BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

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1 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C U.S.-HANEDA COMBINATION Docket DOT-OST SERVICES ALLOCATION PROCEEDING ANSWER OF DELTA AIR LINES, INC. TO TO HAWAIIAN S MOTION FOR AN UNCONTESTED AWARD 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 ( 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 ( kquinn@pillsburylaw.com amna.arshad@pillsburylaw.com christopher.leuchten@pillsburylaw.com Counsel for DELTA AIR LINES, INC. May 9, 2016

2 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C U.S.-HANEDA COMBINATION Docket DOT-OST SERVICES ALLOCATION PROCEEDING ANSWER OF DELTA AIR LINES, INC. TO HAWAIIAN S MOTION FOR AN UNCONTESTED AWARD Delta 1 submits this answer to Hawaiian s Motion for Immediate Grant of Uncontested Application 2 consistent with the Department s Notice Shortening Answer Period. 3 Delta again commends the Department for instituting a transparent process for the new Haneda slots as well as the Department s commitment to consider the effects of each service proposal on the overall competitive environment, including effects on the market structure and on competition in the U.S.-Japan market. 4 Unfortunately, Hawaiian s motion attempts to circumvent the Department s process to receive its third-priority slot pair before other applicants, while still pursuing an overlapping daytime award. 5 Contrary to Hawaiian s assertions, Hawaiian s dualpursuit of both nighttime and daytime authority for the same city pairs is hotly contested and 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 HAWAIIAN AIRLINES, MOTION OF HAWAIIAN FOR IMMEDIATE GRANT OF UNCONTESTED APPLICATION (May 4, 2016 (Docket-DOT-OST ( Hawaiian Motion. 3 DEPARTMENT OF TRANSPORTATION, NOTICE SHORTENING ANSWER PERIOD (May 5, 2016 (Docket DOT-OST ( DOT Notice. 4 Instituting Order at 2. 5 Hawaiian has failed to seek leave to file and demonstrate good cause, required under the Department s Rules of Practice, for its motion. 14 C.F.R (c.

3 Page 2 impacts the overall U.S. Japan competitive market. Accordingly, Delta objects to Hawaiian s motion. 6 Delta does not object to the Department awarding Hawaiian the nighttime slot pair as the sole award to Hawaiian. Delta also supports an award of the nighttime slot with gateway flexibility within the Hawaiian Islands, for Hawaiian to use as it sees fit, at Honolulu, Kona, or any combination thereof. Hawaiian is seeking to have it both ways, however, by seeking a nighttime award now while reserving its rights to obtain a daytime slot pair. The Department should deny Hawaiian s motion and defer action until it has completed its review of the public benefits of the nighttime slot pair award, together with all the other applications and filings, to ensure full and fair consideration of all proposals in the context of overall competitive parity and the public interest. Hawaiian will not be harmed by such a delay as it can use its current daytime slot pair to serve the Honolulu market until conclusion of the proceeding. 7 On the other hand, awarding Hawaiian the current slot pair for its third priority route, while leaving open the possibility of daytime award(s to Hawaiian is outside the parameters outlined in the Instituting Order and would be at the expense of a full public interest evaluation of the totality of the applications and available slot pairs. 6 See Delta Application at 8-9 ( Hawaiian should not receive daytime slots and should receive at most one nighttime slot pair. ; Delta Answer at 22; Answer at DOT Show Cause Order at 7-8.

4 Page 3 I. Hawaiian s Should Receive Only One Slot Pair in this Proceeding As Delta s Application and Answer demonstrate, 8 and its forthcoming Reply will support, the public interest does not support an award of any daytime slot pairs to Hawaiian at this time. Public benefits support an award to Hawaiian of a single nighttime slot pair for its continued service on its current route. Service to the U.S. mainland, where the vast majority of U.S. travelers reside and for which daytime gateways are critical for viable service to Haneda, is more important than providing Japanese leisure travelers multiple daily flight options to Hawaii. In fact, Hawaiian s proposal, as described in its Answer, rests entirely on the economic benefits of Japanese tourists traveling to Hawaii leisure travelers who are more than happy to fly in the evening, and equally willing to fly to Narita on a price-sensitive basis, as compared to timesensitive U.S. travelers who far prefer Haneda. Finally, moving Hawaiian s current nighttime Honolulu slot pair to daytime will not generate any increased economic benefits for the Hawaiian economy the central justification for Hawaiian s original nighttime award from the Department because there will be little if any increased passenger growth associated with a Hawaiian daytime flight. 9 With gateway flexibility, Hawaiian can service both Kona and Honolulu or just Honolulu in whatever combination it determines best meets the needs of its Japanese-originating leisure passengers. This option provides Hawaiian the ability to serve one or both markets, while also preventing a scarce daytime slot pair to Haneda being used sub-optimally during the interim period before more Haneda frequencies become available. 8 Delta Application at 8; Delta Answer at See DEPARTMENT OF TRANSPORTATION, ORDER , FINAL ORDER (July 6, 2010; see also DEPARTMENT OF TRANSPORTATION, ORDER , ORDER TO SHOW CAUSE at 8-9 (May 27, 2010.

5 Page 4 II. Hawaiian Should Adhere to the Department s Instituting Order Hawaiian s last-minute request for a prompt award is a product of its own delay. If Hawaiian were concerned about timely instituting service on its split Kona/Honolulu-Haneda route, it could have included a request for an immediate award of the nighttime slot pair in its Application or filed a motion immediately thereafter. Instead, Hawaiian waited two weeks after Applications were filed and only a day before Answers were due to file its motion. Hawaiian s procedural inaction should not be rewarded, especially since Hawaiian has made no effort to demonstrate that the public benefits support both an immediate award of the nighttime slot pair and continued consideration of a second daytime slot pair in its Application. Hawaiian s reliance on the 2000 U.S.-France Frequency Allocation Proceeding 10 as support for its position that the Department should move immediately to award the frequency is misplaced. In that case, the carriers agreed on splitting remaining frequencies and jointly asked the Department to award their requested frequencies. Here, other than, the other applicants have not agreed that Hawaiian should receive a nighttime slot pair while still pursuing daytime authority for the same route. In a contested proceeding, such as this one, the Department may not immediately enter an award without a full public-interest analysis. 11 Nothing in the record justifies Hawaiian s confidence in the benefits of its daytime Honolulu-to-Haneda route or its omission of a nighttime slot pair application for its first priority 10 DEPARTMENT OF TRANSPORTATION, NOTICE OF ACTION TAKEN (Sept. 7, 2000 (Docket OST See DEPARTMENT OF TRANSPORTATION, ORDER, ORDER at 4, fn. 8, and 10 (Oct. 6, 2000 (Docket DOT-OST (deferring a decision on a motion for uncontested award until the Department s final show cause order awarding all frequencies when other carriers disputed the motion and argued that the motion was attempting to short-circuit the proceeding. In addition, under the Ashbacker doctrine, when, as here, multiple carriers are competing for the same daytime slot pairs, the Department should award them in the same proceeding. Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945 (standing for the general proposition that where applications are mutually exclusive, they must be competitively bid.

6 Page 5 route. As the Department has stated, it will be taking a fresh look at the U.S.-Haneda market to determine which allocations would best serve the public interest. 12 The Department has also stated that the temporary allocations of the daytime slots would not give the carriers any benefit or advantage in the longer-term proceeding and that all applications in the allocation proceeding will receive full and fair comparative consideration. 13 Furthermore, Hawaiian s Application seeks nighttime authority only as a backup to its second priority daytime slot pair request. The Department should not allow Hawaiian to isolate its last priority from its other requested slot pairs 14 and should review the public benefits of Hawaiian s request in the overall proceeding. A full and fair consideration requires that the Department consider the public benefits of all slot pairs and all applications at the same time, not in a piecemeal fashion as Hawaiian would suggest, especially since Hawaiian s nighttime slot pairs would provide equal public benefit to its requested daytime slot pairs. A bifurcated public interest analysis, which Hawaiian is essentially seeking, would delay the outcome of the proceeding and waste the Department s resources. 12 Instituting Order at 1 13 Instituting Order at Hawaiian does not even mention the backup nighttime authority request until near the end (page 34 of its 39-page Application. Hawaiian Application at 1-2 and 34.

7 Page 6 III. Conclusion Delta respectfully submits that the Department should deny Hawaiian s contested motion at this time and defer its decision until the Department completes the full public interest analysis for all of the slot pairs. Respectfully submitted, Kenneth P. Quinn Amna Arshad Christopher K. Leuchten PILLSBURY WINTHROP SHAW PITTMAN, LLP 1200 Seventeenth Street, NW Washington, D.C ( kquinn@pillsburylaw.com amna.arshad@pillsburylaw.com christopher.leuchten@pillsburylaw.com Counsel for DELTA AIR LINES, INC. May 9, 2016

8 CERTIFICATE OF SERVICE I hereby certify that on May 9, 2016, a copy of the foregoing Consolidated Answer of Delta Air Lines, Inc. was served upon the following persons via Air Carrier Hawaiian Hawaiian Hawaiian FedEx UPS Atlas Air Polar Air Cargo DOT DOT DOT DOT FAA State Department LAX MSP ATL DFW SFO 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 Mark Thorpe Kandace Bender 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 mthorpe@dfwairport.com kandace.bender@flysfo.com via U.S. Mail info@airlineinfo.com /s/ Christopher K. Leuchten Christopher K. Leuchten PILLSBURY WINTHROP SHAW PITTMAN, LLP