Howes: Treaty talks imperil Delta Detroit-Tokyo flights
Detroit Metropolitan Airport’s reputation as a gateway to Tokyo could be endangered if talks next month between the United States and Japan leave Delta Air Lines Inc. on the outside looking in.
At stake are more than 6,200 passengers flying daily between 17 cities on the U.S. mainland and the Japanese capital. Tokyo’s downtown Haneda Airport International is set to be opened to daytime international flights under a deal that would favor Delta’s U.S. rivals United and American because of their respective partnerships with Japan’s ANA and JAL airlines.
The simple geography does not favor Delta, should negotiations scheduled for Feb. 9-10 in Japan reward its competition. Delta’s hub at Narita International Airport is 46 miles from central Tokyo, a drive that can take as long as two hours in often brutal traffic. Haneda, on the west edge of Tokyo Bay, is 15 minutes from downtown and has traditionally been the city’s airport for domestic flights.
The fear: a knock-on effect that could imperil the Atlanta-based airline’s fights from seven U.S. cities, including Detroit, to Japan as passengers book direct flights to Haneda. And that could undermine Delta’s continuing service to six Asian destinations as far away as Bangkok and Singapore because competitors would redirect service to the convenient Haneda airport.
“We have no place to turn,” Ben Hirst, special counsel for Delta, said in an interview Monday. “The truth is there have been efforts on the other side to curtail Delta’s networks for many years. Now they’re finding a way to kill it, with the cooperation of the U.S. government.
“We didn’t really fully understand that this was happening until just before Christmas. We’re still in the midst of preparing our response,” he added, explaining that Delta has had preliminary discussions with representatives at the departments of Transportation and State. “It’s a total reversal of where the government has been, on the U.S. side.”
Some deregulation, this extension of the Open Skies Agreement to Haneda. A bilateral treaty designed to foster competition by reducing regulatory barriers could, in fact, be used to achieve the opposite: reduce foreign competition by effectively eliminating Delta from the Tokyo market its predecessor, Northwest Orient, helped the Japanese open and develop after World War II.
The move could endanger Delta jobs in Detroit and other U.S. gateway cities by effectively removing a competitor from the trans-Pacific market. It also could complicate travel for business clients such as the Detroit automakers as well as such Japanese rivals as Toyota Motor Corp. and Nissan Motor Co. with operations in southeast Michigan and major global auto suppliers with business in Japan and beyond.
According to Delta, companies based in Michigan used the Detroit-to-Tokyo route 10,000 times through all of last year. Of all the Delta passengers who landed in Narita in 2015, 64 percent of them connected to one of six Asian cities served by Delta connections, from Shanghai and Taipei to Manila and Osaka.
Last year, Detroit originated just 57 passengers daily for its flight to Narita. Hundreds more arrived on flights from 60 cities around the United States and beyond to hop the Boeing 747 to Narita from Metro Airport, underscoring the complexity of Delta’s network and how it could be affected by a change that disadvantages the airline in Tokyo.
“I learned it Thursday night,” U.S. Rep. Debbie Dingell, D-Dearborn, said of the negotiations and what they portend for Delta. “If this becomes one more example of what’s called free trade, it would deepen my concern with trade policy in the United States. I believe in free trade, but it needs to be fair trade. We need our government to be fighting for us, not costing us jobs.”
By Delta’s internal calculations, the Star Alliance partners of United and ANA, along with the Oneworld partnership of American and JAL, would be awarded anywhere from six to eight of the 10 daytime slots at Haneda, leaving just one or maybe two for Delta. That’s a losing proposition, a recipe for a duopoly Delta says would push its share of the mainland U.S.-Tokyo market to 8 percent from 22 percent.
Delta does not have a Japanese joint-venture partner. Its efforts to woo JAL into an alliance several years ago failed. And hopes that Delta could forge an alliance with Skymark Airlines, Japan’s low-cost carrier with a hub at Haneda, did not materialize, either, leaving rivals United and American with distinct advantages in Japan.
United and American, joined by their Japanese partners, would be expected to first target Haneda routes to New York and Los Angeles, siphoning the largest numbers of potential passengers from the largest U.S. markets. Over time, non-stop routes from Detroit, Minneapolis and Atlanta likely would lose their financial viability, as would-be passengers choose direct service to Haneda over Delta service to Narita.
In July 2013, according to the CAPA Centre for Aviation in Australia, Delta CEO Richard Anderson urged Japanese regulators to allow the airline he leads to move its hub to Haneda from Narita, the de facto international Japanese airport once it opened in 1978. At the time, local media reports cited by the Centre for Aviation, captured Anderson’s reaction: “I think their measured approach is that they’d like to leave us at the less preferable airport outside of town to advantage the two carriers.”
Not so diplomatic, that, but nevertheless reflective of what could unspool for Delta this year with the help of the U.S. government.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.