Delta Air Lines says the outcome of a new round of U.S.-Japan aviation talks next month could threaten its ability to compete in Asia — and possibly imperil its nonstops between Atlanta and Tokyo.
The Atlanta airline is mounting a public relations offensive in advance of the talks, which revolve around rights to fly between the United States and Tokyo’s close-in Haneda Airport, only minutes from the center of the sprawling city.
Delta now sends most of its U.S.-Japan flights, including those from Atlanta, to Narita Airport an hour or so east of central Tokyo.
Delta fears the direction of the talks so far would give rivals American and United airlines more access to Haneda through their partnerships with Japanese airlines. Delta says that would put it at a major disadvantage in competing for U.S.-Tokyo fliers and would jeopardize its Asia flights.
“It would cause Delta’s network in Asia to unravel,” Ben Hirst, Delta’s special counsel, said. “Ultimately it will make the flights that we operate to (Tokyo) Narita from Atlanta not viable.”
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Delta CEO Richard Anderson calls the potential deal “Dark Skies,” a play on the usual term for such treaties, known as Open Skies agreements. American and others say Delta’s dire warnings are simply part of an obstructionist strategy to block its rivals from improving their positions.
The potential agreement is “a pro-consumer deal to bring daytime access to Tokyo’s more convenient airport,” said Will Horton, a Hong Kong-based analyst for the Centre for Aviation. For Delta, he added, “the issue is Delta’s competitors would win more.”
It’s the latest challenge in Delta’s decades-long, up-and-down effort to establish a stronger presence in Asia — and by extension to Hartsfield-Jackson International Airport’s efforts to build direct connections.
Other than Delta’s daily Tokyo nonstop, a Korean Air Lines flight to Seoul is the only nonstop to Asia from Hartsfield-Jackson. Delta has twice launched nonstops between Atlanta and Shanghai, China, only to cancel them after poor results.
A 6,850-mile trip
Delta began nonstop flights between Atlanta and Tokyo’s Narita International Airport in 1998, and now operates the 6,850-mile route with a Boeing 777. Employees at the top 25 companies that use the Atlanta-Tokyo route flew it more than 10,000 times in 2015 to go to Tokyo or elsewhere in Asia, according to Delta.
Delta strengthened its position with the 2008 buyout of Northwest Airlines, which had rights to operate connecting flights from Narita to other Asian cities. Delta took over that operation and says close to 60 percent of its Narita passengers from Atlanta make connections to Shanghai, Taipei, Bangkok, Singapore, Manila, Osaka and other cities.
U.S. operations at Haneda are limited under the current treaty — four “slots,” or landing/takeoff rights, only usable at night. Delta, American, United and Hawaiian Airlines have one slot each.
A round of talks on liberalizing Haneda access began last month, and U.S. and Japanese negotiators begin another round Feb. 9 in Tokyo.
Details are not public, but Delta says the last round came close to producing a limited agreement that would open 10 daily, daytime slots — five to U.S. carriers and five to All Nippon Airways and Japan Airlines.
Daytime flights are more appealing to travelers and enable better connections.
“American believes a deal to move the nighttime flying at Haneda to daytime benefits customers of all the U.S. airlines that serve Haneda,” said Howard Kass, vice president of regulatory affairs at American. United did not respond to a request for comment.
‘A simple numbers game’
Delta, American and United would likely each get at least one daytime slot under the proposed formula.
But Delta contends that, since United and American are partners with ANA and JAL, respectively, the deal tilts in their favor. That’s because United and American could also sell seats on the new ANA and JAL flights, enabling them to offer significantly more seats to Haneda and beyond.
“It’s a simple numbers game. Delta is by itself but American is partnered with JAL, and United with ANA,” Horton said.
Hirst said the number of flights opened at Haneda through a limited liberalization would be “a large enough number to destroy Delta’s Narita hub, but not large enough to allow us to remain a significant competitor in the U.S.-Japan market.”
“Passengers will prefer to go on flights to Haneda, and without that traffic, the flights we operate into the interior of Asia won’t be viable,” Hirst said.
“As those fail … even our key hub flights between Atlanta and Detroit to Narita will no longer be viable.”
That would leave a duopoly in control of the U.S.-Japan market, he said. Delta’s position, essentially, is that negotiators should either keep the status quo or push for a deal to more fully open Haneda and let Delta move its Narita operations to the closer-in airport.
Delta has enlisted political help. U.S. Sen. Johnny Isakson, R-Ga., co-authored a letter to Secretary of State John Kerry and Transportation Secretary Anthony Foxx in November expressing concern that a “limited opening” of Haneda Airport “would unfairly disadvantage U.S. carriers.”
Last week, Isakson said in a written statement that the U.S. government should advocate for agreements that “allow for enough capacity to ensure all U.S. carriers can participate on a level playing field.”
Delta’s problem is partly its lack of success in partnering with a Japanese airline.
It sought to link with Japan Airlines but lost out to American.
It also offered to invest in Japanese discount carrier Skymark, which instead linked with ANA, the United partner.
Meanwhile, Delta has been shrinking its flying to Tokyo in recent years, as it uses Seattle as a gateway to Asia and flies more nonstop flights from the U.S. to China.
“As Delta builds up its Seattle hub and flies nonstop to other Asian cities, it is inevitable its Narita hub will continue to decline,” Horton said.
“What Delta really needs is a new Asian strategy.”
Delta says it has adjusted its entire Asian route network in the past couple of years, including the creation of a Seattle gateway, but that a viable Tokyo operation remains critical. Hundreds of U.S. businesses could lose direct access to Japan’s commercial center if the deal goes through, it says.
American accuses Delta of trying to block a good deal to open more flights to Haneda.
Last week American said it “urges the U.S. government to finalize a deal to allow U.S. carriers to operate at Haneda during times that are convenient and desirable for U.S. travelers.”