Order 2016-4-11

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
Issued by the Department of Transportation
on the 14th day of April, 2016
Served: April 14, 2016
Petitions of
AMERICAN AIRLINES, INC.

Docket DOT-OST-2016-0048

HAWAIIAN AIRLINES, INC.

UNITED AIRLINES, INC.
in the matter of 2016 U.S.-Haneda
Combination Services Allocation Proceeding
ORDER
Summary
By this order the Department grants the petitions of American Airlines, Inc. (American);
Hawaiian Airlines, Inc. (Hawaiian); and United Airlines, Inc. (United) for reconsideration of
Order 2016-3-26 (the Instituting Order) in the above captioned proceeding. On
reconsideration, the Department denies the relief requested.
The Department also makes final its tentative decision, as set forth in Order 2016-3-26, to
allocate four slot pairs, on a temporary basis, to the four incumbent U.S. carriers to provide U.S.Haneda services, during daytime hours, during the pendency of this proceeding and for the
forthcoming IATA winter traffic season. The Department also establishes revised procedural
dates for the processing of this case.
Background
On February 18, 2016, delegations from the United States and Japan negotiated an agreement
that, following an exchange of diplomatic notes, will amend the Schedule to the 1952 Civil Air
Transport Agreement, as amended (the Agreement) between the two countries. The
amendment to the Agreement replaces the existing section on operations at Tokyos Haneda
Airport (Haneda). The four existing U.S. carrier nighttime slot pairs are to be transferred to
daytime hours (i.e., between 0600 and 2255 hours local time) (daytime slot pairs). In addition, a
fifth daytime slot pair and one new nighttime/early morning (i.e., between 2200 and 0655 hours
local time) slot pair (nighttime slot pair) will become available for U.S. carrier scheduled

passenger service to and from Haneda. 1 The Department expects the amendment to enter into
force in time to permit the newly available U.S.-carrier services to begin as early as the start of
the next winter traffic season, i.e., October 30, 2016.
The 2010 MOU amending the Agreement provided for four daily slot pairs for U.S. carriers to
provide scheduled combination services between the United States and Haneda. Those
scheduled operations have been 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 These conditions will remain until the exchange of notes brings the
amendment to the Agreement into force.
As a result of prior proceedings, each conducted in the context of the aforementioned conditions,
the Department has allocated the four slot pairs available under the Agreement as follows: 1) one
slot pair to American for Los Angeles-Haneda service; 2) one slot pair to Delta Air Lines, Inc.
(Delta) for Los Angeles-Haneda service; 3) one slot pair to Hawaiian for Honolulu-Haneda
service; and 4) one slot pair to United for San Francisco-Haneda service. 3
Order Instituting Proceeding and to Show Cause
By Order 2016-3-26, the Department instituted the 2016 U.S.-Haneda Combination Services
Allocation Proceeding to allocate the five daytime slot pairs and one nighttime slot pair available
for U.S.-Haneda scheduled combination services. The Department also tentatively decided to
temporarily allocate four of the new U.S.-Haneda daytime slot pairs to the incumbent carriers
currently holding U.S.-Haneda slot-pair allocations.
The Order set forth a procedural schedule and evidentiary requirements for the establishment of a
record for the Department to make decisions in this case. Pursuant to the procedural schedule,
Petitions for Reconsideration and Objections to the Show Cause Order were due March 29,
2016; and Answers to Petitions and Answers to Objections were due April 5, 2016. By Notice
dated April 6, 2016, in light of the petitions for reconsideration filed on the record, the
Department stayed the remaining procedural schedule for the proceeding until further notice.
Petitions for Reconsideration
On March 29, 2016, American, Hawaiian, and United filed petitions for reconsideration of Order
2016-3-26.
The petitioners each take issue with the Departments decision to include the existing four
nighttime slot pairs in the allocation proceeding, calling the Departments decision arbitrary and
capricious. 4 The petitioners generally argue that the Departments decision is contrary to the
terms of their awards, contrary to Department precedent, and contrary to the public interest.

The amendment to the Agreement establishes daytime hours as between 0600 and 2255 hours (local
time) and nighttime/early morning hours as between 2200 and 0655 hours (local time)
2 Extra sections are also not permitted under the amendment to the Agreement.
3 See Docket DOT-OST-2010-0018.
4 Petition of American, at 2-3; Petition of Hawaiian, at 7; and Petition of United, at 1.
2

The petitioners assert that their respective slot-pair authorities are being operated consistent with
the terms of their awards, and that the Departments public interest determinations made in
awarding their respective requests remain valid today. Each argues that the proceeding should
be limited to the allocation of one daytime slot pair and one nighttime slot pair.
The petitioners acknowledge the Departments ability in appropriate circumstances to review
current awards, such as where an incumbent carrier has failed to use the frequencies it holds or
where the frequencies are not being operated effectively, but they contend the situation here does
not fit those circumstances. In this regard, United asserts that reallocation of an incumbent
carriers Haneda slots may be justified in the event that such a carrier seeks to switch gateways. 5
The petitioners argue that Department precedent does not support a reallocation of existing slot
pairs. American and Hawaiian state that it has been the Departments consistent practice and
policy not to reallocate existing authority in a proceeding where new route rights have become
available. 6 In support of their arguments, American cites the 1997 U.S.-Chile Combined
Allocation Proceeding, and the 1994-1995 U.S.-China Frequency Allocation Proceeding; 7 and
Hawaiian cites the 2007/2008U.S.-Colombia Combination Frequency Allocation Proceeding,
and the 1999 U.S.-Argentina Combination Service Case. 8
Hawaiian also argues that the Instituting Order is inconsistent with the fundamental principle of
security of route, citing the Supreme Courts decision in Civil Aeronautics Board v. Delta Air
Lines, Inc., where the Court held that Congress provided certain minimum protections before a
certificated operation could be cancelled. 9 Hawaiian argues that the Departments order
awarding Hawaiian Haneda authority indefinitely, incorporates and is consistent with this
principle.
Hawaiian and United argue that the Departments allocation orders provide for reallocation of
the authority only if they fail to maintain the underlying economic authority or fail to operate the
authorized route for any 90-day period. 10
United asserts that at no point during the U.S.-Japan negotiation process was United made aware
that it was supporting a deal that would result in its existing San Francisco-Haneda slots being
reallocated. 11 In this regard, Hawaiian asserts that it supported liberalization of access to Haneda
with the expressed understanding that it would continue to have the right to operate the
Honolulu-Haneda route once the nighttime conditions were modified. 12
Hawaiian argues that the Department failed to consider alternatives to requiring incumbent
carriers to re-apply for their Haneda authority, and that the Department offered no notice that it
might pursue this path during the negotiations of the 2016 Amendment. Hawaiian asserts that
the Department had viable alternatives, including: (1) confirming that the route rights would
5

Petition of United, at 5-6.

Petition of American, at 2; and Petition of Hawaiian, at 10.
7 Petition of American, at 2.
8 Petition of Hawaiian, at 10.
9 Petition of Hawaiian, at 7-8.
10 Petition of Hawaiian, at 5-6, citing Order 2010-7-2; and Petition of United, at 9, citing Order 2014-4-6.
11 Petition of United, at 3-4.
12 Petition of Hawaiian, at 6.
6

continue to be held by incumbent Haneda carriers to serve their current gateways even though
the operating conditions will change pursuant to the 2016 Amendment; or (2) granting
incumbent carriers the right to transfer gateways prior to submitting applications for the two
additional frequencies made available as a result of the 2016 Amendment. 13
Lastly, Hawaiian requests that the Department make the application procedures more specific by
requiring carriers to designate whether they are applying for daytime or nighttime operating
authority and ranking their preferences within each category.
Responsive Pleadings
On April 5, 2016, Delta and United filed answers to the petitions; and on April 8, 2016, Delta
filed a reply to Uniteds answer. 14
Delta opposes the petitions, asserting that the Department is not reallocating existing authorities.
Rather, Delta argues that the opening of the U.S.-Haneda market represents new and distinct
opportunities for carriers that are not comparable to the existing routes available. 15 In this
regard, Delta asserts that the Departments decision to allocate all six slot pairs is consistent with
the U.S. Supreme Courts Ashbacker doctrine. 16 Delta argues that, contrary to the petitioners
assertions, no basis exists for the Department to unilaterally award these newly acquired daytime
slot pairs without inviting all applicants to submit proposals.
Delta contends that, even if slot pairs were being taken away, rather than new slots being
awarded, the Department is providing due process to the incumbent carriers by grandfathering
operations until the proceeding is complete, and by giving each carrier an opportunity to
participate in the proceeding and demonstrate the public interest benefits of the new daytime
services they wish to provide.
Delta argues that Americans reliance on Department precedent is misplaced, claiming that the
cases cited by American allocated additional frequencies that had become available and neither
included nor affected the same allocated frequencies in the same market. Unlike the examples
cited by American, Delta argues that the new Haneda daytime slots are in place of the old
nighttime slots, and that they are materially different than reallocations or the addition of new
frequencies in past proceedings. 17
Delta notes that Hawaiian contends on the one hand that some realignment of the gateways may
be warranted but that Hawaiians Honolulu route should not be included in that process. Delta
argues that there is no legal basis to maintain Hawaiians Honolulu slot, but not the other
carriers. 18 Delta also claims that by requesting that the Department require carriers to specify

13

Id., at 9-10.
Delta accompanied its reply with a motion for leave to file an otherwise unauthorized document. The
Department will grant the motion.
15 Consolidated Answer of Delta, at 2.
16 Consolidated Answer of Delta, at 3-4, citing Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945).
17 Consolidated Answer of Delta, at 7.
18 Id., at 8.
14

nighttime or daytime slot requests, Hawaiian effectively concedes that nighttime and daytime
slots are different enough to warrant distinct public interest analysis. 19
Delta also supports the Departments proposed temporary allocation of slot pairs, noting that it
protects U.S. carriers from a competitive disadvantage against Japanese carriers for the IATA
2016/2017 winter traffic season.
In its answer, United asserts that three out of the four U.S. carriers that hold Haneda slots have
sought reconsideration of the Departments decision to re-examine the award of slot pairs that
have already been the subject of competitive carrier selection proceedings. United contends that
there is no evidence of the incumbent carriers having failed to honor the terms and conditions of
their Haneda awards or asked to transfer their service to a different U.S. gateway, and that
forcing carriers to recompete is not remotely justified under these circumstances, and is contrary
to Department precedent and the public interest.
In its reply, Delta argues that it too has fully complied with the terms of its award, but recognizes
that these are new, distinct opportunities. Delta asserts that it is confident in its ability to
demonstrate its superior public benefits for daytime Haneda slots under the Departments
procedures.
Decision on Reconsideration
The Department has decided to grant the petitions for reconsideration of American, Hawaiian,
and United, and on reconsideration, to deny the relief requested.
In instituting this proceeding, the Department stated that daytime access to Haneda has the
potential to significantly expand the number of U.S. cities that can support commercially viable
Haneda service, in contrast to what is economically viable with nighttime slots. 20 The
Department believes this potential expansion represents a fundamental change to the nature of
the route rights, as history amply demonstrates that operations to U.S. regions aside from Hawaii
and the west coast are not economically viable when limited to nighttime operations at Haneda.
Transferring the nighttime slot pairs to daytime slot pairs, as the amended Agreement does,
creates the possibility for economically viable Haneda service from U.S. cities that would almost
certainly not have been viable with the nighttime restrictions.
None of the petitioners challenged the validity of this fundamental determination that led the
Department to institute this proceeding. Nor could they easily do so given their prior positions in
proceedings before the Department with regard to Haneda service. For example, in the initial
Haneda allocation proceeding of 2010, United noted that the flight-hour restrictions on
scheduled U.S. mainland service at Haneda make gateways located in the midwestern, central,
southern and eastern regions of the U.S. mainland less attractive because the flight timings would
not be as conducive to maximizing connecting service opportunities for U.S. passengers as a
West Coast gateway. 21

19

Id., at 9.
Order 2016-3-26, at 2.
21 February 16, 2010 Application of United in Docket DOT-OST-2010-0018, at 7.
20

Similarly, in seeking allocation of a Los Angeles-Haneda slot pair in 2014, American stated that
it is clear that Haneda curfew restrictions make service to interior U.S. gateways infeasible at
this time. American discontinued its New York-Haneda service due to unsustainable losses, the
result of unattractive schedules forced by the curfew. 22 In that same proceeding, Hawaiian
stated that the time restriction for operations under the bilateral, make operating a successful
flight from the continental United States difficult, if not impossible. 23
Indeed, in its very petition Hawaiian states that [a]s over five years of operating experience
between the United States and Haneda has shown, the requirement to operate a route authority at
night has the potential to impact the public interest benefits associated with a particular route
award. 24
The amended Agreement will result in a fundamental change to the nature of U.S.-Haneda route
rights, a change that could broaden the range of economically viable U.S. gateways to Haneda.
The purpose of this proceeding is to evaluate that question in light of the fundamental change to
the nature of the route rights. Whether the public interest will ultimately call for moving the
existing gateways to other cities remains to be seen, and will be considered based on the
applications ultimately filed by the U.S. carriers in this case.
The Department does not disagree in any way with the public interest findings it previously
made to support the award of Haneda slot pairs to the incumbent carriers. In fact, it is entirely
possible that many of these same findings would again prevail in the context of selection for
daytime slot-pair access. As the Department said in the Instituting Order, it will consider a
number of factors previously found relevant in deciding Haneda allocations, such as promoting
geographic diversity among U.S. gateways for Haneda services, promoting competition
(including the new entrant competition enabled by the 2010 Agreement), and promoting a variety
of benefits based on the types of U.S. markets to be served. 25
Some petitioners argue that the Departments decision to institute this proceeding is contrary to
the terms of their respective awards, and that the Department lacks the authority to reexamine the
awards. 26 The Department disagrees. As the previous Haneda allocation orders made clear,
those prior awards were all made in the context of the bilateral conditions that existed at the time,
including conditions that explicitly limited them to nighttime operations at Haneda. 27 In other
words, nighttime slot pairs are all that were available to be awarded at that time, and when the
petitioning carriers received their awards they received no more than what the Department had to
offer. That they have since used the authority awarded is not dispositive in a proceeding
intended to deal with rights that have fundamentally changed.
The petitioners also argue that the Departments policy is not to reallocate existing frequencies,
where additional frequencies have become available. The Department does not, however, find

22

October 2, 2014 Motion and Application of American in Docket DOT-OST-2010-0018, at 5.

January 12, 2015 Answer of Hawaiian in Docket DOT-OST-2010-0018, at 3.
24 Petition of Hawaiian, at 12.
25 Order 2016-3-26, at 2.
26 Petition of Hawaiian, at 5-7; and Petition of United, at 3-5.
27 See Orders 2010-7-2, 2014-4-6, and 2015-6-14.
23

the cited precedents as persuasive in this context. 28 The cases cited by the petitioners involved
the accretion of rights, where the underlying bilateral conditions remained constant. Here,
however, the existing route rights will soon effectively cease to exist and will be replaced by new
route rights. In those circumstances the Department finds that an examination of the allocation
of those route rights is in the public interest.
The Department similarly does not find persuasive the petitioners arguments that the
Departments decision conflicts with the security of route principle. The case cited, CAB v.
Delta Air Lines, 367 U.S. 316 (1961), specifically held that certificate authority could be
amended, provided the amendment was accomplished after notice and hearing. 29 This
proceeding involves slot-pair allocations, which are in the nature of exemptions and thus a lesser
form of authority than the certificate authority at issue in CAB v. Delta. Nevertheless, this
proceeding will provide parties with the notice and hearing they would have been entitled to
even if the route rights at issue had been embodied in certificates.
United and Hawaiian assert that carriers were not advised during the U.S.-Japan negotiations of
the Departments intent to conduct this proceeding. 30 However, the negotiators are not in a
position to inform stakeholders how a new or amended agreement will be implemented as a
regulatory matter, and the government is under no obligation to do so. Such decisions are made
by the appropriate regulatory authorities based on the terms of the agreement after negotiations
are concluded.
Regarding the arguments that the Department should have grandfathered existing nighttime slot
pair holders into daytime slot pair holders, the Department again disagrees with the petitioners.
That approach would not allow the Department to maximize the public benefits that might derive
from a fresh look at the entire U.S.-Haneda allocation in light of the fundamental change that has
occurred.
In sum, the fundamental change in the nature of the U.S.-Haneda route rights could create
significantly expanded new possibilities that were not possible before, and the Department
intends to conduct a comparative proceeding to determine which proposals will best serve the
public interest and maximize public benefits. The Department emphasizes in this regard, that
carriers have been and will continue to be given full due process in the regulatory determinations
the Department is in the process of making.
Against that background, the Department denies the relief requested in the petitions to reconsider
Order 2016-3-26.
Temporary Slot-Pair Allocations
In Order 2016-3-26, the Department noted that U.S. carriers face a deadline of May 20, 2016
(May 19, 2016 in the United States), to file applications with Japanese authorities for takeoff and
landing slot times at Haneda airport for the forthcoming winter traffic season that begins October
28

For example, American cites the 1997 U.S.-Chile Combined Allocation Proceeding, and the 1994-1995
U.S.-China Frequency Allocation Proceeding; and Hawaiian cites the 2007/2008U.S.-Colombia
Combination Frequency Allocation Proceeding, and the 1999 U.S.-Argentina Combination Service Case.
29 367 U.S., at 329.
30 Petition of United, at 4-5; and Petition of Hawaiian, at 6.
7

30, 2016. The Department further stated that it does not anticipate reaching a final decision in
the proceeding in time to meet that Japanese filing deadline, and the Department therefore found
an immediate public need for the grant of temporary U.S.-Haneda daytime slot-pair authority.
The Department expressed its tentative view that the public need is most efficiently met by a
temporary allocation to each of the incumbent carriers currently holding U.S.-Haneda nighttime
slot-pair allocations so that they can continue to serve Haneda during the pendency of this
proceeding and through the forthcoming winter traffic season.
Only Hawaiian objects to the Departments tentative decision, and it objects only to the extent
that Hawaiians operating authority to serve Honolulu-Haneda is not permanent. As discussed
above, the Department has concluded that the public interest is best served by conducting a
proceeding to determine the long-term allocation of U.S.-Haneda opportunities that will
maximize public benefits. Hawaiian did not present any argument to suggest that the
Departments proposed temporary allocation would be contrary to the public interest. 31
Against that background, the Department makes final its tentative decision to temporarily
allocate four of the new U.S.-Haneda daytime slot pairs to the incumbent carriers currently
holding U.S.-Haneda slot-pair allocations. As stated in Order 2016-3-26, the Department again
emphasizes that these proposed slot-pair allocations will be strictly temporary and subject to
whatever results the Department might reach in the longer-term proceeding. The Department
further emphasizes that these grants of interim authority to operate daytime slots will not give the
carriers any benefit or advantage in the longer-term proceeding. All applications in the
allocation proceeding will receive full and fair comparative consideration. Each temporary
allocation will be effective immediately and will remain in effect through March 25, 2017, the
last day of the IATA winter 2016/2017 traffic season. 32
Resumption of the Proceeding
In view of the decisions above, the Department is revising the remaining procedural schedule for
the proceeding as follows:
Applications:
Answers:
Replies:

April 21, 2016

May 5, 2016
May 12, 2016

The Department believes that this schedule will afford parties to the proceeding an appropriate
amount of time to complete their evidentiary submissions in compliance with the Instituting
Order.
As a final matter, Hawaiian requests that the Department make the application procedures more
specific by requiring carriers to designate whether they are applying for daytime or nighttime
operating authority and ranking their preferences within each category. The Department fully
expected that applicants would specify whether they sought daytime or nighttime slots for each
31

No other carrier opposed the Departments tentative decision.

Carriers may, of course, continue to use their nighttime slot-pair allocations until the amended
Agreement has entered into force and the transfer of the slot pairs from nighttime to daytime is effective.
This temporary allocation will permit the carriers to seek airport slots for the winter 2016/2017 traffic
season.
32

proposal, and that they would rank their preferences. 33 To the extent that the order was not
clear, the Department directs applicants to so specify. 34 The Department also reminds carriers
that they may submit any additional information beyond that requested in the Instituting Order if
they believe it would be useful to the Department in reaching a decision.
ACCORDINGLY,
1. The Department grants the petitions filed by American Airlines, Inc.; Hawaiian Airlines, Inc.;
and United Airlines, Inc. for reconsideration of Order 2016-3-26, and upon reconsideration
denies the relief requested;
2. The Department makes final its tentative decision in Order 2016-3-26, and allocates one
daytime slot pair, on a temporary basis, to each of the incumbent carriers to provide their existing
U.S.-Haneda scheduled combination services, as described in this order, through March 25,
2017, as follows:
American Airlines, Inc. for Los Angeles-Haneda service;
Delta Air Lines, Inc. for Los Angeles-Haneda service;
Hawaiian Airlines, Inc. for Honolulu-Haneda service;
United Airlines, Inc. for San Francisco-Haneda service;
3. The Department grants the motion of Delta Air Lines, Inc. for leave to file an otherwise
unauthorized document;
4. Applications and other responsive pleadings should be filed in accordance with the procedural
schedule as revised in this order; and
5. The Department will serve this order on all parties to the proceeding.
By:

SUSAN MCDERMOTT
Deputy Assistant Secretary for
Aviation and International Affairs
(SEAL)
An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov

33

See Order 2016-3-26, at 3-4.

Furthermore, to the extent that parties feel information is lacking from a particular application, they are
free to raise such matters in their responsive pleadings.

34