Hawaiian may add further Asian route in 2011; North American carriers expanding North Asian presence


Hawaiian Airlines CEO Mark Dunkerley in early Dec-2010 stated the carrier, which commenced its first services to Tokyo Haneda last month, may add another Asian destination in 2011, possibly in Japan. The destination would be in addition to service the carrier plans to launch to Seoul Incheon on 12-Jan-2011, with further expansion planned in South Korea for the year.

  • Hawaiian Airlines plans to add another Asian destination in 2011, possibly in Japan, in addition to its service to Seoul Incheon.
  • Asia Pacific traffic has increased 10.1% in the 10 months to Oct-2010, outpacing growth in North America and Europe.
  • China, Japan, and South Korea are Asia's largest international markets, with China leading the world out of the global recession.
  • Hawaiian Airlines has added six new A330s to support its Asian expansion plans.
  • Other US carriers, including Air Canada, American Airlines, United Airlines, and Delta, are also expanding their capacity to Asia.
  • The US and Japan have signed an open skies agreement, eliminating restrictions on flights between the two countries and allowing for new air services.

Hawaiian, like other US network carriers, is adding capacity to Asia, lured by expanded airport access and travel growth. Asia Pacific traffic has increased 10.1% in the 10 months to Oct-2010 outpacing growth of 7.2% in North America and 5.0% in Europe, according to IATA.

China, Japan and South Korea are Asia's largest international markets

North Asia's growth has run at an even faster pace, driven by strong demand to/from China, with China, Japan and South Korea Asia's largest international aviation market.

Asia's biggest international aviation markets (million annual seats): 2001 to 2010 YTD*

The Asia Pacific region's largest airports are also located in North Asia, with Beijing, Tokyo Haneda and Hong Kong the largest airports. Shanghai Pudong, Shanghai Hongqiao and Taipei Taoyuan are among the region's fastest growing airports.

Selected airports passenger numbers and growth: 2010 YTD*

Future growth will no doubt be driven by China, which in 2Q2010 overtook Japan as Asia's largest economy, capping the nation's three-decade rise to emerging superpower. China led the world out of last year's global recession with an economy that is now more than 90 times larger than it was in 1978, when China started its move away from Communist policies in favour of free market reforms.

China is now on track to officially eclipse Japan as Asia's largest and the world's second largest economy this year. The Japanese economy has been second only to the US for more than 40 years. Japan's per capita GDP is however more than 10 times larger than China's. In terms of purchasing power, China replaced Japan as the world's second largest economy nearly a decade ago. China is expected to overtake the US, where annual GDP is around USD14 trillion, as the world's largest economy by 2027, according to Goldman Sachs Group Inc.

Selected Asia Pacific countries' GDP (USD billions) and growth rate: 2010F

Hawaiian adds six new A330s to support Asian expansion

Hawaiian Airlines commenced non-stop service between Honolulu and Tokyo Haneda Airport on 17-Nov-2010, becoming the first US carrier to commence service from the new international terminal at Haneda.

The carrier also plans to launch Honolulu-Seoul Incheon service on 12-Jan-2011. The company will initially operate both new international routes using its B767 aircraft before transitioning to its new A330 aircraft. Hawiian and ANA, in Oct-2010 also signed a commercial partnership agreement and LoI to explore bilateral cooperation in areas such as codesharing, frequent flyer programmes and cargo, subject to government approvals

Mr Dunkerly commented: "Expansion into Asia is a strategy. We clearly want to, and intend to, build a sort of brand image, name recognition, in these markets. That becomes progressively easier the more service that you put into these markets. Assuming everything continues to go as well as it looks now, I think you can expect to see one to two new Asia destinations per year. That's where the growth is. That's where the people who are likely to travel live."

The CEO added that the carrier's Haneda service connecting Honolulu so far are "working out better than we anticipated" adding that load factors are at more than 80%. Mr Dunkerly also commented that Haneda enjoys a fare premium over Narita. The carrier previously has stated that Haneda represents the "most significant" international expansion for the carrier and "starts the company on a course for future growth to other major Asian markets".

To support the carrier's Asian aspiration, Hawaiian on 29-Nov-2010 increased its firm commitments for A330-200 aircraft from ten - including three already in service - to 16, with the additional six to be delivered between 2012 and 2015. The carrier exercised six A330 purchase rights under the terms of its 2008 purchase agreement with Airbus and acquired additional purchase rights in this transaction, leaving it with a total of four purchase rights remaining. The aircraft will be powered by Trent 700 engines.

The airline took delivery of its third new A330 from aircraft leasing company AWAS on 10-Nov-2010, following deliveries of the first two A330s on lease on 28-Apr-2010 and 28-May-2010. The carrier will take delivery of two A330s in 2011, three each in 2012, 2013 and 2014 and two in 2015. All of the A330s have 294 seats in a two-class configuration, meaning it has 30% more capacity than the carrier's B757-300ER fleet. Beginning in 2017, Hawaiian will take delivery of the first of six new A350XWB-800 aircraft from Airbus, with rights to purchase an additional six aircraft. The A350s will be configured with more than 300 seats in a two-class configuration and have a range of 8300 nautical miles (15,400km).

Air Canada to expand Asian capacity; United and American to operate LA-Shanghai sector; Delta to operate Atlanta-Shanghai

Hawaiian Airlines is not the only North American carrier targeting North Asian expansion opportunities with Air Canada, American Airlines, United Airlines and Delta also announcing planned growth on North America-North Asia sectors in recent months.

North America recent route announcements for North Asia


Network plans


Air Canada

Services to Hong Kong, Shanghai, Beijing, Narita, Haneda and Seoul in spring 2011

Air Canada in Sep-2010 announced plans to increase international services from Vancouver to Asia from next winter, equating to a capacity increase of 17%. As part of the expansion, the carrier will offer daily services to Hong Kong, Shanghai, Beijing, Tokyo Narita, Tokyo Haneda (effective 29-Jan-2011), Seoul, Sydney, London Heathrow and Mexico City (weekend service commences 01-Nov-2010 with daily services effective 01-Dec-2010).

Air Canada Executive VP and CCO Ben Smith said: "Air Canada is significantly increasing international flights from Vancouver, our second largest hub. We will be flying daily non-stop to Shanghai, Beijing and Hong Kong, representing an increase in capacity of 17% compared to last winter. With our recently announced new daily non-stop flights to Mexico City and to Tokyo Haneda, plus boosting all international flights to daily non-stop service, Air Canada is increasing its international capacity from Vancouver by 15% this coming winter from a year ago."

American Airlines

Los Angeles-Shanghai service from 05-Mar-2011

The carrier will operate on Los Angeles-Shanghai sector with daily frequency using B777 equipment. Meanwhile, JAL has entered into bilateral agreements with oneworld alliance partners, including American Airlines, to commence codeshare services from Tokyo Haneda, which opened on 21-Oct-2010. The carrier will operate codehsare service with American Airlines to six US destinations via San Francisco.


Atlanta-Shanghai service from 05-Jun-2011

Saipan-Nagoya service from Feb-2011

Detroit-Haneda and Los Angeles-Haneda service to late Feb-2010

Hopes to establish JV company with China Eastern and China Southern

Plans to resume Atlanta-Shanghai service after first launching daily services between the two cities in 2008. The service was suspended in 2009 due to the global economic recession and increasing fuel price. Delta plans to launch tree times weekly Saipan-Nagoya service from Feb-2010 increasing to daily from Mar-2011. The carrier currently serves Saipan as an extension from Tokyo Narita.

Delta Air in Sep-2010 requested a 30-day start-up extension from the US DoT covering the planned Detroit-Haneda and Los Angeles-Haneda routes, with the carrier seeking to delay services from late Jan-2011 as initially intended. Delta, in its submission, stated: "By starting service just 30 days later, Delta's new service will benefit from this important seasonal upswing in Tokyo traffic. Delta believes it makes good public interest sense to introduce new service and capacity when there is public demand to support the flights. However, Delta reiterates that it will meet any start-up condition required by the Department."

Delta CEO Richard Anderson in late Nov-2010 stated in the long-term, the carrier hopes to work with China Eastern Airlines and China Southern Airlines to establish a JV company. "China is the world's fastest growing aviation market and is expected to maintain double-digit growth over the next few years. Whether it's through a JV company or closer ties with Chinese carriers, what we hope to achieve is to create seamless travel between China and the US. Cooperation within the SkyTeam Alliance is not sufficient, [we] need to increase our network cooperation with Chinese carriers."

In the Japan market, Delta launched an advertising campaign on 31-Nov-2010. The new ad will feature in newspapers, magazines, online media and out-of-home media, including train stations and billboards, from mid-Dec-2010 to the end of Feb-2011.

Separately, Delta President Edward Bastian stated the firm Japanese yen - the USD recently hit a 15-year low against it - has helped the carrier improve its financial results, with revenue from Asian operations increasing 30% in 2Q2010. "Our goal in Asia is to be the carrier of choice for both Asian as well as American customers," he said. Delta has added 12 trans-Pacific routes since 2008, with plans to launch Tokyo Narita-Palau, Nagoya-Honolulu, Tokyo Haneda-Detroit and Tokyo Haneda-Los Angeles services in the near future.

United Continental

Los Angeles-Shanghai service from May-2011

United Airlines in Oct-2010 received approval from the US DoT to commence daily non-stop service between the its Los Angeles hub and Shanghai from May-2011. The application was approved one day after it was finalised. The carrier, which will codeshare with Continental on the route, will operate with B777 equipment and is required to commence the service by 30-May-2010. United serves Shanghai daily from Chicago and San Francisco, while Continental serves Shanghai daily from New York/Newark. Continental Airlines also plans to launch nine direct charter services to Beijing, Shanghai, Hangzhou and Shenyang to Guam during the Chinese 2011 Lunar New Year.

United has the largest Pacific capacity (ASMs) and traffic (RPMs) among the US majors, despite capacity reductions in recent years, followed closely by Delta. Continental and American's Pacific capacity is much smaller.

Select US carrier Pacific capacity (ASMs, 000s): Jan-2007 to Oct-2010

Select US carrier Pacific capacity (RPMs, 000s): Jan-2007 to Oct-2010

US-Japan reach open skies agreement

Japan and the US formally signed an open skies MoU on 25-Oct-2010 moving the process a step towards establishing full open skies between the countries. The agreement is the first major change of a 1952 aviation agreement between the US and Japan since 1998. The countries signed a draft open skies treaty in Dec-2009.

Restrictions eliminated under the accord include a restriction permitting only three US carriers - Delta, United and FedEx Corp - to serve all Japanese markets with unlimited frequency. Hawaiian Holdings, United Parcel Service and US Airways Group are among other US carriers that no longer face flight restrictions under the agreement.

Hawaiian Airlines, Delta and American Airlines also all gained permission to operate to Tokyo Haneda this year under the agreement. Haneda is 10 miles south of central Tokyo, while the city's main airport, Tokyo Narita, is located about 44 miles away. See related article: Haneda Airport expansion is a game changer for Tokyo

ANA, JAL, United Continental Holdings and American Airlines welcomed the move with the carriers, after receiving antitrust immunity in Nov-2010, now able to execute a trans-Pacific JV with their respective Japanese alliance partners. United, Continental and US Airways will partner with Star Alliance partner ANA, while American Airlines will partner with JAL. SkyTeam's Delta does not have a Japanese partner.

ANA's Star Alliance has the largest presence at Haneda with a 54% capacity share, followed by JAL's oneworld with a 35% stake. SkyTeam only has a 1% capacity share.

Tokyo Haneda International Airport capacity share (seats) by alliance: Nov-2010

Star Alliance is also the largest alliance at Tokyo Narita with a 37% capacity share, ahead of oneworld (27%) and SkyTeam with a 23% share.

Tokyo Narita International Airport capacity share (seats) by alliance: Nov-2010

Tokyo Haneda expansion and the alliances

Star Alliance


North American and Japanese members

Air Canada




US Airways



Japan-US open skies

United Continental said: "The open skies agreement will fully liberalise this important aviation market, allowing for new air services between the two countries and enabling consumers to benefit from greater choices and competition. With this critical milestone reached, we look forward to receiving final approval from the US Department of Transportation granting antitrust immunity to United, Continental and our partner ANA to implement our trans-Pacific joint venture. Early in 2011, we expect to be able to coordinate our planning and marketing activities, offering customers improved schedules and greater access to fare and service options."

ANA stated: "ANA welcomes the open skies agreement signed between Japan and the United States and is deeply appreciative of the hard work and ongoing commitment of all the individuals who have played a part in reaching today's historic signing. The open skies agreement will transform the marketplace and ANA is confident that our planned joint venture with United and Continental will ensure stable long-term growth by providing our valuable customers more travel options and enhanced services."

American/JAL stated: "We applaud the efforts taken by the governments of Japan and the United States in signing the Memorandum of Understanding that moves the process yet another step toward establishing full open skies between our countries. By signing this MoU, the governments are clearing the way for flights to begin operating between Tokyo's Haneda Airport and the US, which is terrific news for our employees, customers and investors and for the people of both nations. Full open skies, which is expected in coming weeks after an official signing ceremony, will be the result of a multi-stage process that began more than a year ago. We believe officials in both governments should be commended for their diligence, hard work and foresight in setting out the framework that will bode well for the future of aviation between Japan and the United States."

Tokyo Haneda

Stated it operates four out of every 10 flights from Haneda. Star member airlines there will offer:

  • Will co-locate check-in and ticketing in the new International Terminal adding that it would be the "only alliance to offer such a service at Haneda";
  • Transfers between international arrivals and domestic flights to the 36 destinations served by ANA from Haneda have also been improved with the minimum connecting time for domestic to international to be reduced by 10 minutes;
  • ANA has doubled the size of its Domestic Terminal, allowing for more check-in kiosks, check-in counters, security checkpoints and baggage claim facilities. New lounge facilities and dedicated security checkpoints for top customers are now also available;
  • Haneda is the third 'Move under one Roof' project which Star Alliance has completed under the leadership of ANA in Japan after Tokyo Narita and Nagoya Centrair Airport
Stated it is set to be the "leading airline alliance at Asia's newest international hub". oneworld's member airlines there will offer:
  • The airport's most extensive international network, including the only services between Haneda and Europe, with services to London Heathrow and Paris CDG, and New York and San Francisco;
  • JAL will add flights to six international destinations, including Paris and San Francisco;More international capacity to and from Tokyo Haneda than any other alliance;Regarding Haneda-North America flows, JAL is operating services to Honolulu and San Francisco from Haneda;The largest domestic schedule at what is also Japan's biggest domestic hub through Japan Airlines;
  • Minimum international-to-domestic connecting times considerably faster than competition at 70 minutes. Minimum connection times from domestic-to-international and from international-to-international will also be reduced to 70 and 50 minutes respectively.

Antitrust immunity

United Airlines, Continental Airlines and ANA received final approval from the US DoT in Nov-2010 granting antitrust immunity enabling the carriers to execute a trans-Pacific JV under which they intend to jointly develop flight schedules and sales activities. ANA secured Japanese regulatory clearance for the JV in Oct-2010.

The clearance enables the carrier's the preparatory work necessary to launch its JV in spring 2011 and paves the way for further cooperation between the carriers. As part of the JV, the carriers plan to combine their route networks and jointly develop flight schedules as well as sales activities.

ANA has stated it would adopt a new timetable for Japan-US services in late Mar-2011 as part of joint operation of the routes with two US carriers. The carrier added that the integration could boost revenue by JPY3-5 billion p/a adding: "With three carriers sharing risk, it will be easier to launch new routes."

American Airlines and Japan Airlines received US DoT approval in Nov-2010 for their joint request for antitrust immunity and plans for a joint business between North America and Asia. JAL received MLIT approval for the JV in Oct-2010.

The approval enables the carrier to enter a joint business agreement as two independent legal entities, enabling them to cooperate commercially on routes between North America and Asia.

Both airlines anticipate launching the trans-Pacific business in early 2011. American plans to launch daily service between New York JFK and Tokyo Haneda on 20-Jan-2010 while JAL commenced service from Haneda to San Francisco in late Oct-2010. Both carriers will codeshare on the flights.

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