BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. CONSOLIDATED ANSWER OF DELTA AIR LINES, INC.

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1 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. ) ) 2016 U.S.-HANEDA COMBINATION ) SERVICES ALLOCATION PROCEEDING ) ) ) CONSOLIDATED ANSWER OF DELTA AIR LINES, INC. Communications with respect to this document should be addressed to: Robert J. Cortelyou Senior Vice President Network Planning DELTA AIR LINES, INC Delta Boulevard Atlanta, Georgia Alexander Krulic Managing Director and Associate General Counsel Regulatory & International Affairs Christopher Walker Director Regulatory & International Affairs DELTA AIR LINES, INC New York Avenue, N.W. Washington, D.C (202) alex.krulic@delta.com chris.walker@delta.com Kenneth P. Quinn Amna Arshad Christopher K. Leuchten PILLSBURY WINTHROP SHAW PITTMAN, LLP th Street, N.W. Washington, D.C (202) kquinn@pillsburylaw.com amna.arshad@pillsburylaw.com christopher.leuchten@pillsburylaw.com Counsel for DELTA AIR LINES, INC. May 5, 2016

2 Consolidated Answer of Delta Air Lines Inc. Docket OST Table of Contents - Page 1 Table of Contents I. Executive Summary... 2 II. Delta s Proposed Service Provides Superior Public Benefits... 3 A. Delta s Application Offers Balance and True Competition Against the Two Immunized Joint Ventures, Which Dominate Haneda and Tokyo... 4 B. Delta s Unique Position in Japan by Virtue of Its Split Narita Operations Warrants Particular Consideration... 7 C. Delta s Application Will Provide Seamless Coverage and Benefit the Most Passengers.. 7 III. American s Application Is Based on Fundamental Flaws... 8 A. American s Application is Based on Faulty Premises Instead of Looking at Haneda, American Invents a Market that Spans Three Countries and Encapsulates One-Fifth of the World s Population American Only Acknowledges Its Joint Venture with JAL When Convenient American Application Includes Misstatements of Fact B. Delta s Proposed Service Will Provide Greater Benefits to the U.S. Public than American s Proposal Delta s LAX Proposal is Superior to American s LAX Proposal American s DFW-HND is an Inferior Gateway from the Heartland of the United States C. American Mischaracterizes the Bilateral Negotiations IV. United s Application Ignores Its Partnership with the Largest Japanese Airline and Fails to Make an Effective Public Interest Argument for Its Proposals A. The Department Should Not Further Strengthen United/ANA s Dominance B. Delta s LAX Proposal is Stronger than United s SFO Proposal and Would Benefit a Greater Number of U.S. Travelers C. United s EWR-HND Service Proposal is Duplicative and Not in the Public Interest V. Hawaiian s Proposal Squanders Valuable Daytime Slot and Provides No Additional Public Benefits for U.S. Travelers or the U.S. Economy A. Hawaiian s HNL-HND Proposal is Equally Effective at Night, Offers Nothing New, and Does Not Benefit the U.S. Economy B. Hawaiian s Proposed Gateways Are Inferior to Delta s Hawaiian s HNL-HND Gateway Cannot Compare to Delta s Geographically Diverse Gateways Hawaiian s Daytime KOA-HND Service Would Provide Even Fewer Benefits

3 Consolidated Answer of Delta Air Lines Inc. Docket OST Table of Contents - Page 2 C. Hawaiian s Proposal Has Limited Benefits for U.S. Passengers D. Hawaiian s Mischaracterizes Delta s Position at Haneda and Distorts the Market to Appear Very Small VI. Conclusion TABLE OF EXHIBITS

4 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. ) ) 2016 U.S.-HANEDA COMBINATION ) SERVICES ALLOCATION PROCEEDING ) ) ) CONSOLIDATED ANSWER OF DELTA AIR LINES, INC. Delta 1 submits this consolidated answer 2 to the Applications of American, 3 United, 4 and Hawaiian 5 for slot pair allocations under the Instituting Order. As an initial matter, Delta commends the Department for instituting a transparent, public, and competitive process for the award of these valuable daytime slots at Haneda, and denying the efforts of other carriers to simply convert their nighttime Haneda slots to daytime. 6 Upon this fresh look of the competing applications for daytime slots, Delta respectfully submits that its Application for LAX, MSP, and ATL service is the only proposal that will maximize the public benefits and provide competitive parity among the major airline alliances at Haneda, while not wasting a scarce asset by providing an unnecessary daytime slot to Hawaiian. 1 Except as defined herein, all terms shall have the same meaning as defined in Delta s Application. DELTA AIR LINES, INC., APPLICATION OF DELTA AIR LINES, INC. (Apr. 21, 2016) ( Delta Application ) (Docket DOT-OST ). 2 To the extent deemed necessary by the Department, Delta requests leave to file a consolidated answer under the Department s Rules of Practice. 3 AMERICAN AIRLINES, INC., APPLICATION, TESTIMONY, AND DIRECT EXHIBITS OF AMERICAN AIRLINES (Apr. 21, 2016) ( American Application ) (). 4 UNITED AIRLINES, INC., APPLICATION OF UNITED AIRLINES, INC. (Apr. 21, 2016) ( United Application ) (Docket DOT-OST ). 5 HAWAIIAN AIRLINES, INC., APPLICATION OF HAWAIIAN AIRLINES, INC. FOR ROUTE AUTHORITIES TO SERVE TOKYO, JAPAN (HANEDA AIRPORT) FROM: (1) HONOLULU, HAWAII; AND (2) KONA, HAWAII (3 TIMES PER WEEK) AND HONOLULU, HAWAII (4 TIMES PER WEEK) (Apr. 21, 2016) ( Hawaiian Application ) (). 6 DEPARTMENT OF TRANSPORTATION, ORDER , ORDER (Apr. 14, 2016) ( DOT Order on Reconsideration ).

5 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 2 I. Executive Summary The Department will maximize the benefits to the public by allocating Delta a full award of its Proposed Service. 7 As Delta discussed in its Application, its Proposed Service will provide the most benefits to the U.S. traveling public and satisfy two critical criteria in the Department s public interest analysis: 8 (1) providing U.S. passengers with the benefits of vigorous competition at Tokyo s preferred airport; and (2) opening up new Haneda gateways throughout the United States to provide access to the entire U.S. mainland. No other application provides similar competition at Haneda or achieves such extensive geographic diversity. By contrast, the Applications of American, United, and Hawaiian provide far fewer benefits, and each contains key mischaracterizations and shortcomings. For example: Rather than focusing on competition at Haneda, which all carriers appear to concede is the close-in, preferred airport for Tokyo travelers, American, United, and Hawaiian downplay the critical need for competition in the U.S.-Haneda market, and instead make arguments based on Narita, China, Korea, the whole of Asia, and other tangential markets; American and United ignore the dominant position they possess in the U.S.-Japan market generally and in the U.S.-Haneda market in particular, while barely mentioning their immunized joint ventures with JAL and ANA, the two largest Japanese carriers; 7 While only a full award of Delta s entire Proposed Service (LAX-HND, MSP-HND, and ATL-HND) will maximize public benefits, in the event the Department only awards one slot pair, Delta seeks only LAX-HND; if two slot pairs, LAX-HND and MSP-HND U.S.C (e) (stating that it is United States international air transportation policy includes strengthening the competitive position of air carriers to ensure at least equality with foreign air carriers, and increasing the number of nonstop United States gateway cities ). 2

6 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 3 American s Application contains misinformation about Delta and its Application; it also proposes service with smaller capacity and longer, less convenient connecting flights; United s Application for two daytime slot pairs, when coupled with the slot pairs already allocated to its joint-venture partner ANA, would have the Department give United/ANA half of the total number of U.S.-Haneda daytime slot pairs, ignoring the need for competitive balance; and Hawaiian s Application would squander a valuable daytime slot to provide Japanese beachgoers more convenient access to a monorail if their flight is delayed an issue that Hawaiian can remedy simply by operating its flights ontime. II. Delta s Proposed Service Provides Superior Public Benefits Delta s Application is the strongest of all of the applications, and an award to Delta of its full Proposed Service would best serve the traveling public when considering: (1) Delta s geographically diverse gateways and high-quality service proposals; (2) Delta s relatively small position at Haneda; and (3) Delta s competitive disadvantage from not having a Japanese alliance partner. Unlike American and United, which benefit from increased access to Haneda as a result of immunized, metal-neutral, joint-venture partnerships with Japanese carriers, Delta has no Japanese partner and now operates at a competitive disadvantage in Japan, especially with the opening of international flights and capacity additions at Haneda. Unlike Delta, American s and United s partnerships position them to operate at a high capacity from both Narita and Haneda Airports, whereas Delta s Narita s service is likely to become unsustainable without a strong, Japanese partner. 3

7 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 4 To its credit, the Department determined that daytime slot pairs at issue in this proceeding are new and distinct opportunities that offer increased economic viability and are not comparable to the past nighttime slot pairs. 9 Exhibit DL-A-408. Therefore, in this proceeding, the Department is correctly employing a forward-looking approach to maximize the value of the daytime slot pairs. Despite the clarity the Department has provided on this issue, American and Hawaiian still attempt to re-litigate Delta s history of operating nighttime routes at Haneda in their Applications, while ignoring abandonment of other non-viable nighttime slot pairs; they seek to preserve the past at the expense of the future. Such backward-looking critiques are without merit because, quite simply, nighttime and daytime routes to Haneda cannot be compared. 10 Exhibit DL-A-408. A. Delta s Application Offers Balance and True Competition Against the Two Immunized Joint Ventures, Which Dominate Haneda and Tokyo Delta s Application demonstrates that its Proposed Service will provide the necessary competition to counter the persistent and growing domination of the metal-neutral joint ventures offered by United/ANA and American/JAL in the Haneda market. Exhibits DL-A The United/ANA joint venture recently was awarded two additional slot by Japan, bringing its combined total to four slot pairs even before the Department awards any slot pairs to U.S. carriers. Exhibit DL-A-108. With ANA s anticipated service to New York and Chicago, 9 The past nighttime restrictions at Haneda resulted in inconvenient flight times with subpar connecting opportunities from the U.S. mainland. See DEPARTMENT OF TRANSPORTATION, ORDER , ORDER at 5 (April 14, 2016) ( 2016 Order on Reconsideration ) ( 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. ). 10 Delta believes that history with suboptimal nighttime service to Haneda should not be considered in this proceeding. Even American could not utilize its nighttime slot at JFK further reinforcing the differences between daytime and nighttime service. AMERICAN AIRLINES, INC., LETTER TO THE DEPARTMENT (Oct. 23, 2013) (Docket DOT-OST ). Similarly, Delta returned its Seattle slot pair in 2015 when it determined it could not meet the Department s operational criteria. ALEXANDER VAN DER BELLEN, Letter to Paul Gretch, DOT (June 17, 2015) (Docket DOT-OST ). 4

8 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 5 United s service to Newark International Airport ( EWR ) to provide access to Central and Eastern U.S. simply is not needed. 11 The American/JAL joint venture, for its part, already enjoys two daytime slot pairs at Haneda, meaning that six of the 12 total U.S.-Haneda slot pairs already have been allocated to these two powerful, U.S.-Japanese airline joint ventures. Exhibit DL-A-108. As a result, the only way to achieve parity among daytime slot pairs is to award Delta its full proposed Service. United/ANA and American/JAL dominance extends beyond Haneda to the entire mainland U.S.-Tokyo market. American/JAL has one-and-a-half times as many seats from US48-Tokyo; United/ANA has more than twice as many as Delta. Exhibits DL-A and DL-A ANA scores new daytime US flights at Haneda Airport, NIKKEI ASIAN REVIEW (April 27, 2016), available at 5

9 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 6 While the U.S.-Japanese joint-venture carriers attempt to ignore or obfuscate these facts in their Applications, 12 the Department should not do so, and should fully take into account their growing dominance in this critical market. Every additional slot pair granted to either joint venture further concentrates their market power. The Department factored in this competitive advantage in the 2010 U.S.-Haneda proceeding and allocated Delta half of the available slot pairs. 13 It should do so again here. Delta s disadvantaged position in the Haneda market has not changed since 2010, nor has the entrenched nature of United s and American s dominant role in this market in tandem with their alliance partners, where they have combined control of approximately 80% of all departures. The Department s award to Delta of its requested three daytime slot pairs would achieve slot parity among Delta, American, and United and provide competitive balance in the market. 12 See infra at Section II-A-2 (American/JAL) and Section III-A (United/ANA). 13 See DEPARTMENT OF TRANSPORTATION, ORDER , ORDER TO SHOW CAUSE at 8-9 (May 27, 2010) ( 2010 Haneda Show Cause Order ); see also DEPARTMENT OF TRANSPORTATION, ORDER , FINAL ORDER at 6 (July 6, 2010) ( 2010 Haneda Final Order ) (awarding Delta two of the four available Haneda slot pairs). 6

10 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 7 Exhibit DL-A-109. Accordingly, the Department should do as it did in 2010 and allocate half, i.e. three, of the six available slot pairs to Delta. B. Delta s Unique Position in Japan by Virtue of Its Split Narita Operations Warrants Particular Consideration As a result of their dominant position with their joint venture partners at both Haneda and Narita, United and American are relatively unaffected by the limited daytime slots in this proceeding, unlike Delta. As Delta and the other carriers discussed in their Applications, 14 given U.S. travelers strong preference for Haneda s convenient location, the lessening of restrictions at Haneda will result in a reduction in U.S. passenger service to Narita, negatively and uniquely impacting carriers like Delta, which lack Japanese partners with greater access to both airports. 15 United s and American s domination will not change as a result of the outcome of this proceeding they can both serve their proposed gateways through their Japanese partners without impacting Narita. 16 However, for Delta, anything less than a full award of its Proposed Service to Haneda will put Delta at a further disadvantage, given Delta s split operations between Narita and Haneda and the lack of a Japanese airline partner. 17 C. Delta s Application Will Provide Seamless Coverage and Benefit the Most Passengers More than any of the other applications, Delta s Proposed Service will connect Tokyo s downtown to the West Coast (via Los Angeles), the U.S. Heartland and the East Coast (via Minneapolis), and the Southeast (via Atlanta) with significant connection capabilities, effectively 14 Delta Application at 10-12; American Application at See also DEPARTMENT OF TRANSPORTATION, ORDER , SHOW CAUSE ORDER at (Feb. 13, 2010) ( The preference for business travelers to use Heathrow is strong enough that many travelers will choose to fly on a connecting itinerary out of Heathrow instead of a nonstop itinerary out of Gatwick ). 16 Delta Application at Exhibits DL Id. 7

11 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 8 providing continuous coverage for all regions of the mainland United States. Exhibit DL-A-110. Delta s Proposed Service will also provide the greatest capacity among all applications. Exhibits DL-A-207, 301, 401. Delta s most important route, LAX, will continue its service in a proven market with a strong demand. 18 By comparison, the data demonstrates that American s LAX service and United s SFO service are inferior to Delta s and offer smaller capacity and minimum experience. 19 Delta s LAX-HND route also provides an important counterbalance to United s and American s domination of the LAX-Tokyo market with a combined share of 78% of the seats. Exhibit DL-A-204. Delta s second priority route, MSP-HND, will enhance the geographic diversity of U.S. gateways to Haneda through a proven transpacific hub and provide significant connecting opportunities to the U.S. Heartland and the East Coast. Exhibit DL-A-212. By contrast, as discussed further in Section III-B-2, the only other proposed Heartland gateway DFW falls short of Delta s MSP proposal, which would provide the best coverage for Haneda and a greater number of connections. Exhibit DL-A-211. Finally, Delta s ATL-HND service will provide the Southeast U.S. with its first nonstop gateway to Haneda from Delta s primary hub airport, as well as unparalleled connectivity to a greater number of U.S. destinations than any other hub. 20 III. American s Application Is Based on Fundamental Flaws American s Application is based on at least four fundamental flaws: (1) American defines the market as U.S.-Asia, not U.S.-Japan/Haneda; (2) American disguises its relationship with 18 LOS ANGELES WORLD AIRPORTS, SUPPLEMENTAL COMMENTS OF LOS ANGELES WORLD AIRPORTS, OPERATOR OF LOS ANGELES INTERNATIONAL AIRPORT, IN SUPPORT OF CONTINUED SERVICE BETWEEN LAX-TOKYO HANEDA, (Apr. 21, 2016) ( LAWA Comments ) (). 19 This point is further discussed in Sections II-B-1 and III-B, infra. 20 Delta Application at Exhibit DL

12 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 9 JAL to appear smaller in the market; (3) American wrongly suggests that its proposal will enhance competition between [sic] the alliances; 21 and (4) American oddly claims that Delta has a joint venture partner at Haneda, which it does not. Then, based on these flawed arguments, American proposes two slot pairs to Haneda, each providing fewer benefits than Delta s proposals. A. American s Application is Based on Faulty Premises 1. Instead of Looking at Haneda, American Invents a Market that Spans Three Countries and Encapsulates One-Fifth of the World s Population The Department has stated that given the new daytime slots, the public interest warrants a fresh look at the U.S.-Haneda market and that the Department will consider the effects on the market structure and on competition in the U.S.-Japan market. 22 Rather than adhering to the Instituting Order s instruction to focus on competition at Haneda and Japan, 23 American instead no doubt knowing its immunized alliance with JAL would hurt its chances of demonstrated needs at Haneda or in Japan tries an old game: change the market. So it repeatedly invokes competition in Northeast Asia, 24 a supposed market consisting of three separate countries: Japan, Korea, and all of Mainland China. 25 Yet, this proceeding is about Haneda, not China or Korea. Delta does not have any immunized (or even code-share) relationships with a Japanese carrier. And while Delta s only immunized alliance relationship with an Asian partner is with a Korean carrier, it gives Delta no meaningful access to Haneda. 21 American Application at Instituting Order at Id. 24 American Application at 1. American s Application refers to Northeast Asia dozens of times. See American Application at 1, 2, 3 (twice), 9 (twice), 13 (three times), 14 (three times), 15, 16 (three times), 17, 19, testimony T-1 (13 times), Exhibits AA-405, AA-500, AA-501, AA-502, and AA Id. at 9. 9

13 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 10 American s attempt to divert attention away from Haneda, and ignore its own Japanese partner, leads it instead to develop an unrealistic market, spanning half a continent and consisting of one and a half billion people an absurd result. 26 U.S. travelers are not considering connecting to Tokyo via Chengdu, Guangzhou, Wuhan, China, or Seoul, South Korea; indeed, 97 percent of U.S.-Tokyo passengers travel on a nonstop flight to Tokyo. Even in this strained market definition of U.S.-Asia, Delta does not enjoy immunized, metal-neutral relationships with China Eastern or China Southern, as American does with JAL. Exhibit DL-A-216. American s references to Delta s alliances with other non-japanese carriers 27 are no more relevant to the U.S.-Japan market than American s partnership with Cathay Pacific or Malaysia Airlines. The Department should adhere to the Instituting Order 28 and follow its practice of weighing the competitive impacts on the particular airport and the country, 29 rather than impacts across a continent especially one as expansive as Asia. 30 Even American could not dispute that competition analysis of Haneda and Japan shows that American/JAL and United/ANA control 26 The countries American has selected for its relevant market Japan, South Korea and the entirety of mainland China combine for a total population of over 1.5 billion people over 20 percent of the people on the planet and seven of the 15 largest cities in the world. 27 American Application at See Instituting Order at In most of the recent allocation proceedings, the Department did not address competition on at the continental level as part of its decision, including the 2013/2014 U.S.-Brazil Combination Frequency Proceeding, 2009 U.S.- Brazil Combination Frequency Proceeding, 2008 U.S.-Brazil Combination Frequency Proceeding, 2007/2008 U.S.- Colombia Combination Frequency Proceeding, 2007/2008/2009 U.S.-China Air Services and Combination Frequency Allocation Proceeding; and 2005 U.S.-Argentina Combination Frequency Proceeding. See DEPARTMENT OF TRANSPORTATION, ORDER , ORDER TO SHOW CAUSE (June 20, 2013); DEPARTMENT OF TRANSPORTATION, ORDER , ORDER TO SHOW CAUSE (Mar. 20, 2009); DEPARTMENT OF TRANSPORTATION, ORDER , FINAL ORDER (Mar. 20, 2009); DEPARTMENT OF TRANSPORTATION, Order , ORDER TO SHOW CAUSE, (Mar. 5, 2009); DEPARTMENT OF TRANSPORTATION, ORDER , FINAL ORDER AND ORDER TO SHOW CAUSE (Sept. 25, 2007); DEPARTMENT OF TRANSPORTATION, ORDER , ORDER TO SHOW CAUSE (Oct. 5, 2005); see also Instituting Order at See, e.g. American Application at 14, and Exhibits AA-500 AA-504, which rely heavily on the Northeast Asia market. 10

14 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 11 almost all passenger traffic and that Delta s Proposed Service is necessary and can create balance in the market. Exhibit DL-A American Only Acknowledges Its Joint Venture with JAL When Convenient American s Application further muddies the true competitive landscape through its inconsistent treatment of JAL, American s joint-venture partner. On the one hand, American highlights JAL s advantages regarding network connections, while simultaneously downplaying JAL s detrimental impact on competition. Indeed, American does not refer to its massive Japanese partner until nearly halfway through its Application, and then does so only to boast about JAL s numerous behind and beyond connections. 31 When discussing competition, however, American downplays JAL, stating that JAL is a non-competitor. 32 American s efforts to de-emphasize its partnership JAL by highlighting the enormity of United s partner 33 are ineffective. The fact remains that JAL operates 1,477 weekly frequencies at Haneda to 42 destinations in Japan and Asia and controls two of the five daylight slot pairs available to Japanese carriers to fly to the U.S. 34 Operating almost 1,500 flights a week from Haneda summarily rebuts American s suggestion that JAL is a non-competitor. American also presents a number of exhibits that discuss competition, but exclude JAL, even though JAL is a metal-neutral partner to American and the two act as one carrier in Japan. For example, American s charts on page 14 of its Application are misleading, as they fail to 31 American Application at Id. at Id. at 16, Exhibit AA Id. 11

15 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 12 include joint venture partners. 35 In actuality, American/JAL, as a joint venture, comprise one half of the Haneda duopoly. And in less than a year, JAL will have the freedom to expand internationally again. 36 American/JAL s position in the U.S.-Haneda market is so significant that the joint venture can service both of American s proposed gateways without receiving any additional slot pairs from the Department. Exhibit DL-A-206. As an immunized joint venture, American/JAL can cooperatively make business decisions about the two daytime slot pairs it controls, and already has the necessary authority to operate both LAX-HND and DFW-HND without any slot pairs in the current proceeding. Therefore, the Department does not need to further widen the competitive advantage of the American/JAL joint venture by awarding it any additional authority. As a result, the Department should turn aside American s argument that American s immunized joint venture with JAL one of the two largest Japanese carriers, which controls two Haneda slot pairs does not give it a competitive edge American Application Includes Misstatements of Fact Another fundamental flaw in American s Application is a series of erroneous statements, the most blatant of which is the contention that Delta ha[s] a long-term presence and powerful alliance partner at Haneda. 38 This statement underscores American s general mischaracterization of the facts on the ground at Haneda. 35 American Application at 14, Figures 2 and 3. Besides the fact that the charts ignore U.S. carriers ATI partners in Japan, the charts also does not include data from 2015 or 2016 and refer to the market of Northeast Asia, which is irrelevant for Haneda, as was discussed above. 36 Id. at Id. at American Application at 16 (stating that [w]here Delta and United already have a long-term presence and powerful alliance partners, like Haneda, the Department should foster further competition by ensuring that the awards of incremental authority go to American ). 12

16 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 13 Not only does Delta not have an alliance partner based at Haneda, but this statement more accurately describes American itself, with its powerful immunized partner, JAL. A number of American s charts continue to present incorrect information about Delta. American wrongly claims that it is the smallest carrier between the mainland U.S. and Japan. That is not accurate Delta is the smallest. Exhibits DL-A American attempts to rewind the competitive landscape to 2014 by presenting two traffic charts that conspicuously neglect to include data from 2015 or Exhibit DL-A-204. When those charts are extended through the present, American s claim that Delta has a collarhold on U.S.-Japan traffic is proven simply false. Lastly, American suggests that its own relative weakness in Japan stems from historical events, 39 as if random, exogenous events resulted in Delta having a large operation at Narita. The reality, of course, is that Delta s position in Japan was acquired the old-fashioned way: it 39 Id. at

17 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 14 paid for them, and then proceeded to invest considerably in building its ties to Japan and making infrastructure investments at Narita. American could well have bid highest and won valuable international routes from Northwest, or from Pan Am, but chose not to do so. B. Delta s Proposed Service Will Provide Greater Benefits to the U.S. Public than American s Proposal 1. Delta s LAX Proposal is Superior to American s LAX Proposal Delta s LAX service proposal far surpasses American s proposal due to: (1) Delta s extensive history and experience servicing this route; (2) the significant capacity of Delta s aircraft; and (3) the increase in competition in this market. By contrast, American is offering a smaller aircraft, and minimal experience servicing this route. Of U.S. carriers, Delta has a proven history operating the LAX-HND route, the longestestablished mainland U.S.-HND route. Delta has demonstrated its commitment to this route by operating LAX-HND for 58 consecutive months, longer than any other U.S. carrier has operated service between the mainland United States and HND. Rather than credit Delta s persistence, American criticizes Delta for its LAX-HND load factors in 2011 and As noted in Delta s Application, Delta s LAX-HND load factors have increased every year since American, on the other hand, just began its LAX-HND service in February only three months ago. American s claim that it is a good steward of the route based on this negligible experience and a few months of load factor data is dubious. 42 Delta is also maximizing the benefits of the slot pair through its superior capacity from LAX. American proposes to operate a much smaller aircraft out of LAX than Delta. American s 40 American Application at AA Delta Application at Exhibit DL American Application at 4. 14

18 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 15 Boeing 787 provides 65 fewer seats on each flight compared to Delta s Boeing Exhibit DL-A-207. Over the course of the year, Delta would offer 212,430 seats on this route, an increase of roughly 29 percent compared to American s proposal, and a sizeable increase in capacity that would benefit the most U.S. passengers. Exhibit DL-A-207. Lastly, American s demand that Delta should not receive any slot pairs would directly lessen competition at LAX. Without Delta s presence in the market, the two massive joint ventures American/JAL and United/ANA will dominate the largest mainland market, LAX-HND, free from competition. 2. American s DFW-HND is an Inferior Gateway from the Heartland of the United States Delta agrees with the Department in its prior statement that there is a need to provide central and eastern U.S. passengers with access to Tokyo s downtown airport. 44 Delta s Proposed Service from MSP does this. As a Heartland gateway, American s proposed flight from DFW provides few benefits to the U.S. public in comparison to Delta s service from MSP because it: (1) offers a less convenient location for connecting travelers; (2) provides smaller capacity; (3) and weakens competition by giving the powerful American/JAL alliance another transpacific flight. MSP s location is far superior to DFW s for much of the Central and Eastern United States. Exhibit DL-A-212. Connecting passengers would be forced to travel far longer to connect to Haneda via DFW as compared to MSP. Exhibit DL-A-211. Despite American s claim that it creates an efficient gateway to Haneda through DFW for all points east of the 43 American Application at Haneda Show Cause Order at

19 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 16 Rocky Mountains, 45 the data show this American claim, like others, to be false. For example, New Yorkers would have a 13% longer flight to Haneda via DFW compared to MSP. Exhibit DL-A-211. Other connecting passengers would be similarly inconvenienced by flying through DFW instead of MSP. Bostonians would also have a 13% longer flight via DFW; Chicagoans 15% longer; Washingtonians 11% longer; even passengers from Orlando would have a longer trip. Exhibit DL-A-211. When traveling such vast distances, a five percent difference in flight length increases flying time by roughly 45 minutes. 46 DFW does not fare any better when comparing connections to Delta s proposed gateway at ATL. Exhibit DL-A-214. ATL offers a shorter trip than DFW for New York, Boston, Washington, Orlando, Miami, Pittsburgh, and many other East Coast and Northeast cities. Exhibit DL-A-214. Failing to persuasively make the case for U.S. travelers, American attempts to rely on connections to Latin America to justify this poorly-located gateway. 47 The Department should not credit this argument for two reasons. First, Latin American travelers can just as easily travel through LAX to reach Haneda. Second, when listing connections via DFW, American continues its focus on foreign travelers by including connections to Mexico and Canada in its tally. Exhibits DL-A As American concedes and Department precedent supports, the Department should be chiefly considering benefits for U.S. travelers, not foreign travelers American Application at See Delta s Application at Exhibit DL American Application at 12, fn See id.; Instituting Order. 16

20 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 17 American also argues that its service provides diversity of access to Haneda. 49 However, this argument falls flat when compared to Delta s Application. Delta has a plan to serve all parts of the contiguous U.S., including travelers from the Western, Heartland and Eastern regions of the country. LAX, MSP, and ATL combined provide the best coverage to HND. Exhibit DL-A-110. Finally, just like at LAX, American s capacity at DFW is smaller than Delta s proposed capacity from MSP on its Boeing Each American flight would carry 44 fewer seats, which, over the course of a year, totals 32,120 fewer opportunities for passengers to travel to and from Haneda than on Delta s MSP flight. Exhibit DL-A-207. American s proposal offers roughly 18 percent less capacity compared to Delta s MSP proposal. Exhibit DL-A-207. C. American Mischaracterizes the Bilateral Negotiations The final example of American raising revisionist and inaccurate arguments is its attempt to re-litigate past airline negotiating positions on the U.S.-Japan Agreement. As an initial matter, the Department should evaluate the competing proposals based on furthering the public interest and enhancing the competitive landscape not political gamesmanship or who posed for what photo-op or who thanked whom, as American would suggest. 51 Now that the U.S.-Japan Agreement is in effect, the Department can and should allocate the slot pairs at Haneda based on maximizing the public interest not on rewarding American for its self-interested support of an interim bilateral agreement that automatically helped its alliance partner at Haneda while harming its competitor at Narita. 49 American Application at American Application at American Application at 4. 17

21 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 18 Second, contrary to American s assertion that Delta opposed opening up Haneda in the U.S.-Japan Agreement, Delta was in favor of strengthening the deal into a full open skies agreement between the U.S. and Japan and gaining unrestricted access to Haneda Airport to create greater opportunities for U.S. travelers. 52 Delta s primary opposition was to more limited access and an interim deal. Of course, American was not being altruistic in its support of the limited Haneda expansion, as this would allow American/JAL to solidify its foothold at Haneda Airport at the expense of other unaligned carriers, such as Delta, for the foreseeable future. In any event, as American is aware from other air service negotiations and agreements, the Department for good reason does not accord any decisional weight or relevance to air carrier press releases, photos or negotiating positions in future route, slot, or frequency allocation proceedings. IV. United s Application Ignores Its Partnership with the Largest Japanese Airline and Fails to Make an Effective Public Interest Argument for Its Proposals A. The Department Should Not Further Strengthen United/ANA s Dominance United s Application is most notable for what it omits. Despite United s metal-neutral joint venture with ANA, which gives it control of 46% of Haneda departures, United conveniently neglects to mention its omnipresent Japanese partner, ANA, even once in the text of its Application. 53 The United/ANA alliance now has entrenched and dominant positions at both Haneda and Narita. United/ANA will continue to dominate at Haneda even without a single award to United in this proceeding. United s claims about enhanc[ing] U.S. flag competition at 52 DELTA AIR LINES, INC., LETTER TO PAUL GRETCH at 1 (June 17, 2015) (DOT-OST ) ( Delta remains strongly opposed to any further changes to the Haneda operating rules unless and until Japan is willing to open the airport under normal open skies terms and allow Delta to relocate its Tokyo hub operation to the preferred airport )(emphasis added). 53 United Application. 18

22 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 19 a highly restricted airport 54 disregards the realities of competition at Haneda, which is centered on metal-neutral joint-venture relationships, not just U.S. carriers. United s Application for two daytime slot pairs at Haneda is an effort to further monopolize its position at Haneda Airport. If the Department were to grant United s full request, United/ANA would control half the U.S.-Haneda daytime slot pairs available to both countries under the U.S.-Japan Agreement. United/ANA just received two new slot pairs from the Government of Japan, so the joint venture has the resources to serve both of United s proposed cities without any additional slot pairs in this proceeding, which would allow it to provide strong geographic coverage of the country while still maintaining equal competitive positioning. Exhibit DL-A-304. United should not receive even one, let alone two, daytime slot pairs because even a single daytime slot pair award to United would further imbalance the market in United/ANA s favor and hinder consumer choice and competition. B. Delta s LAX Proposal is Stronger than United s SFO Proposal and Would Benefit a Greater Number of U.S. Travelers Allocating a daytime slot pair for United s proposed SFO-HND service provides few, if any, public benefits when compared to Delta s LAX-HND service. In addition to the negative competitive impacts of United s Application, Delta s LAX proposal is a superior West Coast Haneda gateway in comparison to United s SFO proposal because Delta provides: (1) service to a larger O&D market for Japan and in general; and (2) greater capacity. LAX is a significantly larger market than San Francisco in general, and for Tokyo O&D passengers specifically. The LAX O&D market is nearly twice as large as SFO s which makes Los Angeles a more beneficial gateway for U.S. travelers United Application at 4. 19

23 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 20 In addition, United s SFO proposal does nothing to advance geographic diversity of Haneda gateways. American/JAL already operates a route between San Francisco and Haneda. Exhibit DL-A-206. Instead of awarding additional service from the same U.S. gateway, the Department has the opportunity to award the valuable daytime slot pair to a new and non-west Coast gateway such as Minneapolis and Atlanta cities that would serve larger regions and benefit a greater number of U.S. travelers than San Francisco. Exhibit DL-A-206. Delta s LAX proposal provides better connecting service than United s SFO. Delta s LAX proposal provides connecting service for 95% of the West Coast demand. 56 United admits that its SFO gateway only allowed Haneda access for several cities. 57 The other West Coast gateways such as Delta s LAX gateway already provide excellent connecting service to Haneda, and United s service at SFO is therefore duplicative. To inflate its connecting flight numbers, United even suggests without support that its service enabled Los Angeles to access Tokyo Haneda via San Francisco 58 In fact, Delta was serving Haneda via LAX years before United began its SFO service, so Los Angeles passengers did not require United s connecting service at SFO to access Haneda. The reality of traffic numbers simply does not support United s assertions, where only 4% of the flight is filled by LAX O&D passengers. 59 Finally, Delta s LAX proposal also provides for greater capacity than United s SFO proposal. Delta has proposed to use a larger aircraft offering 39 additional seats than United per flight. Exhibit DL-A-301. Over the course of the year, Delta would offer 16% more seats from 55 Delta Application at Exhibit DL Delta Application at Exhibit DL United Application at United Application at MIDT last twelve month ending Mar

24 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 21 LAX to Haneda. Exhibit DL-A-301. Delta s Proposed Service from MSP and ATL would also provide greater capacity than United s SFO proposal. Exhibit DL-A-301. In short, Delta s Proposed Service is superior to United s by providing greater capacity, geographic diversity, and opening up new U.S. gateways to Haneda. C. United s EWR-HND Service Proposal is Duplicative and Not in the Public Interest As the largest carrier in the U.S.-Japan market and the NY-Japan market, United/ANA s EWR-Haneda proposal is not in the public interest. It would cement United s control of Haneda and unnecessarily expand its already-large lead in the NYC-Tokyo market. Exhibit DL-A-302. As expected, Japan recently allocated to United/ANA the two new slot pairs (one daytime and one nighttime) under the U.S.-Japan Agreement, 60 one of which ANA will likely use to provide service to New York. Exhibit DL-A-304. United, by virtue of its immunized joint venture with ANA, will directly benefit from this slot pair regardless of the outcome of this proceeding, making its EWR proposal duplicative and unnecessary. Exhibit DL-A-304. Unlike Delta, which legitimately requires three daytime slot pairs to effectively compete with the immunized joint ventures, United is already at a significant advantage through its joint venture with ANA and should not benefit any further from this proceeding. Exhibit DL-A-109. While the competition argument alone should be sufficient to determine that United EWR proposal provides no public benefit, additionally, Delta s service proposals provide more capacity. From both MSP and ATL, Delta would offer U.S. travelers 9% more seats to Haneda than United. 60 ANA scores new daytime US flights at Haneda Airport, NIKKEI ASIAN REVIEW (April 27, 2016), available at 21

25 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 22 V. Hawaiian s Proposal Squanders Valuable Daytime Slot and Provides No Additional Public Benefits for U.S. Travelers or the U.S. Economy As demonstrated below, Hawaiian should not receive daytime slots and should receive at most one nighttime slot pair 61 given: (1) its HNL-HND flight s current success in nighttime channels and failure to demonstrate why daytime slots are needed for its service; (2) its reliance on its own poor on-time performance as the justification for needing a shift in schedule of less than two hours for a daytime slot; (3) its inferior proposed gateways due to their circuity and lack of connectivity; (4) limited benefits to U.S. travelers; and (5) its failure to demonstrate any value of its proposal to split a daytime slot pair for HNL and KOA service. The public interest benefits of expanding geographic diversity to cover the entirety of mainland U.S. which only Delta s Proposed Service does strongly support an award to Delta. The current Haneda flights are skewed unreasonably in Hawaii s favor and the Department has the opportunity to correct this imbalance in this proceeding. Daytime service to the U.S. mainland with a population of 315 million provides dramatically greater benefits than daytime service to a market that is 95 percent Japanese travelers in a state of less than 1.5 million. Despite this, Hawaii has significantly more access to overall Tokyo Haneda capacity than the U.S. mainland with three daily flights to Haneda while the U.S. mainland only has four Haneda flights. Exhibit DL-A Hawaiian has applied for two slot pairs in this proceeding: (1) one daytime slot pair for HNL-HND service; and (2) a second slot pair for split HNL/KOA-HND service that it prefers in the daytime but would accept as a nighttime slot pair as a last priority. 22

26 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 23 A. Hawaiian s HNL-HND Proposal is Equally Effective at Night, Offers Nothing New, and Does Not Benefit the U.S. Economy As an initial matter, Hawaiian is the only carrier that has applied for the nighttime slot pair, indicating Hawaiian s confidence in its continuing ability to succeed in this market. 62 Exhibit DL-A-404. Awarding Hawaiian one of the scarce daytime slots would be a waste of a valuable asset for nominal, if any, benefits. When maximizing the benefits of scarce resources, the Department should reserve daytime slot pairs for their highest value providing the greatest number of U.S. passengers access to downtown Tokyo. Exhibit DL-A-101. As Delta predicted in its Application, Hawaiian s plan for daytime service shifts its HNL-HND slot pair by two and a half hours from its nighttime service, departing Haneda at 21:30, rather than 23:55. Exhibit DL-A-402. Based on Hawaiian s own data, these flights are already near capacity, 63 and no marginal benefit, economic or otherwise, will come to the U.S. public by moving this flight into daytime channels by a shift of a few hours. B. Hawaiian s Proposed Gateways Are Inferior to Delta s 1. Hawaiian s HNL-HND Gateway Cannot Compare to Delta s Geographically Diverse Gateways Geographically, Honolulu is an inefficient route to Tokyo for the vast majority of U.S. travelers based on its high circuity. Exhibit DL-A-405. From the mainland U.S., flying through Hawaii would be add almost a thousand miles and multiple hours to the trip. Exhibit DL-A Hawaiian has filed a motion to seek an immediate award of the nighttime slot pair. Contrary to Hawaiian s statement that its motion is uncontested, while other carriers have not applied for nighttime authority, it is premature for the Department to award the nighttime slot pair to Hawaiian at this juncture prior to evaluating the totality of the applications in the context of available slot pairs. Delta will articulate its response to Hawaiian s Application pursuant to the Department s Rules of Practice. HAWAIIAN AIRLINES, MOTION OF HAWAIIAN FOR IMMEDIATE GRANT OF UNCONTESTED APPLICATION (May 4, 2016) (Docket-DOT-OST ). 63 Hawaiian repeatedly cites its high load factors for nighttime HNL-HND service, which surpass 91%. See Hawaiian Application at 22, Exhibit HA-203. And, in fact, Hawaiian is retrofitting its aircraft so that it provides 16 fewer seats on this route. See Exhibit HA-209 at fn

27 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 24 Even if a traveler were willing to spend this additional travel time flying to Tokyo via HNL, they might not have connecting options, because Hawaiian has such limited connectivity to the U.S. mainland, with service to only eleven mainland U.S. cities, six of which are in California, and only one non-western U.S. city. 64 In addition, Delta s proposed gateways to the U.S. mainland will serve a population of over 315 million U.S. residents, over 200 times larger than Hawaiian s small population of 1.5 million. Besides being geographically inferior for the large majority of the U.S. population, Hawaiian s flight also proposes smaller capacity than Delta s Proposed Service. 65 Hawaiian offers 278 seats to Haneda where Delta offers 291 seats totaling 4,745 additional U.S.-Haneda seats every year or 4.6% more seats. Exhibit DL-A Hawaiian s Daytime KOA-HND Service Would Provide Even Fewer Benefits Hawaiian s HNL-HND service cannot justify itself as benefitting any U.S. passengers, and its request for a second daytime slot pair split between HNL and KOA is even more unpersuasive. The Department s Instituting Order states that promoting geographic diversity among U.S. gateways is an important factor to consider in this proceeding. 66 Hawaiian proposes to use a majority of the two daytime slot pairs it is requesting for the same U.S. gateway Honolulu and seems to thinks that this duplicative request along with three flights a week to Kona can somehow satisfy the diversity component. The Department can maximize the value of the available frequencies only by awarding to Delta, to benefit the greatest number of 64 Hawaiian Airlines, North America, May 1, 2016, 65 See Hawaiian Application at Instituting Order at 2. 24

28 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 25 U.S. travelers not by a duplicative award to Honolulu and a partial award to Kona, a gateway benefitting only Japanese leisure passengers. Hawaiian previously had applied for KOA-HND service, and the Department rejected this route for its dearth of benefits for U.S. travelers. 67 In that proceeding, the Department specifically found that Hawaiian s KOA service only benefits Japanese-originating leisure passengers, minimizing the benefits of Haneda s downtown location for the majority of U.S. travelers. 68 Like its last failed attempt for KOA service, Hawaiian has offered no new benefits to it proposed service. The Department should reject Hawaiian s KOA proposal, as it did before. Hawaiian cannot make a compelling argument for KOA based on connecting service because, by its own admission, KOA offers zero connecting flights to the U.S. mainland. 69 In fact, KOA barely offers any connecting service to anywhere. Hawaiian s exhibits show that only two airports will receive connecting service via KOA, and one of them is HNL, where travelers can easily connect for service to Haneda. 70 Additionally, Hawaiian itself offers significant connectivity between KOA and HNL, with more than 20 flights per day. 71 The short, noncircuitous HNL-KOA flight allows KOA to be easily accessible for travelers to HNL without getting its own slot pair to Haneda. Hawaiian has not adequately demonstrated superior public benefits from the use of a valuable daytime Haneda slot pair for this proposed route. Exhibits DL-A See DEPARTMENT OF TRANSPORTATION, ORDER , ORDER TO SHOW CAUSE, 9-10 (Mar. 27, 2015). 68 See id. ( 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. ) 69 Hawaiian Application at Exhibit HA 108 p.4 and HA-109 p Id. 71 HAWAIIAN AIRLINES, Flight Schedule, accessed May 1, 2016, available at 25

29 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 26 C. Hawaiian s Proposal Has Limited Benefits for U.S. Passengers The Department has stated that service from Haneda to Hawaii minimizes Haneda s advantages to U.S. travelers in general and U.S. business travelers in particular. 72 Unlike other U.S. mainland gateways, Hawaiian s service uniquely appeals to the Japanese market and not the general U.S. traveling public. Hawaiian does not hide this fact, and even offers an exhibit explaining that nearly all sales for service between Hawaii and Tokyo are Japanese Point of Sale 95% for HNL and 94% for Kona International Airport ( KOA ). 73 Therefore, any benefits to be gained by having a slightly earlier departure time from Haneda would go to Japanese-originating passengers, and not to U.S. travelers. Exhibit DL-A-403. Lacking any other credible argument of public benefit, Hawaiian suggests that guaranteed access to a monorail at Haneda airport is a public benefit great enough to warrant its allocation of 72 DEPARTMENT OF TRANSPORTATION, ORDER NO , ORDER TO SHOW CAUSE at 9-10 (March 27, 2015). 73 Hawaiian Application at Exhibit HA

30 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 27 a daytime slot pair. 74 Currently, Japanese tourists returning home following their Hawaiian vacation have over two hours after landing before the monorail stops for the night. Hawaiian claims that a possible delay beyond 45 minutes may cause passengers to miss the train, forcing them to take the bus. 75 Since this problem only occurs when Hawaiian offers significantly delayed service, Hawaiian can solve the problem on its own by providing on-time service into Haneda, without wasting a daytime slot pair. The Department should not reward Hawaiian s hypothetically-delayed flights with a valuable daytime slot pair. In short, the incremental benefit of mainly Japanese-originating traffic having the peace of mind that they will comfortably ride the monorail, rather than the bus, after their beach vacation cannot possibly compete with the public benefits of Delta s Proposed Service, which would provide hundreds of thousands of U.S. travelers from the East Coast, Midwest or the Southeast access to downtown Tokyo. D. Hawaiian s Mischaracterizes Delta s Position at Haneda and Distorts the Market to Appear Very Small Hawaiian s Application is based on significant mischaracterizations and misstatements, which undermine its proposal and actually support a case for a nighttime award: Like American, Hawaiian relies on hindsight to support its Application, citing to other carriers past unsuccessful routes in nighttime channels, which only demonstrates how essential daytime service is for mainland U.S. travelers and, by 74 Hawaiian Application at Hawaiian admits that passengers who miss the monorail, based on Hawaiian s delayed arrival into Haneda, could still take buses, which operate later schedules. See id. 27

31 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 28 comparison, how little nighttime service impacts flights from Hawaii. 76 Exhibit DL- A-404. Hawaiian erroneously compares Delta with American/JAL and United/ANA throughout its Application despite Delta not having a Japanese airline partner that would impact Delta s position at Haneda. 77 As discussed earlier in Section II-A, American and United, but not Delta, are uniquely advantaged in Haneda by virtue of their joint ventures with Japanese carriers. Hawaiian provides an exhibit 78 to boast about its HNL-HND flight s high load factors in comparison to U.S. mainland flights to Haneda. However, the higher load factors on the Narita flights from the U.S. mainland as compared to the nighttime flights to Haneda merely demonstrate that nighttime flights to Haneda from Honolulu are extremely effective and that daytime flights should be reserved for service to Haneda from the U.S. mainland. Exhibit DL-A-404. Hawaiian provides a chart 79 that distorts the market scope to make Hawaiian appear very small in U.S.-Japan market in comparison to all alliances, including SkyTeam. In reality, Delta competes has a much smaller seat share than Hawaiian would have the Department believe. Exhibit DL-A-406. In the Hawaii- Japan market, Hawaiian competes on equal footing with United/ANA and with Delta, and requires no additional awards to maintain that parity. Exhibit DL-A Hawaiian Application at See Hawaiian Application at (comparing Hawaiian and other non-aligned carriers to SkyTeam, Star and oneworld). 78 Hawaiian Application at Exhibit HA Hawaiian Application at 19, Exhibit HA

32 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 29 Finally, Hawaiian s attempt to show that its service is in high demand using combined U.S. and Japan Point of Sale data only demonstrates that it is Japanese not U.S. passengers that prefer Hawaiian s flight. 80 In actuality, when Hawaiian s data is converted into U.S. Point of Origin traffic, Delta s existing LAX service is far and away the most used by U.S. customers. In fact, Delta s LAX service served more U.S. passengers than the next three routes combined. Exhibit DL-A-407. VI. Conclusion Delta respectfully submits that its Application presents the strongest case for the highest and best use of the valuable daytime Haneda slot pairs. A full award of its Proposed Service is necessary to provide competitive balance in the U.S.-Japan market and maximize public benefits. No other carriers have demonstrated that they can provide the benefits to the U.S. traveling public that Delta can provide. Therefore, Delta requests that Department allocate Delta s Proposed Service before allocating the remaining slot pairs to American, United, or Hawaiian. Respectfully submitted, /s/ Kenneth P. Quinn Kenneth P. Quinn Amna Arshad Christopher K. Leuchten PILLSBURY WINTHROP SHAW PITTMAN, LLP 1200 Seventeenth Street, NW Washington, D.C (202) kquinn@pillsburylaw.com 80 Hawaiian Application at Exhibit HA

33 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 30 Counsel for DELTA AIR LINES, INC. May 5,

34 CERTIFICATE OF SERVICE I hereby certify that on May 5, 2016, a copy of the foregoing Consolidated Answer of Delta Air Lines, Inc. was served upon the following persons via Air Carrier American American American American American American Hawaiian Hawaiian Hawaiian United United United United United United FedEx UPS Atlas Air Polar Air Cargo DOT DOT DOT DOT FAA State Department LAX MSP ATL Japanese Ambassador Airline Info Name Howard Kass Robert Wirick John B. Williams Jonathan Hacker Benjamin Bradshaw Burden Walker Parker Erkmann Julia Renehan Aaron Alter Dan Weiss Thomas Bolling Abby L. Bried Marc Warren Gerald Murphy Steven Seiden Nancy Sparks Anita Mosner Russell Pommer Kevin Montgomery Brian Hedberg Robert Finamore Brett Kruger Ben Taylor John Duncan Thomas Engle Deborah Flint Jeff Hamiel Miguel Southwell Amb. Kenichiro Sasae Airline Info Address howard.kass@aa.com robert.wirick@aa.com john.b.williams@aa.com jhacker@omm.com bbradshaw@omm.com bwalker@omm.com perkmann@cooley.com jrenehan@cooley.com aaron.alter@hawaiianair.com dan.weiss@united.com thomas.bolling@united.com abby.bried@united.com mwarren@crowell.com gmurphy@crowell.com sseiden@crowell.com nssparks@fedex.com anita.mosner@hklaw.com rpommer@atlasair.com kevin.montgomery@polaraircargo.com brian.hedberg@dot.gov robert.finamore@dot.gov brett.kruger@dot.gov benjamin.taylor@dot.gov john.s.duncan@faa.gov englets@state.gov dflint@lawa.org jeff.hamiel@mspmac.org miguel.southwell@atlanta-airport.com via U.S. Mail info@airlineinfo.com /s/ Christopher K. Leuchten Christopher K. Leuchten PILLSBURY WINTHROP SHAW PITTMAN, LLP

35 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 32 CONSOLIDATED ANSWER OF DELTA AIR LINES, INC. U.S.-HANEDA TABLE OF EXHIBITS Exhibit Number Exhibit DL-A-101 Exhibit DL-A-102 Exhibit DL-A-103 Exhibit DL-A-104 Exhibit DL-A-105 Exhibit DL-A-106 Exhibit DL-A-107 Exhibit DL-A-108 Exhibit DL-A-109 Exhibit DL-A-110 Exhibit DL-A-201 Exhibit DL-A-202 Exhibit DL-A-203 Exhibit DL-A-204 Exhibit DL-A-205 Exhibit DL-A-206 Exhibit DL-A-207 Exhibit DL-A-208 Exhibit DL-A-209 Exhibit Description Table of Contents Competitive Landscape Delta s Proposed Service Provides Superior Public Benefits This Proceeding Should Focus on Increasing Haneda Access to the U.S. Mainland While Taking into Account Immunized Joint Venture Agreements Hawaii has Access to Significantly More Overall Tokyo Haneda Capacity Per Capita Than the U.S. Mainland As Part of their Antitrust Immunized Joint Venture, American/JAL Already Enjoy the Following Benefits When Competing for US48 to Tokyo Traffic United/ANA Joint Venture Operates as a Unified Carrier American/JAL Joint Venture Operates as a Unified Carrier American/JAL s US48 to TYO Network Larger than Delta s United/ANA s US48 to TYO Network Much Larger than Delta s To Avoid a Haneda Duopoly by United/ANA & American/JAL Joint Ventures, Delta Must Secure 3 Slots Delta Seeking Slot Parity with United/ANA and American/JAL Joint Ventures Delta Needs 3 Slot Pairs to Provide Meaningful Competition to American/JAL and United/ANA Joint Ventures American s Application is Based on Fundamental Flaws Delta Is The Smallest Carrier Between US48-TYO American Claims that American is Smaller Than Delta; American s Claim is Simply False Delta Considerably Smaller than American/JAL in the US48 JP Market, Where HND Access Actually Matters American Suggests that Delta Has a Collarhold on U.S.-Japan Traffic, In Fact American/JAL and United/ANA Control 78% of the US48-Japan Market American Falsely Claims Its Northeast Asia Presence is Half of Delta s; American/JAL is Larger than Delta to Northeast Asia American/JAL Can Already Serve DFW-HND and LAX-HND With Its 2 HND Daylight Slot Pairs Delta s Proposal Offers More Capacity Into the Market than American American Incorrectly Claims that No Other Proposal Can Cover LAX, Offer Superior East Coast Connectivity and Provide Competitive Balance American Overstating Strength of DFW Hub Connectivity by Including Connections to Mexico and Canada (Proceeding is About Maximizing U.S.-HND Service) - Summer 32

36 Consolidated Answer of Delta Air Lines Inc. Docket OST Page 33 Exhibit Number Exhibit DL-A-210 Exhibit DL-A-211 Exhibit DL-A-212 Exhibit DL-A-213 Exhibit DL-A-214 Exhibit DL-A-215 Exhibit DL-A-216 Exhibit DL-A-301 Exhibit DL-A-302 Exhibit DL-A-303 Exhibit DL-A-304 Exhibit DL-A-401 Exhibit DL-A-402 Exhibit DL-A-403 Exhibit DL-A-404 Exhibit DL-A-405 Exhibit DL-A-406 Exhibit DL-A-407 Exhibit DL-A-408 Exhibit Description American Over-Stating Strength of DFW Hub Connectivity by Including Connections to Mexico and Canada (Proceeding is About Maximizing U.S.-HND Service) Winter Delta s MSP-HND Offers Better Path for Connecting Traffic vs. American/JAL s Proposed DFW-HND Route Delta s MSP-HND Service Provides Unique Connectivity as the Only Midwest Application by a U.S. Carrier Delta s ATL-HND Offers Better Path for Connecting Traffic vs. American/JAL s Proposed DFW-HND Route Delta s ATL-NRT Service Has More One-stop U.S. Connections Compared to DFW When Adjusted for Number of Frequencies American Wrongly Boasts that DFW Offers More Coverage; When Adjusted to Show Just U.S. Cities, it s Very Similar American Wrongly Claims Its Partnerships Lag Behind, However, American s Partnerships are Extensive United s Application Ignores its Partnership With the Largest Japanese Airline and Fails to Make an Effective Public Interest Argument for its Proposals Delta s Proposal Offers More Capacity Into the Market than United United/ANA Already the Largest Carrier in NYC-TYO Delta s MSP-HND offers better path for connecting traffic vs. United s Proposed EWR-HND application United/ANA Can Already Serve SFO-HND and NYC-HND With Its 4 HND Slot Pairs Hawaiian s Proposal Squanders Valuable Daytime Slot and Provides No Additional Benefits to U.S. Travelers or the U.S. Economy Delta s Proposal Offers More Capacity Into the Market than Hawaiian Daylight HND Slots Provide Relatively Little Benefit to Hawaiian s Leisure Oriented, Japan Point of Sale Service Only Primary Benefit of HNL-HND Daylight Service Is That JP Tourists can Have 2 Hours & 30 Minutes More Beach Time By Hawaiian s own admission, HNL-HND Nighttime Service has been an unequivocal success Why Change Timings? Geographically, HNL is a Poor Connection Point for the Vast Majority of the U.S. Population Hawaiian Distorting Market Scope To Appear Very Small Why Use a U.S. Route Authority To Benefit Japanese Consumers? Late Night Arrivals in Long-Haul Markets Drive Unsustainably Poor Demand 33

37 Table of Contents DL-A-101 through DL-A-110 DL-A-201 through DL-A-216 DL-A-301 through DL-A-304 DL-A-401 through DL-A-408 Competitive Landscape Delta s Proposed Service Provides Superior Public Benefits American s Application is Flawed and Inferior to Delta s United s Application Ignores its Partnership With the Largest Japanese Airline and Fails to Make an Effective Public Interest Argument for its Proposals Hawaiian s Proposal Squanders Valuable Daytime Slot and Provides No Additional Public Benefits for U.S. Travelers or the U.S. Economy

38 Competitive Landscape Delta s Proposed Service Provides Superior Public Benefits

39 This Proceeding Should Focus on Increasing Haneda Access to the U.S. Mainland While Taking into Account Immunized Joint Venture Agreements Exhibit DL-A-101 Page 1 of 1 1 Haneda daylight access should be about providing the greatest number of U.S. residents with access to Tokyo s preferred airport The lower 48 U.S. states have a combined population of ~315 million. The state of Hawaii has a population of 1.5 million. Hawaii has a disproportionate amount of Tokyo service (and particularly Tokyo Haneda service) relative to its overall population As Hawaiian states in its application, HNL-Japan flights consist almost entirely of Japan Point of Sale customers, which while beneficial for the Hawaiian economy, does little in terms of providing U.S. residents with convenient access to Haneda This proceeding should focus on the competitive balance between carriers that compete for Mainland U.S. to Tokyo traffic, and should provide access to the greatest number of U.S. residents across a wide variety of destinations 2 As a result of their ATI Joint Venture agreements, American/JAL and United/ANA should be treated as unified entities from a route planning, revenue management, sales, and general business perspective during these Haneda route proceedings The scope of this proceeding should center around existing U.S. Mainland to Tokyo capacity, inclusive of ATI JV partnerships

40 Hawaii has Access to Significantly More Overall Tokyo Haneda Capacity Per Capita Than the U.S. Mainland Exhibit DL-A-102 Page 1 of 1 Legend = 200,000 people Hawaii U.S. Lower 48 States Hawaii Population: 1.5 million U.S. 48 Population: 315+ million Hawaii to Haneda (daily flights): 3x U.S. 48 to Haneda (daily flights): 4x One long haul Haneda flight for every ~78,750,000 residents One long haul Haneda flight for every ~500,000 residents Source: U.S. Census data; Diio/Innovata schedule data from August 2016

41 As Part of their Antitrust Immunized Joint Venture, American/JAL Already Enjoy the Following Benefits When Competing for US48 to Tokyo Traffic: Exhibit DL-A-103 Page 1 of 1 Alignment of schedules Expanded codesharing [and] fare alignment between the two airlines Co-location [of terminals] at Chicago [and general] facility co-locations Online booking capability and check-in regardless of which airline is being flown Aligned operational policies and procedures Coordinated pricing for travel agencies and corporations [Shared] best practices Sales forces [that] can conduct activities in cooperation increasing opportunities for sales Operational efficiencies gained from co-locations at airports, offices, joint lounge operations expected to make both airlines stronger Awarding additional Haneda daylight slot pairs to American/JAL beyond their existing 2 slot holdings will result in less overall customer choice in the US48 to Tokyo market Source: aa.com; American Airlines and Japan Airlines Announce Joint Business Benefits for Trans-Pacific and MLIT

42 United/ANA Joint Venture Operates as a Unified Carrier Exhibit DL-A-104 Page 1 of 1 The immunized JV between United & ANA effectively makes them one carrier for Transpacific flights Haneda slot allocation should account for this collaborative relationship I ll use an example of ANA as to why joint ventures are important for us. the joint venture has allowed us to work together with ANA to make Tokyo a great connecting hub we sat with ANA and we said look at this great opportunity [from Tokyo] to Jakarta, look at this great opportunity [from Tokyo] to Kuala Lumpur Tokyo for us is about working with ANA and being able to share travel trends and information with them so they feel good about retiming their flights. UA VP of Network Planning, Brian Znotins The strength for us in Tokyo is that if you re going to Tokyo itself, we can offer you dozens of flights either on us or ANA nonstops or if you re going beyond Tokyo we can give you a great connecting portfolio We think our two major U.S. competitors can t even come close to that UA VP of Network Planning, Brian Znotins It s interesting to note that today we connect more passengers to ANA in Tokyo than we connected to ourselves at the time of the merger with all the beyond-tokyo flying we had... the ANA joint venture has really enabled that. UA VP of Network Planning, Brian Znotins ANA hopes to take advantage of new [HND] takeoff and landing slots details of new routes are expected to be set next month after talks with United Airlines ANA President Osamu Shinobe, Japan Times 3/4/16 Source: Airways News Interview with Brian Znotins (3/28/16) & Japan Times Interview with Osamu Shinobe (3/4/16)

43 American/JAL Joint Venture Operates as a Unified Carrier Exhibit DL-A-105 Page 1 of 1 The immunized JV between American & JAL effectively makes them one carrier Haneda slot allocation should account for this collaborative relationship The U.S. DOT granted antitrust immunity to American Airlines Inc. and Japan Airlines International Co. on Wednesday so they can cooperate more deeply on their U.S.-Japan service American and JAL plan a joint venture to share revenue, coordinate schedules, set fares and otherwise strengthen cooperation - Dallas Morning News 11/10/10 once fierce competitors, American and JAL last fall received antitrust immunity to set prices and share revenue on flights between the U.S. and Japan... American and JAL will divvy up revenue on 10 routes between the U.S. and Japan that currently generate about $1.5 billion annually Chicago Tribune 1/12/11 On behalf of American's 100,000 employees, we welcome our joint business partner, Japan Airlines, to our great hub in Dallas/Fort Worth Japan Airlines is an honorable partner and a great friend to American. AA CMO, Andrew Nocella, PR Newswire 8/31/15 Source: PR Newswire AA/JL Joint Press Release 8/31/15

44 American/JAL s US48 to TYO Network Larger than Delta s Exhibit DL-A-106 Page 1 of 1 American/JAL JV Coverage of US48-TYO Delta Coverage of US48-TYO SEA ORD JFK BOS PDX MSP DTW JFK SFO LAX SAN DFW LAX ATL JV 24K # of weekly US48-TYO seats (one-way) 16K # of weekly US48-TYO seats (one-way) 13 # of daily US48-TYO frequencies 8 # of daily US48-TYO frequencies 2 # of HND slots already held before DOT ruling 0 # of HND slots already held before DOT ruling American/JAL JV has 1.5 times as many daily US48-TYO seats as Delta Source: Diio/Innovata Schedule Data, September 2016

45 United/ANA s US48 to TYO Network Much Larger than Delta s Exhibit DL-A-107 Page 1 of 1 United/ANA JV Coverage of US48-TYO Delta Coverage of US48-TYO SEA SFO SJC DEN ORD IAD JFK EWR SEA PDX MSP DTW JFK LAX LAX ATL JV IAH 33K # of weekly US48-TYO seats (one-way) 16K # of weekly US48-TYO seats (one-way) 19 # of daily US48-TYO frequencies 8 # of daily US48-TYO frequencies 4 # of HND slots already held before DOT ruling 0 # of HND slots already held before DOT ruling United/ANA JV has over twice as many daily US48-TYO seats as Delta Source: Diio/Innovata Schedule Data, September 2016

46 To Avoid a Haneda Duopoly by United/ANA & American/JAL Joint Ventures, Delta Must Secure 3 Slots Exhibit DL-A-108 Page 1 of 1 In order to compete with these immunized joint ventures, Delta must secure enough slots to be a relevant competitor Given that United/ANA already have 4 HND slots and American/JAL have 2 HND slots, Delta is at a disadvantage before the route cases even began U.S. Haneda Slot Holdings Prior to DOT Route Case JV JV

47 Delta Seeking Slot Parity with United/ANA and American/JAL Joint Ventures Exhibit DL-A-109 Page 1 of 1 Even with 3 HND daylight slots, Delta remains a third tier player behind United/ANA & American/JAL Joint Ventures If Delta were to be awarded just 2 HND daylight slots, the competitive gap would widen even further, resulting in fewer options for U.S. consumers (POTENTIAL) U.S. Haneda Slot Holdings Post DOT Route Case UA/ANA JV AA/JAL JV Delta UA/ANA JV AA/JAL JV Delta UA/ANA JV AA/JAL JV Delta ANA/UA JV AA/JAL JV Delta Hawaiian awarded nighttime slot Status: Competition maintained (U.S. Mainland to HND) Hawaiian awarded daytime slot Hawaiian awarded nighttime slot Hawaiian awarded daytime slot Status: Status: Status: Competition reduced (U.S. Mainland to HND) Competition maintained (U.S. Mainland to HND) Competition reduced (U.S. Mainland to HND)

48 Delta Needs 3 Slot Pairs to Provide Meaningful Competition to American/JAL and United/ANA Joint Ventures Exhibit DL-A-110 Page 1 of 1 Awarding Delta less than 3 HND slots results in significant disadvantage when compared to the multiple flights & geographic coverage offered by both American/JAL & United/ANA JVs Potential United/ANA & American/JAL JV Coverage of US48-HND Potential Delta Coverage of US48-HND MSP NYC SFO 2 LAX LAX DFW Versus MSP SFO ORD NYC 3 LAX LAX ATL

49 American s Application is Flawed and Inferior to Delta s

50 Delta Is The Smallest Carrier Between US48-TYO Exhibit DL-A-201 Page 1 of 1 American claimed they were the smallest carrier to Tokyo in their application - that s simply false American/JAL is 33% of the market, Delta is 19% DL AA/JAL UA/ANA US48 Tokyo Routes By Carrier Dest HND % of HND NRT % of NRT Total % of Total ATL 7 7 DTW 7 7 JFK 6 6 LAX MSP 7 7 PDX 5 5 SEA 7 7 Total DL 7 20% 46 19% 53 19% BOS 7 7 DFW JFK LAX ORD SAN 7 7 SFO 7 7 Total AA/JAL 14 40% 77 32% 91 33% DEN 7 7 EWR 7 7 IAD IAH JFK LAX ORD SEA 7 7 SFO SJC 7 7 Total UA/ANA 14 40% % % Totals Delta Just 19% of the Routes Between the US48 and Tokyo 3 HND Slots Maintains Balance Source: Diio/Innovata September 2016

51 American Claims that American is Smaller Than Delta; American s Claim is Simply False Exhibit DL-A-202 Page 1 of 1 American s graph also conveniently stopped in 2014, when using seats through 2016, Delta is considerably smaller in the US48 Japan market American s graph used in their application included capacity from Hawaii-JP which is not relevant for this proceeding 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 US48 Japan Seats By Carrier AA+JL UA+NH DL Source: Diio/Innovata Without Haneda Access, DL Will Not Be Able to Compete Against the Two ATI JVs

52 Delta Considerably Smaller than American/JAL in the US48 JP Market, Where HND Access Actually Matters Exhibit DL-A-203 Page 1 of 1 American/JAL and United/ANA have been operating under a joint venture or joint business agreement since 2011 Delta is now 34% smaller than the average of its two JV competitors Since 2011, American/JAL have grown their seats by 57% Since 2011, United/ANA have grown their seats by 34% US48 Japan Seats By Carrier American/ JAL United/ ANA Delta % Delta smaller than Average of United + ANA and American + JAL ,617,932 2,762,368 2,344,536 7% ,705,677 2,947,705 2,286,599-2% ,789,817 3,333,610 2,260,670-12% ,681,268 3,606,405 2,056,961-22% ,070,380 3,667,602 1,768,612-34% ,534,214 3,692,090 1,707,941-34% Source: Diio/Innovata In 2016, Delta Will Be 34% Smaller Than the Average of AA + JAL and UA + ANA

53 American Suggests that Delta Has a Collarhold on U.S.-Japan Traffic, In Fact American/JAL and United/ANA Control 78% of the US48-Japan Market Exhibit DL-A-204 Page 1 of 1 American s graph also conveniently stopped in 2014, when using seats through 2016, Delta is considerably smaller in the US48 Japan market American s graph used in their application included capacity from Hawaii-JP which is not relevant for this proceeding US48 Japan Seats By Carrier 4,000,000 3,500,000 % Seats 47% 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 32% 78% 22% 500,000 0 AA+JL UA+NH DL Source: Diio/Innovata Awarding 3 HND Slots to Delta Will Maintain Competitive Balance in US48 Japan Market

54 American Falsely Claims Its Northeast Asia Presence is Half of Delta s, American/JAL Is Larger than Delta to Northeast Asia Exhibit DL-A-205 Page 1 of 1 American did not include their ATI/JV partner JAL in size comparisons vs. Delta American also included Hawaii-Japan frequencies but did not include HKG Once adjusting for these two omissions, it shows Delta s disadvantage relative to both American/JAL and United/ANA Delta is the smallest carrier Northeast Asia Market of Delta vs. American/JAL and United/ANA Weekly Frequencies Number of Routes AA/JAL DL UA/ANA AA/JAL DL UA/ANA Tokyo (NRT/HND) Shanghai (PVG/SHA) Beijing (PEK) Hong Kong (HKG) Seoul (ICN/GMP) Osaka (KIX/ITM) Nagoya (NGO) Hokkaido (CTS) Northeast Asia Total DL's % of AA+JAL or UA+ANA 79% 52% 100% 67% Source: Diio Mi September 2016 American/JAL and United/ANA Both Considerably Larger than Delta to Northeast Asia

55 American/JAL Can Already Serve DFW-HND and LAX-HND With Its 2 HND Daylight Slot Pairs Exhibit DL-A-206 Page 1 of 1 American/JAL s SFO-HND service does not provide the same consumer benefit as its proposed LAX/DFW flights due to limited AA domestic connectivity available behind SFO American/JAL can maximize overall consumer benefit by shifting Joint Venture SFO-HND service to DFW-HND This potential solution would achieve goals of maintaining competition between American/JAL JV & Delta, while also unlocking Haneda access in under-served Midwest and Southeastern regions via Delta s ATL and MSP service Current U.S. Domestic Connections from SFO (American/JAL JV) Potential Re-allocation JFK JFK ORD PHL ORD PHL SFO CLT SFO CLT PHX LAX DFW American/JAL JV already has 2 HND daylight slots MIA MIA PHX LAX DFW Use existing American/JAL JV slots for LAX & DFW to maximize benefit while preserving competition MIA

56 Delta's Proposal Offers More Capacity Into the Market than American Exhibit DL-A-207 Page 1 of 1 Delta s proposal with 777 fleeting offers 28% more seats than American s 787 and 18% more seats than American s 777, maximizing public access to Haneda 228 Seats 247 Seats 291 Seats Equipment AA: AA: DL: Proposed Routes (LAX-HND) (DFW-HND) (LAX-HND) (MSP-HND) (ATL-HND) Seats 166,440 seats (annually) 180,310 seats (annually) 212,430 seats (annually per route) 637,290 seats total (annually) Delta s Proposal Will Offer More Seats on a Per-Route Basis Than American s Source: Delta and American Airlines HND Applications

57 American Incorrectly Claims that No Other Proposal Can Cover LAX, Offer Superior East Coast Connectivity, and Provide Competitive Balance Exhibit DL-A-208 Page 1 of 1 American claims that no other Haneda proposal can do the following: 1. Ensure that the LA community's demand for travel to Tokyo is satisfied with more convenient service to Haneda FALSE: Delta s LAX-HND proposal ensures the LA community even more Haneda access by offering 28% more seats on its 777 versus American s Create a central U.S. gateway to Haneda with superior connectivity to all points east of the Rocky Mountains FALSE: exists Delta s MSP-HND and ATL-HND not only provide far superior connecting paths for Haneda-US customers than American s DFW (defined in terms of path circuity), Delta also serves more total destinations from ATL than American does from DFW 3. Elevate competition on U.S. JP routes between oneworld, SkyTeam & Star Source: Delta and American Airlines HND Applications FALSE: Delta s HND application will help even the strong competitive imbalance that as a result of United/ANA and American/JAL US-Japan Joint Ventures

58 American Over Stating Strength of DFW Hub Connectivity by Including Connections to Mexico and Canada (Proceeding is About Maximizing U.S.-HND Service) Exhibit DL-A-209 Page 1 of 1 93 U.S. 93 to U.S. Cities Source: American Airlines HND Application

59 American Over Stating Strength of DFW Hub Connectivity by Including Connections to Mexico and Canada (Proceeding is About Maximizing U.S.-HND Service) Exhibit DL-A-210 Page 1 of 1 74 U.S. 74 to U.S. Cities Source: American Airlines HND Application

60 Delta s MSP-HND Offers Better Path for Connecting Traffic vs. American/JAL s Proposed DFW-HND Route Exhibit DL-A-211 Page 1 of PDEW (84% of E. Coast Demand) Top 20 U.S. East Coast/Central TYO Markets Rank City TYO PDEW via MSP via DFW 1 NYC 508 3% 16% 2 BOS 159 6% 19% 3 ORD 122 0% 15% 4 WAS 86 2% 13% 5 MCO 81 0% 2% 6 IAH 58 5% 0% 7 DTW 58 1% 16% 8 ATL 49 0% 5% 9 DFW 46 6% 0% 10 CMH 32 1% 12% 11 MIA 26 0% 2% 12 MSP 24 0% 22% 13 BNA 21 0% 6% 14 PHL 18 3% 14% 15 IND 18 0% 11% 16 AUS 16 7% 1% 17 RDU 14 0% 9% 18 CVG 12 0% 11% 19 CLT 11 0% 7% 20 PIT 10 1% 14% Shorter 17 3 Equal PDEW Longer 3 17 Cxr Proposal Better Path for MSP-HND DFW-HND Top 20 (84% Dmd.) 120 PDEW 1369 PDEW Source: MIDT LTM Mar 16; path circuity calculated by comparing the great circle distance of nonstop XXX-HND to XXX-MSP-HND and XXX-DFW-HND to determine best path DFW JV AUS MSP IAH MSP HND Circuity Legend DL has better path over MSP DL & AA/JAL have equal paths MSP vs. DFW AA/JAL has better path over DFW BOS NYC DTW PHL ORD PIT WAS IND CMH CVG RDU CLT BNA ATL MCO MIA Better connecting option than DFW

61 Delta s MSP-HND Service Provides Unique Connectivity as the Only Midwest Application by a U.S. Carrier Exhibit DL-A-212 Page 1 of 1 U.S. Midwest has 70M+ residents, Delta s MSP-HND currently the best positioned service for this large pool of demand Delta is the only carrier that has proposed service from Midwest to HND MSP U.S. Cities Served via MSP 114 U.S. Midwest 28 Cities Delta only Serves via MSP 86 Other U.S. Cities Category 1

62 Delta s ATL-HND Offers Better Path for Connecting Traffic vs. American/JAL s Proposed DFW-HND Route Exhibit DL-A-213 Page 1 of PDEW (84% of E. Coast Demand) Top 20 U.S. East Coast/Central TYO Markets Rank City TYO PDEW via ATL via DFW 1 NYC % 16% 2 BOS % 19% 3 ORD % 15% 4 WAS 86 9% 13% 5 MCO 81 0% 2% 6 IAH 58 13% 0% 7 DTW 58 Even 16% 16% 8 ATL 49 0% 5% 9 DFW 46 18% 0% 10 CMH 32 12% 13% 11 MIA 26 0% 2% 12 MSP 24 30% 22% 13 BNA 21 Even 6% 6% 14 PHL 18 11% 14% 15 IND 18 13% 11% 16 AUS 16 17% 1% 17 RDU 14 4% 9% 18 CVG 12 10% 11% 19 CLT 11 3% 7% 20 PIT 10 12% 14% Shorter PDEW Equal PDEW Longer 6 12 Cxr Proposal Better Path for ATL-HND DFW-HND Even ATL/DFW 79 PDEW Top 20 (84% Dmd.) 1369 PDEW Source: MIDT LTM Mar 16; path circuity calculated by comparing the great circle distance of nonstop XXX-HND to XXX-ATL-HND and XXX-DFW-HND to determine best path DFW JV AUS MSP IAH ATL DTW CMH ORD IND CVG BNA HND Circuity Legend DL has better path over ATL DL & AA/JAL have equal paths ATL vs. DFW AA/JAL has better path over DFW ATL BOS NYC PHL PIT WAS CLT RDU MCO MIA Better connecting option than DFW

63 Delta s ATL-NRT Service Has More One-stop U.S. Connections Compared to DFW When Adjusted for Number of Frequencies Exhibit DL-A-214 Page 1 of 1 American operates 2x day DFW-NRT flights and is an unfair comparison to the rest of the markets with a single operation When adjusting for that variance and limiting to just one-stop connections into the gateway, Delta s ATL eclipses American s DFW True O&D Passengers Per Daily Operation Between U.S. Gateways and NRT (Single Connect Behind Hub) AA-DFW DL-ATL UA-EWR American Delta United Source: U.S. DOT O&D Data, YE 3Q 2015 Delta s Proposal for Atlanta Offers More U.S. Access Than American s DFW

64 American Wrongly Boasts that DFW Offers More Coverage; When Adjusted to Show Just U.S. Cities, it s Very Similar Exhibit DL-A-215 Page 1 of 1 American s DFW stands at 132 and Delta s ATL at 127 using U.S. DOT O&D Data Delta serves more U.S. cities from ATL (152) than American does from DFW (147) Number of U.S. Airports with Connecting Passengers Through Each Gateway to NRT AA-DFW DL-ATL UA-EWR American Delta United Source: U.S. DOT O&D Data, YE 3Q 2015, Diio Mi/Innovata July 2016 schedule of AA and DL

65 American Wrongly Claims Its Partnerships Lag Behind, However, American s Partnerships are Extensive Exhibit DL-A-216 Page 1 of 1 American/JAL JV provides incredible strength in the rich Japan-US market in addition to an expansive hub with near-ideal U.S. Asia geography American only lacks a partner in Taiwan, while United only lacks a partner in Hong Kong Delta lacks partners in Japan and Hong Kong U.S. Carrier Northeast Asia Partnerships Country Japan Carrier Relationship Carrier Relationship Carrier Relationship Joint Business JV Korea American s commercial relationships with Northeast Asian carriers also lag behind. American s Haneda Application Mainland China Hong Kong Taiwan American Has Comprehensive Partnerships Across Northeast Asia Source: American Airlines Application in DOT-OST ; Diio Mi (Innovata) Codeshare Schedules; Carrier Press Releases

66 United s Application Ignores its Partnership With the Largest Japanese Airline and Fails to Make an Effective Public Interest Argument for its Proposals

67 Delta s Proposal Offers More Capacity Into the Market than United Exhibit DL-A-301 Page 1 of 1 Delta s proposal with 777 fleeting offers 16% more seats than United s 787 and 9% more seats than United s 777, maximizing public access to Haneda 252 Seats 268 Seats 291 Seats Equipment UA: UA: DL: (LAX-HND) Proposed Routes (SFO-HND) (EWR-HND) (MSP-HND) (ATL-HND) Seats 183,960 seats (annually) 195,640 seats (annually) 212,430 seats (annually per route) 637,290 seats total (annually) Source: Delta and United Airlines HND proposals Delta s Proposal Will Offer More Seats on a Per-Route Basis Than United s

68 United/ANA Already the Largest Carrier in NYC-TYO Exhibit DL-A-302 Page 1 of 1 United/ANA leads the market at 47%, followed by American/JAL at 30% and Delta at 22% Awarding EWR to United will continue to expand United/ANA s large lead in the NYC TYO market Current NYC-TYO Market Share 47% 30% 22% Awarding United Additional Haneda Slots Further Distorts Competition Source: MIDT LTM Feb 2016

69 Delta s MSP-HND offers better path for connecting traffic vs. United s Proposed EWR-HND application Exhibit DL-A-303 Page 1 of 1 Top 20 U.S. East Coast/Central TYO Markets 1369 PDEW (84% of E. Coast Demand) Rank City TYO PDEW via MSP via EWR 1 NYC 508 3% 0% 2 BOS 159 6% 3% 3 ORD 122 0% 19% 4 WAS 86 2% 3% 5 MCO 81 0% 6% 6 IAH 58 5% 22% 7 DTW 58 1% 13% 8 ATL 49 0% 9% 9 DFW 46 6% 26% 10 CMH 32 1% 10% 11 MIA 26 0% 5% 12 MSP 24 0% 30% 13 BNA 21 0% 13% 14 PHL 18 3% N/A 15 IND 18 0% 14% 16 AUS 16 7% 26% 17 RDU 14 0% 4% 18 CVG 12 0% 12% 19 CLT 11 0% 6% 20 PIT 10 1% 7% Shorter PDEW Equal 0 0 Longer 2 18 Cxr Proposal Better Path for MSP-HND EWR-HND Top 20 (84% Dmd.) 667 PDEW* 1369 PDEW DFW AUS MSP IAH ORD BNA DTW CMH IND CVG ATL PIT CLT MCO PHL WAS RDU MIA EWR BOS JV *667 PDEW number driven almost entirely by NYC local market, which will already have UA/NH JV NYC-HND service Source: MIDT LTM Mar 16; path circuity calculated by comparing the great circle distance of nonstop XXX-HND to XXX-MSP-HND and XXX-EWR-HND to determine best path MSP Better connecting option than EWR

70 United/ANA Can Already Serve SFO-HND and NYC-HND With Its 4 HND Slot Pairs Exhibit DL-A-304 Page 1 of 1 Before the DOT route proceedings even begins, the United/ANA JV will hold almost as many HND slots as will be dispensed by the DOT in total - Awarding United/ANA even more HND slots will further entrench them as the monopoly player between the US and Tokyo United/ANA can already allocate its existing 4 HND slots to provide strong geographic coverage of the country, while maintaining equal competitive positioning between United/ANA, American/JAL JV and Delta, and unlocking Haneda access in under-served Midwest and Southeastern regions via Delta s ATL and MSP service Potential Allocation Using 2 United/ANA JV Slots for NYC/SFO United/ANA JV already has 4 HND slots SFO NYC Use existing United/ANA JV slots for SFO & EWR to maximize benefit while preserving competition

71 Hawaiian s Proposal Squanders Valuable Daytime Slot and Provides No Additional Public Benefits for U.S. Travelers or the U.S. Economy

72 Delta's Proposal Offers More Capacity Into the Market than Hawaiian Exhibit DL-A-401 Page 1 of 1 Delta s proposal with 777 fleeting offers 5% more seats than Hawaiian s 332, maximizing public access to Haneda 278 Seats 291 Seats Equipment Proposed Routes Seats HA: (HNL-HND) (HNL/KOA-HND) 202,940 seats (annually per route) 405,880 seats total (annually) DL: (LAX-HND) (MSP-HND) (ATL-HND) 212,430 seats (annually per route) 637,290 seats total (annually) Delta s Proposal Will Offer More Seats on a Per-Route Basis Than Hawaiian s Source: Delta and Hawaiian Airlines HND proposals

73 Daylight HND Slot Pairs Provide Relatively Little Benefit to Hawaiian s Leisure Oriented, Japan Point of Sale Service Exhibit DL-A-402 Page 1 of 1 HND nighttime slots already work well for JP-Hawaii leisure service Hawaiian s proposes suboptimal use of daylight slots in comparison to U.S. mainland Delta s prediction of HA s HNL-HND schedule proposal HA s Actual HNL-HND Proposal HA s actual proposal consists of moving its HNL-HND arrival from ~22:00 to 19:30 a mere 2.5 hours earlier HA s actual proposal consists of moving its HND-HNL departure from ~23:55 to 21:30 a mere 2.5 hours earlier Source: Hawaiian Airlines Haneda application

74 Only Primary Benefit of HNL-HND Daylight Service Is That JP Tourists Have 2 hours & 30 minutes More Beach Time Exhibit DL-A-403 Page 1 of 1 The result of Hawaiian s HND daylight proposal is that it can move its HND-HNL arrival time earlier by 2 hour and 30 minutes, enabling primarily Japan point of sale leisure customers to have a 2.5 hours of extra time on Waikiki beach Source: Hawaiian Airlines Haneda application

75 By Hawaiian s own admission, HND-HNL Nighttime Service has been an unequivocal success Why Change Timings? Exhibit DL-A-404 Page 1 of 1 Allocating daylight HND slots to Hawaiian s leisure service would be a waste of a scarce resource, especially with so many competing U.S. mainland service applications that can provide Haneda access to a far greater number of U.S. residents By Hawaiian s self-admission, its HND-HNL nighttime service is already a commercial success and has an annual load factor greater than 90%...why change course? Source: Hawaiian Airlines Haneda application

76 Geographically, HNL is a Poor Connection Point for the Vast Majority of the U.S. Population Exhibit DL-A-405 Page 1 of 1 HNL-HND serves a population of less than 1.5 million U.S. residents whereas US48-HND service serves 315 million+ U.S. residents Hawaiian s U.S. to HND service via HNL highly circuitous (+17%) vs. nonstop US48-HND service 5,487 miles Population of U.S.48: 315+ million 6,409 miles Population of Hawaii: 1.5 million

77 Hawaiian Distorting Market Scope To Appear Very Small Exhibit DL-A-406 Page 1 of 1 Hawaiian is 18% of the Hawaii-JP market, in-line with United/ANA and Delta but behind market leader American/JAL Seat Share Between Hawaii and Japan 11% Other 18% Hawaiian 33% American/JAL 20% Delta 17% United/ANA Source: Diio/Innovata September 2016