Rumors are circulating that Star Flyer's (7G/SFJ) current President Shinichi Yonehara has decided to resign from his position. Yomiuri Shimbun along with other media all reported the news on February 19th. It was denied by the airline the following day, but several sources close to the President are telling that other executives have already been informed about the matter.
Star Flyer is expected to post a staggering 3.3 billion JPY loss for fiscal year 2013 ending in March. Their all-Airbus A320 fleet will be reduced to nine, executives have already taken 15-30% salary cuts, and the company has cut about 10% of its workforce through early voluntary retirements. The carrier blames higher fuel costs due to the rapid devaluation of the Japanese Yen (JPY) as well as increased competition from LCCs, but that's just a tip of an iceberg.
As part of restructuring, they are axing the four-times daily Osaka/Kansai (KIX/RJBB) - Fukuoka (FUK/RJFF) service after February 19th as well as their double-daily Kitakyushu (KKJ/RJFR) - Busan/Gimhae (PUS/RKPK) route, their sole but highly unprofitable international service, after March 29th. Star Flyer touts itself as Kitakyushu's hometown airline with its headquarters and maintenance center based there, but most of its routes are to and from the big cities of Fukuoka, Osaka, and Tokyo. Last spring, it put all of its five slot-pairs newly awarded at Tokyo/Haneda (HND/RJTT) on the Haneda - Fukuoka route, a high-demand route but at the same time one of the most highly-contested. Load factors went up, but prices went down and hurt the all-important yield.
Meanwhile, Star Flyer's Haneda - Kansai route, which constantly sees load factors around 70%, is not helping the balance sheet either. As many as 130 of the 150 seats per flight are sold by All Nippon Airways (NH/ANA), which puts its code on these flights, and Star Flyer is being forced to sell these seats to ANA at "unfavorably low prices", according to close sources. Soon they will have ANA's code on code on all flights; the 'NH' code will be placed on all of its 10 Haneda - Fukuoka round-trips on February 1st, as well as the three-times-daily Nagoya/Chubu Centrair (NGO/RJGG) - Fukuoka route which will commence on March 30th. "ANA basically forced Star Flyer to start taking over another unprofitable (at ANA's costs) route", cite a source who preferred not to be named.
Unlike competing LCCs which cram 180 seats on the A320, Star Flyer only has 150; they have boasted 'high-quality domestic economy', providing audio visual on-demand (AVOD) at every seat, the only domestic airline to do so, as well as serving Tully's-branded coffee accompanied by chocolate for free. But these features will not stand out soon, as Skymark will put in all-premium Airbus A330s into service on the Haneda - Fukuoka route and sells these seats at prices often even cheaper than ANA and Japan Airlines' (JL/JAL) economy.
ANA Holdings owns 17.96% of Star Flyer, and rumors have it that an ANA veteran will be installed as new President. Can Star Flyer find a niche? Or will it become merely a feeder carrier for ANA operating routes that would be unprofitable at ANA's costs?
Source: Yomiuri Shimbun, February 19th. (in Japanese)
Source: Aviation Wire, February 21st. (in Japanese)
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| Airbus A320-214 JA08MC 'Heart of Kitakyushu' taxies at Haneda. (Photo: Ryosuke Yano) |
Star Flyer is expected to post a staggering 3.3 billion JPY loss for fiscal year 2013 ending in March. Their all-Airbus A320 fleet will be reduced to nine, executives have already taken 15-30% salary cuts, and the company has cut about 10% of its workforce through early voluntary retirements. The carrier blames higher fuel costs due to the rapid devaluation of the Japanese Yen (JPY) as well as increased competition from LCCs, but that's just a tip of an iceberg.
As part of restructuring, they are axing the four-times daily Osaka/Kansai (KIX/RJBB) - Fukuoka (FUK/RJFF) service after February 19th as well as their double-daily Kitakyushu (KKJ/RJFR) - Busan/Gimhae (PUS/RKPK) route, their sole but highly unprofitable international service, after March 29th. Star Flyer touts itself as Kitakyushu's hometown airline with its headquarters and maintenance center based there, but most of its routes are to and from the big cities of Fukuoka, Osaka, and Tokyo. Last spring, it put all of its five slot-pairs newly awarded at Tokyo/Haneda (HND/RJTT) on the Haneda - Fukuoka route, a high-demand route but at the same time one of the most highly-contested. Load factors went up, but prices went down and hurt the all-important yield.
Meanwhile, Star Flyer's Haneda - Kansai route, which constantly sees load factors around 70%, is not helping the balance sheet either. As many as 130 of the 150 seats per flight are sold by All Nippon Airways (NH/ANA), which puts its code on these flights, and Star Flyer is being forced to sell these seats to ANA at "unfavorably low prices", according to close sources. Soon they will have ANA's code on code on all flights; the 'NH' code will be placed on all of its 10 Haneda - Fukuoka round-trips on February 1st, as well as the three-times-daily Nagoya/Chubu Centrair (NGO/RJGG) - Fukuoka route which will commence on March 30th. "ANA basically forced Star Flyer to start taking over another unprofitable (at ANA's costs) route", cite a source who preferred not to be named.
Unlike competing LCCs which cram 180 seats on the A320, Star Flyer only has 150; they have boasted 'high-quality domestic economy', providing audio visual on-demand (AVOD) at every seat, the only domestic airline to do so, as well as serving Tully's-branded coffee accompanied by chocolate for free. But these features will not stand out soon, as Skymark will put in all-premium Airbus A330s into service on the Haneda - Fukuoka route and sells these seats at prices often even cheaper than ANA and Japan Airlines' (JL/JAL) economy.
ANA Holdings owns 17.96% of Star Flyer, and rumors have it that an ANA veteran will be installed as new President. Can Star Flyer find a niche? Or will it become merely a feeder carrier for ANA operating routes that would be unprofitable at ANA's costs?
Source: Yomiuri Shimbun, February 19th. (in Japanese)
Source: Aviation Wire, February 21st. (in Japanese)
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