Wednesday, September 30, 2015

Skymark relaunched with ANA sponsorship.

On September 29th, bankrupt Skymark Airlines [BC/SKY] (Skymark to file for bankruptcy.) officially revamped its ownership structure and management. A 100% capital reduction was performed, followed by a 18 billion JPY capital injection together from Integral Corporation, ANA Holdings, and UDS Airlines Investment, which officially became the new owners of the embattled airline, controlling 50.1%, 16.5%, and 33.4%, respectively (Creditors choose ANA/Skymark proposal over Delta/Intrepid.). UDS is a new investment firm jointly owned by Development Bank of Japan (DBJ) and Sumitomo Mitsui Banking, both now long-time partners of ANA Holdings.

Boeing 737-86N(WL) JA73NJ taxies at New Chitose. Skymark intends to retain a fleet of at least 26 baby Boeings. Can Skymark remain independent? Caught in between the incumbent carriers and new LCCs, what market could it pursue outside its bread-and-butter (for now) Haneda? (Photo: Ryosuke Yano)

The former Skymark management, including Chairman Takashi Ide and President Masakazu Arimori, has been entirely replaced by six new executives. Integral's President Nobuo Sayama has become Chairman and Masahiko Ichie of Development Bank of Japan (DBJ) assumed the role of President. Senior Managing Director is Hideo Yaguchi from OCS, an ANA Holdings cargo subsidiary, who will be responsible for general supervision. Manabu Motohashi, the sole person on the board from within Skymark, is Managing Director and Executive Officer, taking responsibility for management planning, overall control for marketing, and information system. Integral's Shigeki Nishioka has become Director and Executive Officer, overseeing finance, accounting, general affairs, human resources, and listing preparation. ANA's Noriyuki Masukawa has been appointed Director to supervise safety operations.
At the same time, Skymark signed a binding code-sharing agreement with rival All Nippon Airways [NH/ANA], subsidiary of the bankrupt carrier's now 16.5% owner ANA Holdings, which is the centerpiece of the struggling airline's corporate rehabilitation plan (Skymark gives in to ANA; Japan reverts to duopoly.). Discussions are being held to implement code-sharing on 13 routes; all but three routes out of Tokyo/Haneda [HND/RJTT] and Sendai [SDJ/RJSS], which is being axed at the end of next month (Skymark to pull out of Sendai in October.). Omitted from Haneda are to Fukuoka [FUK/RJFF], Kagoshima [KOJ/RJFK], and Sapporo/New Chitose [CTS/RJCC], where ANA already commands the lion's share of flights and they learned the Japan Fair Trade Commission is unlikely to give a nod.

"We're working towards starting code-sharing in Winter 2016/2017," said Mr. Sayama, adding "We hope to reveal the outline of code-sharing by mid-October." ANA has been pushing Skymark to adopt their Able-D reservations system, which was also taken up by previous ANA-sponsored airlines AIRDO [HD/ADO] (d.b.a Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. However, taking up the system meant pricing needed to have consent from ANA, and all income would go into ANA first and then later be transferred to the airlines, virtually making the three quasi-subsidiaries of ANA. Mr. Sayama has said "Nobody can call that independent, so Skymark can't do that." Outgoing Chairman Mr. Ide had also stated that preserving Skymark's own reservations system, handmade by former President and CEO Shinichi Nishikubo, and modifying it to make it compatible with code-shares, instead of abandoning it and wholly-adopting Able-D, is key to keeping Skymark independent from ANA.

Boeing 737-881(WL) JA75AN takes off from Haneda. Now the ANA group has direct and indirect influence over a dominant 60% of domestic slots at Haneda. With Air Do, Solaseed Air, and Star Flyer having adopted ANA's reservations system and effectively becoming de facto subsidiaries of ANA, a key to Skymark's independence in the long term is to continue using its own platform. (Photo: Ryosuke Yano)

In addition, Skymark reached an agreement with Mizuho Bank for the establishment of a commitment line on September 17th, allowing up to 10 billion JPY in financing. Payments to creditors will commence on November 30th, and those claiming 1 million JPY will receive the entire figure while those claiming more will initially be given 5% of the amount exceeding 1 million JPY. Biggest creditor Intrepid Aviation, which initially sought for 900 million USD (108 billion JPY) for scrapping Airbus 330 leases (Skymark terminates all Airbus A330 leases.) and fought against ANA to sponsor Skymark with Delta Air Lines [DL/DAL] (Intrepid picks Delta to sponsor Skymark.), has compromised at 57.3 billion JPY, while talks are still continuing with Airbus, Rolls-Royce, and CIT Aerospace, which are the second, third, and fourth largest creditors, respectively. A settlement with Airbus and Rolls-Royce is to be watched, as rumors point out to ANA making a backroom deal to purchase three of Skymark's canceled Rolls-Royce-powered A380s and taking options for two more, which prompted the two creditors to make a last-minute sway in favor of ANA's sponsorship over Delta's (Bye-bye Skymark, Hello ANA Airbus A380?).

Mr. Ichie said that no new routes nor route cuts are planned for the following year, after Sendai is axed. The new chief said Skymark will focus more on building loyalty in its communities where it has a relatively stronger brand recognition, such as in Kobe [UKB/RJBE] and Ibaraki [IBR/RJAH]. The fleet will be kept at at least 26 Boeing 737-800s, and whether to renew the lease of the 27th machine, which is expiring in January 2016, is currently being evaluated. Mr. Sayama confirmed that Skymark will retain its current identity even after it emerges from bankruptcy protection, instead of renaming it SKY bee (Skymark hints at new brand: SKY bee?). Both the new and old management agree that Skymark could become quickly profitable and be listed again in three years. Regulator Japan Civil Aviation Bureau (JCAB) has hinted limiting ANA's financial involvement in Skymark to five years to keep competition at Haneda, however, ANA's cozy relationship with the governing Liberal Democratic Party (LDP) could make the winds blow in their favor again.

Skymark's load factors are quickly recovering. Although August is normally a high month as it is the peak summer vacation travel season coupled with Obon homecoming, the bankrupt airline produced load factors exceeding 90% for most Haneda routes. It doesn't directly translate to yields, however, it is nevertheless a positive sign. With the Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) currently planning to allocate most, if not all of, new future slots at Haneda to international flights in preparation for the 2020 Tokyo Olympics/Paralympics, its domestic market remains closed off to LCCs, making Skymark the only low-fare option at Japan's most important airport. But what market will Skymark pursue beyond that? It has lost against LCCs on almost every other directly-competing route, and though much lower cost and offering lower fares than ANA or JAL, it has failed to generate demand, which the LCCs have succeeded in doing. Regional international routes within reach of its 737s are also seeing growing competition from LCCs. And with the domestic market shrinking, Haneda is not a safe haven forever.

Finding itself being caught in between the majors and LCCs forced Skymark to boldly (and unsuccessfully) pursue the demand for affordable premium travel, initially in the domestic market with all-premium A330s (Skymark Airlines inaugurates Airbus A330 service.) and in the international long-haul arena with premium-only A380s (Skymark posts loss but optimistic with strategy tweaks.). The A330s were also equipped with full galleys so that it could fly regional international routes as well. However, it was too costly and Skymark failed there. So what future lies for Skymark in the long term?

Source: Aviation Wire, 2015 September 1st. (in Japanese)
Source: Aviation Wire, 2015 September 2nd. (in Japanese) 
Source: Aviation Wire, 2015 September 11th. (in Japanese)
Source: Hokkaido Shimbun, 2015 September 15th. (in Japanese)
Source: Toyo Keizai, 2015 September 17th. (in Japanese)
Source: Toyo Keizai, 2015 September 24th. (in Japanese)
Source: Aviation Wire, 2015 September 29th. (in Japanese)
Source: Skymark Airlines, 2015 September 29th. (in English)
Source: Nikkei Shimbun, 2015 September 29th. (in Japanese)
Source: Aviation Wire, 2015 September 29th. (in Japanese)

Monday, September 14, 2015

ANA unveils Star Wars Boeing 787 R2-D2 ANA JET.

On September 12th, All Nippon Airways [NH/ANA] rolled out Boeing 787-9 JA873A R2-D2 ANA JET (ANA reveals Star Wars Project.), the first of three special-themed aircraft featuring Star Wars, at Paine Field [PAE/KPAE]. This marks the first time a character from the popular epic space opera appears on the exterior of a commercial aircraft. It took 10 days to paint R2-D2 on ANA's newest Dreamliner, which will be configured with 215 seats (48 business, 21 premium economy, and 146 economy).

Boeing 787-9 JA873A R2-D2 ANA JET was rolled out from Boeing's factory in Everett on September 12th at 0900 PST. (Photo: ANA)

After cabin work is finished, R2-D2 ANA JET will be delivered at the end of September and is expected to arrive in Japan in early October. Service entry is scheduled for October 18th as flight NH116 from Tokyo/Haneda [HND/RJTT] to Vancouver [YVR/CYVR]. It will also be deployed to Beijing/Capital [PEK/ZBAA], Jakarta/Soekarno-Hatta [CGK/WIII], Munich [MUC/EDDM], Paris/Charles de Gaulle [CDG/LFPG], San Jose [SJC/KSJC], and Sydney/Kingsford Smith [SYD/YSSY] (ANA announces Haneda – Sydney.) later on.

JA873A will be adorned with the iconic robot until March 2020. (Photo: ANA)

One day prior to inaugurating service, R2-D2 ANA JET will be assigned to a scenic flight from Haneda. 39 winners from a photo contest on ANA's website that will end on September 18th will be invited, and all members of ANA Mileage Club (AMC) are also eligible to apply for a scarce 25 groups of two made available. The five-year Star Wars Project agreement with The Walt Disney Company (Japan) will take advantage of the release of The Force Awakens, the series' latest episode and the first of the next trilogy, to bolster ANA's brand-awareness in the international arena.

Due to overwhelming popularity, last month ANA decided to paint two more aircraft in the Star Wars theme (ANA announces Boeing 777 and 767 Star Wars Jets.). 777-381/ER JA789A will be adorned with BB-8 and be named BB-8 ANA JET to ply intercontinental routes alongside R2-D2 ANA JET, while 767-381/ER JA604A will be painted as STAR WARS ANA JET and fly domestic routes. The former will enter service in March 2016 and the latter in November this year. The three special livery aircraft will fly until March 2020, when the five-year contract expires.

Source: All Nippon Airways Japan @ Facebook.
Source: Aviation Wire, 2015 September 13th. (in Japanese)

Saturday, September 5, 2015

Peach Aviation starts Okinawa – Seoul.

On September 4th, Peach Aviation [MM/APJ] launched Okinawa/Naha [OKA/ROAH] – Seoul/Incheon [ICN/RKSI] (Peach announces Okinawa – Seoul.). Operated by 180-seat Airbus A320-200s, the daily service became their fifth route out of their Naha hub (Peach launches Naha hub; but Naha – Ishigaki axed.). Japan's so far most successful LCC already serves the South Korean capital three times daily from Osaka/Kansai [KIX/RJBB].

Airbus A320-214 JA808P departs on Peach's inaugural flight from Naha to Incheon. It boasts a modest fleet of 16 A320s. Their 17th will arrive in November, followed by one aircraft each in March, July, and November next year for a total of 20. (Photo: Aviation Wire)

Inaugural flight MM905 departed Naha at 1304 JST with 151 passengers, including five children. Along with locals, many American workers at Okinawa's U.S. bases were also on the flight. Aircraft assigned was A320-214 JA808P, which arrived at Incheon 17 minutes late at 1532 due to traffic congestion. Return leg MM906 left Incheon at 1611 carrying a full load of 180 passengers, including three children, and arrived at Naha at 1824.

"Unlike the majors, Peach's target is younger travelers. We're seeing repeaters," said Shinichi Inoue, CEO of the Kansai-headquartered LCC, when asked about expansion in the Japan – South Korea market, which has seen Japanese incumbents reducing capacity due to political tensions and territorial disputes. Tokyo/Narita [NRT/RJAA]-based sister LCC Vanilla Air [JW/VNL] also withdrew from the market in March this year (Vanilla Air to suspend Seoul.).

Flight Schedule:
Naha – Seoul/Incheon NEW daily with A320-200.
MM905 OKA 1305 – 1515 ICN 320 Daily
MM906 ICN 1555 – 1805 OKA 320 Daily

Peach first arrived in Naha with service from Kansai on October 18th, 2012, and added Ishigaki [ISG/ROIG] on September 13th, 2013, followed by Taipei/Taoyuan [TPE/RCTP] seven days later. It was upgraded to a hub on July 19th, 2014 with the launch of Fukuoka [FUK/RJFF], though Ishigaki became the first route to be axed on Peach's network at the same time (Peach launches Naha hub; but Naha – Ishigaki axed.). Although Mr. Inoue cited heavy competition as the reason for the suspension, rumors point out to 39% owner ANA Holdings pressuring Peach to exit the short but high-demand route connecting the two major Okinawa islands to protect All Nippon Airways [NH/ANA]. Hong Kong [HKG/VHHH] was launched on February 21st (Peach commences Okinawa – Hong Kong.).

The growing LCC currently bases two A320s at Naha, with ambitions to turn it into a scissors hub to funnel passengers between the main islands of Japan and Southeast Asia. Peach has publicly said Thailand and Vietnam are their top priorities, followed by Malaysia and Singapore. Bangkok/Don Mueang [DMK/VTBD] is being evaluated for launch during the Winter 2015/2016 timetable (Peach mulls Okinawa – Bangkok.), possibly sometime after their 17th A320 is delivered in November. However, Peach does not offer a fly-through product as of yet, forcing passengers to buy two segments separately if they wished to connect, and this may need to change if Mr. Inoue is serious about a full-fledged transit hub.

Source: Aviation Wire, 2015 September 4th. (in Japanese)
Source: Aviation Wire, 2015 September 4th. (in Japanese)

Wednesday, September 2, 2015

ANA restores Kuala Lumpur link.

On September 1st, All Nippon Airways [NH/ANA] resumed Kuala Lumpur/Sepang [KUL/WMKK] with daily nonstop service from Tokyo/Narita [NRT/RJAA] using 240-seat (42 business and 198 economy class) Boeing 787-8s, ending a 13-year hiatus (ANA reveals Kuala Lumpur and expansion at Narita.). ANA used to serve the city via Bangkok/Don Mueang [DMK/VTBD] until January 14th, 2002.

Boeing 787-8 JA829A prepares for departure from Narita for their first flight to Kuala Lumpur on September 1st. ANA's Dreamliner fleet is comprised of 34 -8s and seven -9s, with another two and 36 on order, respectively, along with three -10s. (Photo: Aviation Wire)

Inaugural flight NH815 departed Narita on-time at 1720 JST with a load of 227 passengers. It took off 18 minutes later. "We have been strengthening our Asian network, and Kuala Lumpur had been at the top of our wishlist," said Osamu Shinobe, President of ANA, adding "We expect Asia – North America travel to account for 40%. With Narita's departure and arrival timed for connections, Star Alliance's unfinished business here is how to connect at the Malaysia end."

Flight Schedule:
Narita – Kuala Lumpur/Sepang NEW 1 daily with 787-8.
NH815 NRT 1720 – 2335 KUL 788 Daily
NH816 KUL 0700 – 1500 NRT 788 Daily 

The new round-trip is timed to receive feed from North American arrivals at Narita, while the departure from Kuala Lumpur is timed for onward connections across the Pacific after arriving into Narita.

The route sees competition from Japan Airlines [JL/JAL] with a daily flight operated by 767-300ERs and Malaysia Airlines [MH/MAS] with 10 times weekly flown with Airbus A330-300s. AirAsia X [D7/XAX] suspended its Narita link effective August 20th, though it continues to operate daily from Tokyo/Haneda [HND/RJTT], the preferred downtown airport serving Japan's capital.

Source: Aviation Wire, 2015 September 1st. (in Japanese)

Tuesday, September 1, 2015

JAL shifts more Tokyo – China flights from Narita to Haneda.

On August 31st, Japan Airlines [JL/JAL] announced plans to expand their China network from Tokyo/Haneda [HND/RJTT] with new daily service to Guangzhou [CAN/ZGGG] and Shanghai/Pudong [PVG/ZSPD] along with a second daily round-trip to Beijing/Capital [PEK/ZBAA] effective October 25th, the beginning of the Winter 2015/2016 timetable. Meanwhile, Tokyo/Narita [NRT/RJAA] will see JAL axe Guangzhou and reduce Beijing from twice to once daily.

Nine 767s, including pictured Boeing 767-346/ER(WL) JA618J at Honolulu, are equipped with winglets and Sky Suite interior. JAL, which flies 32 -300ERs and 12 -300s, is celebrating their 30th year of 767 operations. 60 were ordered and the first, a -200, was delivered back on July 23rd, 1985. Although 787s are gradually taking over the 767s' roles, newer -300ERs are being converted to domestic, replacing older -300s and 777s. The versatile aircraft will surely soldier on for another decade or two. (Photo: Ryosuke Yano)

The new Haneda – Shanghai/Pudong link will be served by Boeing 767-300ERs configured with JAL's award-winning Sky Suite product (JAL adding more Sky Suite destinations.) and boasting a generous 199-seat layout (24 business and 175 economy class). The new Guangzhou and additional Beijing flights will see non-Sky Suite 227-seat (30 business and 197 economy class) 767-300ERs deployed.

Flight Schedule:
Haneda – Tokyo/Haneda – Beijing/Capital increase from 1 to 2 daily.
JL021 HND 0910 – 1220 PEK 788 Daily
JL025 HND 1720 – 2030 PEK 763 Daily *NEW from Oct/25.
JL020 PEK 0825 – 1245 HND 763 Daily *NEW from Oct/26.
JL022 PEK 1640 – 2100 HND 788 Daily

Tokyo/Haneda – Guangzhou NEW daily with 767-300ER.
JL087 HND 0850 – 1305 CAN 763 Daily *From Oct/25.
JL088 CAN 1450 – 1945 HND 763 Daily *From Oct/25.

Tokyo/Haneda – Shanghai/Hongqiao daily with 777-200ER. (existing service)
JL081 HND 0915 – 1145 SHA 772 Daily
JL082 SHA 1305 – 1645 HND 772 Daily

Tokyo/Haneda – Shanghai/Pudong NEW daily with 767-300ER.
JL085 HND 1440 – 1710 PVG 76W Daily *From Oct/25.
JL086 PVG 1835 – 2220 HND 76W Daily *From Oct/25.

In May, authorities of China and Japan agreed to allocate two round-trips to each side for Haneda – Guangzhou services. JAL's archrival All Nippon Airways [NH/ANA] was the first to take advantage, having already announced a similar expansion at Haneda and shift away from Narita (ANA strengthens Haneda – China with Guangzhou.). China Southern Airlines [CZ/CSN], based in China's third most populated city, is reportedly also preparing to launch the route though no official announcement has yet been made.

Source: Japan Airlines, 2015 August 31st. (in Japanese) 
Source: Aviation Wire, 2015 September 1st. (in Japanese)