also shifting Delta’s Intra-Asia hub, inherited from Northwest, from Narita to Haneda. Some are skeptical about whether he has been pragmatic in approaching Japanese authorities with the appropriate tone required for his actions to become effective, but he doesn’t show any signs of backing down. He certainly got his way with allowing the US DOT to grant him a second chance with Haneda from Seattle, so never say never.
Second, while OneWorld considers LAX a cornerstone “hub,” in reality, the alliance holds a mere 22% marketshare, outpaced by Star at 28.3%, and followed closely by SkyTeam at 18.5%, according to CAPA. Conversely, at SFO, by an large considered Star Alliance’ premier West Coast hub, Star maintains a 55.2% marketshare, followed by SkyTeam next at 10.3% and OneWorld at 8.9%.
To that end, United has applied for the San Francisco to Haneda route every single time there has been a DOT Proceeding. There’s no possible way that UA will accept another rejection this round, especially considering the second chance granted to Delta in spite of its largely mixed results on its Haneda flights.
Haneda will round out United’s transpacific portfolio from SFO to compete effectively against Delta at Seattle
With respect to its SFO hub, United offers existing service to across the pacific to Tokyo Narita, Osaka, Seoul, Beijing, Shanghai, Sydney and Hong Kong. In the pipeline is a new 787 service to Chengdu, China scheduled to launch next year, and a second-attempt at Taipei, Taiwan, a route that was cancelled in 2008 (and supposed to start in April 2013, but was delayed a full year for ambiguous reasons).
As part of its application, United has requested the following times:
However, hoping for securing these times, for better or worse, are not on the highest end of United’s concern list. Rather, United should be most fearful of Hawaiian, if the carrier chooses to re-apply again this year. Arguably, the HA service from Honolulu to Haneda has performed substantially better relative to its US peers, although obviously Hawaiian benefits from the greatest competitive advantage thanks to its geography, proximity to Asia, and large O&D market to Japan.
Furthermore, United’s application to Haneda also underscores the all out war emerging on the West Coast between it at San Francisco and Delta at Seattle for luring US-Asia traffic. Watching LAX receive a slot allocation in the first round on Delta was painful enough for SFO; having SEA added to the mix just stirs the pot even more.
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