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ANA asks US to mandate Hawaiian Airlines interline
April 26th 2019
Hawaiian-JAL JV could preclude ANA’s access to other Hawaiian islands. Read More »
All Nippon Airways (ANA) is asking US DOT to require Hawaiian Airlines to continue interlining with ANA even though Hawaiian has a proposed joint-venture (JV) with ANA rival Japan Airlines (JAL).
Hawaiian has asked the provision be rejected. The Hawaiian-JAL JV does not restrict either airline from interlining, and Hawaiian has not said it would discontinue or alter its interline with ANA. But Hawaiian and JAL’s codeshare agreement initially prohibited Hawaiian from codesharing with ANA, a clause taken out at the request of Japanese authorities.
“Hawaiian’s aversion to maintaining a relationship with ANA – absent direct government intervention to protect consumers and competition – has been evident from the outset,” ANA tells DOT. “Hawaiian asks the Department to set aside valid concerns about competition and simply ‘trust’ Hawaiian to continue interlining with ANA, notwithstanding the undisputed incentives for Hawaiian to cease doing so.”
For inter-island flights, Hawaiian has been the almost exclusive operator in recent times until this year’s launch of inter-island flights from Southwest Airlines. But Southwest’s schedule is limited. Since cutting over to Amadeus Altea, Southwest has the technological capability for cooperation, but its pilot union places restrictions on receiving interline passengers.
ANA says approximately 20,000 of its Hawaii passengers interline with Hawaiian a year. But as a percentage of its total Hawaii traffic, the figure seems smaller at 4%. But the Japan-Hawaii market is rapidly changing. First is ANA’s own growth as it swaps 10 weekly flights from 787 to A380s with more than double the capacity. Delivery of ANA’s third and last A380 next year will produce further expansion. The growth may require ANA to maximise network options.
A large factor may be marketing. ANA is seeking to change Japanese consumer mindset that associates Hawaii with Japan Airlines. ANA's A380 features innovation for the Hawaii market, and ANA is expanding its related services on the ground in Honolulu. Yet if ANA cannot offer same-ticket access to other parts of Hawaii, consumers may not see ANA as good or better than JAL. This is a point JAL has seized on. At the same time ANA has a marketing campaign centred on "ANA HAWAII", JAL has responded with its own Hawaii campaign with the tagline "Style Yourself". Ads prominently show the beyond-Honolulu access JAL has to other Hawaiian destinations.
It is in ANA’s commercial interest to have the Hawaiian interline continue. But ANA argues it is also a public benefit since if the Hawaiian-JAL JV is approved without an interline remedy, Hawaiian and JAL will have an effective monopoly on travel to Hawaiian destinations other than Honolulu. “Passengers will likely be harmed because they will have fewer options at higher costs for these itineraries,” ANA says in a regulatory submission.
Eleven per cent of Japanese passengers travelling to Hawaii visit more than one island, according to Hawaii tourism research. The Japan-Hawaii market is approximately 89% outbound Japan.
ANA’s request for a mandated interline agreement is not out of step internationally. The European Commission has mandated interline agreements. ANA’s regulatory submission eagerly notes Hawaiian Airlines in 2016 requested regulators mandate Qantas to agree to cooperate with Hawaiian as part of the proposed American Airlines-Qantas JV. “The Hawaiian of 2019 should respect the wisdom of the Hawaiian of 2016,” ANA’s submission says.
The cooperation Hawaiian sought was a codeshare, more important than the interline ANA seeks. Further, domestic Australia has an alternative carrier, Virgin Australia, whereas inter-island Hawaii does not.
“ANA is not proposing that the department go that far (i.e., to require codesharing), but argues that by Hawaiian’s own reasoning from the American-Qantas proceeding, ANA’s passengers certainly merit the lesser benefit of interlining on terms no less favorable than Hawaiian provides to JAL.”
Underlying the matter is risk of hypocrisy. Hawaiian Airlines, along with JetBlue Airways and US freight operators, have sought to act as a check on American, Delta and United’s push to restrict Gulf airlines in the US. Hawaiian and JetBlue have regularly commented on various JV and traffic right applications. Some of JetBlue’s comments may now be seen to be self-fulfilling as JetBlue seeks remedy slots in European airports.
