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.

16 Comments

  1. I remember flying to NRT in 1996 and how NW had a whole section of the airport. I also remember that it was much cheaper to have a ticket to SEL, with 2 6-week, “stops,” in NRT 😉

  2. I did CLT-MSP-NRT-DTW-CLT this year when Delta marked down fares to $600 RT. Both of the over-the-Pacific legs were 100% full. I would have preferred HND due to its proximity to Tokyo proper but it wasn’t part of that particular fare war.

  3. I have pretty strong opinion on this matter, as I rode NW as a baby via Haneda for my first trip from US to Hong Kong in 1971. To me, DL is giving up serious and important markets, like HKG. It’s not just a “Tokyo” problem, but simply they are dismantling their whole Asian business. For 40+ years, NW have at least one 747 at HKG, and at its’ peak 744×2. NW did a lot of things wrong during their last years, but DL is giving up the rest on their own with no one else to blame.

    • Jin

      Agreed 120%. Their decision to terminate NRT-HKG and hand it to MU is an indicator that they are retreating from Tokyo, but then to where? PVG/SHA does not and cannot replace TYO/NRT. Perplexing move.

  4. Pingback: Tokyo's Handea airport set to further marginalize Narita - Wandering Aramean

  5. Mike

    If NRT is not making financial sense, DL is doing the right thing. Note in the article that United did the same thing – UAL dismantles NRT in favor of SFO, and DL is dismantling in favor of SEA. Where DL lacks a Japanese partner, they have established a Chinese partner in China Eastern. Delta has been vocal about creating a hub in Shanghai along the lines of their hub in Amsterdam. To me, this makes sense given the ascendancy of Chinese markets. It’s obvious to me this is extremely forward thinking on their part.

    • Seth Miller

      United started to break down its NRT hub well before Delta did; that’s definitely Delta following, not leading.

      As for China, Delta is not growing into the secondary markets there organically. It does have partners in China just like United does but neither of them can set up joint ventures to operate in China because the current bilateral doesn’t allow for that. There are some code-share arrangements in place but Delta is far from unique nor advanced on that front. It is well ahead of American in China but AA will use JAL via NRT in many cases, similar to DL and China Eastern.

      I strongly believe that tearing down the NRT hub is the correct business decision. But I think Delta is doing it late and under protest rather than embracing the ability to overfly Tokyo and build direct links to more of Asia. And a lot of that comes from not having a good west coast hub to operate the flights from.