A last gasp for Delta’s Narita hub

Four weeks ago Delta Air Lines tentatively secured the one “spare” route frequency allocation available for a US-based carrier operating to Tokyo’s Haneda airport. The allocation process was hotly contested and Delta’s success should, in theory, be celebrated by the company. That celebration appears to be taking the form of dismantling what remained of its Tokyo Narita hub.

In the fall Delta will slash operations from Narita, a move confirmed in a company announcement last week. Service between New York’s JFK airport and Tokyo will be terminated; onward service from Tokyo to Osaka and Bangkok will also be axed. Separately Delta previously dropped service from Los Angeles to Narita for the winter schedule based on the temporary approval to move its daytime flight to Haneda. Assuming the DOT order becomes final Delta expects to keep the LA service only at Haneda and also to shift its Minneapolis service from Narita to Haneda. It will still maintain Narita service from Seattle, Portland, Detroit and Atlanta and beyond to Manila, Shanghai, Singapore and Taipei. Alas, that remaining service is a shell of what the operation was when it peaked under Northwest Airlines.

Somewhat ironically, the Tokyo hub was originally based at Haneda. Northwest operated there for 30+ years until New Tokyo Airport (now named Narita) was opened and long-haul traffic was shifted to the new airport. Northwest acquired 5th freedom rights to operate to other Asian destinations in 1952 along with Pan Am. The Pan Am routes were eventually acquired by United Airlines which also ran a hub at Narita while Northwest’s rolled into Delta in the 2008 merger. United began dismantling its Narita hub operations several years ago (only Seoul and Guam remain in Asia) in expectation of the shifting market. Delta only really just started that same effort.

Delta blames joint ventures – the ability for partner airlines to collude on pricing and schedules – for creating an unfair imbalance in the trans-Pacific market. While United and American Airlines each have partners based in Tokyo (ANA & JAL, respectively) Delta does not. It bid to save Skymark from bankruptcy, keeping the fledgling Japanese LCC in business and able to provide the onward connections. That bid fell short with Skymark folding into ANA’s Vanilla LCC brand.

The efficiency of Narita as a hub for those transfers is hard to argue with. The total extra distance flown is less than 5% for many destinations in Southeast Asia and for decades the ability to serve those routes nonstop was not technically or financially viable. Newer aircraft can fly further at lower costs, however, making many more routes viable non-stop from the US mainland. Indeed, the partner traffic Delta envies of its major rivals is generally used to route passengers to secondary and tertiary destinations. For primary traffic routes United and American typically fly nonstop from their US hubs. Delta lacks a west coast hub to handle many of these routes, placing it at a competitive disadvantage for the “over flights” beyond Japan.

Drawing down Northwest’s Tokyo hub was arguably always part of the plan. In 2005, prior to the merger with Delta, the carrier seemed set to do that itself when it placed an order to be the US launch operator for the Boeing 787 Dreamliner. At that time Alan Mulally, president and chief executive officer of Boeing Commercial Airplanes was not shy about the future of the route network and the role the 787 would play, saying, “We share the airline’s vision for a world of air travel where passengers can choose to go non-stop directly to their destination, safely, comfortably and affordably. Northwest’s business plan will take full advantage of the tremendous range, speed, passenger comfort and economic capabilities of the 787.” But Delta has repeatedly deferred that order; it remains on the books but scant few in the industry believe that new 787 will be delivered with a widget on the tail. And, while Delta moved in recent years to try to build the west coast hub for Asia service at Seattle success has not come easily.

For passengers headed to Tokyo the flights to Haneda are nearly universally more appealing. Opening more access to that airport benefits travelers. And yet Delta continues to fight it. Expanding access to Haneda means that Delta’s business plan for Asia, a plan reliant on riding out the legacy infrastructure rather than adapting to change, will perform below its peers. It blames “unfair” competition despite its participation in similar arrangements around the world; presumably such joint ventures are viewed as more fair in the markets where Delta sees greater benefit.