US carriers American Airlines and Hawaiian Airlines have submitted applications to the United States Department of Transportation (DOT) to take over Delta Air Lines’ route authority to serve the Japanese market and launch their own Transpacific routes using this licence. The filings, citing underutilisation of a scarce resource, have been prompted by the US DOT's decision last month to review the public interest served by Delta Air Lines' Seattle - Tokyo route after the US major reduced its frequency from daily to a basic seasonal schedule.

As per the US-Japan bilateral agreement, US airlines may only operate a total of four daily round-trip flights at Haneda Airport. Currently that service is provided by Delta Air Lines from Los Angeles and Seattle, Hawaiian Airlines from Honolulu, and United Airlines from San Francisco. However, in December, the DOT instituted a carrier-selection proceeding to determine whether current service between Seattle and Haneda should be reallocated to another airline.

American Airlines is proposing to operate daily, year-round, non-stop service between Los Angeles International Airport and Tokyo's Haneda Airport using this route authority, claiming its link will increase competition in the Haneda market. The route will be served with one of its Boeing 777-200s, which are currently being retrofitted with updated interiors.

"With only four authorized daily flights for US airlines between Haneda and the United States, it is imperative that American be allowed to compete," said Scott Kirby, president, American Airlines. "We are the only US global network carrier without the authority to operate our own aircraft at Haneda.”

American, if successful, would bring competing head-to-head service with Delta on the Los Angeles-Tokyo Haneda route and will bring the first-ever oneworld service to the route pair to compete with other alliances. American's proposal would also enhance the overall competition for service between the US and Tokyo.

Los Angeles is currently the largest continental US gateway to Tokyo and demand in the Los Angeles - Tokyo market is almost five times larger than the Seattle – Tokyo currently allocated for this route authority. American is the leading airline in Los Angeles and has nearly 200 daily departures from Los Angeles International Airport.

Hawaiian Airlines plans to use the licence, if successful in its application, to begin daily, non-stop service this summer to Tokyo Haneda from Kona International Airport on Hawaii Island. In its application, the carrier urged the US DOT to reallocate Delta's Haneda frequency based on market data, noting that Hawaiian Airlines' Honolulu - Tokyo service has been "by far the most, if not only, successful route" of the four Haneda slot pairs granted to US carriers in 2010.

"Kona continues to be a top destination for Japanese travellers, and we are more certain than ever that direct service to West Hawaii is the highest and best use for the scarce Haneda slots that are at stake here," said Mark Dunkerley, president and chief executive officer, Hawaiian Airlines. "This route would provide unmatched public benefit by improving US exports, boosting spending and economic growth within the United States."

The Hawaii Tourism Authority (HTA) estimates that the proposed daily service will generate 531,721 visitor days and $146 million in visitor expenditures. Hawaiian Airlines' application calculates that service directly to Kona will attract 39,000 additional visitors and result in 1,151 new jobs and $65 million in new direct spending.

If approved, this would be Hawaiian Airlines' fifth Japan route and third daily non-stop flight between Japan and Hawaii, joining daily service to Honolulu from Tokyo and Osaka and thrice-weekly service between Honolulu, Sendai and Sapporo. Hawaiian Airlines anticipates it will begin service on or about June 1, 2015, utilising a 294-seat Airbus A330-200.

In our analysis, below, we look in greater detail at passenger flows between Japan and the United States over the past ten years and highlight the largest individual origin and destination markets in the United States. The largest US market to Japan is, unsurprisingly given its location, Honolulu in Hawaii with over three million annual passengers.

In 2013 the Hawaiian capital had a 32.9 per cent share of the total demand between the United States and Japan. Los Angeles is the largest market on the US mainland with a 14.4 per cent share in 2013, followed by San Francisco (8.9 per cent), New York (8.7 per cent) and Chicago (6.6 per cent). Despite the non-stop Delta service, Seattle is only the sixth largest O&D market in the United States with a 5.4 per cent share.