Tuesday, February 23, 2010

Allocating Haneda's Slots

The scramble for scarce slots at Tokyo's Haneda airport is on.  As discussed previously on the blog, see "DOT to Allocate Scarce Haneda Slots," the Department of Transportation has been authorized under the U.S./Japan open skies Memorandum of Understanding signed last December to allocate four daily takeoff and landing slots at the world's fourth busiest airport.  See generally Order Instituting Proceedings, Dkt. No. DOT-OST-2010-0018 (Jan. 26, 2010).  Not surprisingly, all four major U.S. carriers--American, Continental, Delta, and United--are vying for one or all of the available slots.  Without judging the merits of each applicant's claims, Delta's filing is certainly the most intriguing in light of JAL's recent decision to pursue an immunized alliance with American Airlines rather than join Delta as part of SkyTeam.

According to Delta, JAL, along with fellow Japanese airline and Star Alliance member ANA, "operate 84 percent of scheduled departures and 90 per cent of scheduled seats at Haneda."  See Application of Delta Air Lines, Inc., at 2, Dkt. No. DOT-OST-2010-0018 (Feb. 16, 2010).  Delta argues in its filing that since it has been effectively locked out of forming an alliance with a major Japanese airline, the only way to establish competitive parity on routes between the U.S. and Haneda is for the DOT to grant Delta all four daily slot offerings.  Though Delta does enjoy greater access at Tokyo's other airport, Narita, the carrier believes "that its services at far-distant Narita are not competitive with Haneda for premium business passengers."  Id. 

It will be interesting to see if the DOT accepts Delta's arguments and awards it all four slots.  If it does, the decision could have the effect of bolstering both oneworld and the Star's claims that granting their alliances antitrust immunity won't unduly harm competition in the transpacific market.  On the other hand, if the DOT opts not to immunize one or both of the transpacific alliance applications, a decision to hand all four slots over to Delta would be difficult to justify.  It's uncertain at this point whether the DOT will render its alliance decisions before making a final determination on how to allocate the Haneda slots.  Though that route appears to make sense in light of the arguments advanced in Delta's application, the two antitrust immunity applications will take longer to decide.  Meanwhile, scarce slots at Haneda--slots which could benefit airline consumers--will go unused.

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Comments

Regarding the last sentence, doesn't the US-Japan MOU on open skies say that the slots are only available after Haneda's fourth runway opens, which is scheduled for October? Since the final signature of the MOU is also expected to occur in October, isn't that the earliest those slots would become available? The discussions on the open skies agreement indicate that Japan wants the US to grant antitrust immunity to Star and oneworld as a condition to Japan's signing the agreement, meaning that would have to happen before the slots become available. So how would it limit the opportunity to use the slots if DOT waited to allocate them until after it ruled on the ATI applications?

Posted by: Tim | Feb 24, 2010 9:05:46 AM

I have not seen the application but I wonder about Delta's intent with respect to Narita operations should they be granted the new Haneda slots. In their communications, they avoid representations about continuing specific Narita service that I assume the applications would require. Do they intend to reduce Narita flying as a result? Are they willing to give up Narita slots to get into Haneda?

Posted by: Ted SMITH | Feb 24, 2010 9:43:44 PM

Tim,

Yes, the slots are slated to become "usable" in October 2010 under the terms of the MOU. As you have indicated--and as the posting indicates--the slots may sit in suspension until the antitrust immunity applications are decided. That doesn't mean the slots don't exist; they have already been set aside for the U.S. to assign and, if assigned promptly (which is what the DOT is looking to do), they should, in theory, be used starting in October. If they aren't in use in October, it's a waste of scarce capacity unless Japan decides to reallocate them to other carriers (though there's no indication they would do so right now).

One of the points of the post is that the assignment of the slots would be premature until the antitrust immunity decisions come down. That's an independent point over whether or not Japan will go ahead and finalize the MOU before the antitrust application procedures are finished. Japan could go ahead and sign the MOU anyway, but that wouldn't bypass the problem raised by Delta's filing over who should get the slots.

Posted by: Gabriel | Feb 26, 2010 1:01:02 PM

Ted,

Based on the Delta filing, they aren't looking to strike a deal of Narita-for-Haneda slots. The filing brings up the point that Delta's Asian hub used to be Henda until Japan made the airport "domestic only" in 1978. One of Delta's arguments is that being awarded the four slots will contribute to restoring (but hardly fully restore) its old competitive position at the airport. Perhaps if more slots became available, it would be interested in trading. But that seems unlikely right now.

Posted by: Gabriel | Feb 26, 2010 1:06:00 PM

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