Thursday, May 15, 2014

Skymark's new routes suffering low load factors.

Skymark Airlines' (BC/SKY) system-wide load factor for April, the first month of the Summer 2014 schedule, was 62.1%. Available seats went up 13.4% to 840,397 while total passenger number only increased 6.1% to 521,011. While its lucrative Tokyo/Haneda (HND/RJTT) slots continue to generate positive results, their recent foray into secondary markets is hurting the bottom line. Here's a summary of some of the details.
Boeing 737-86N(WL) JA73NT prepares for another flight from Haneda. (Photo: Ryosuke Yano)

From Haneda, Fukuoka (FUK/RJFF) was at the top with 84.9% (+0.8% from 1 year ago), while Yonago (YGJ/RJOH) was lowest with 53.1% (new from April 1st). Routes that saw the seventies were Kobe (UKB/RJBE) at 70.9% and Sapporo/New Chitose (CTS/RJCC) at 78.5%. At Tokyo/Narita (NRT/RJAA), Okinawa/Naha (OKA/ROAH) saw 57.0% (-0.9%) and New Chitose was at 46.0% (+17.4%). These routes see heavy competition (Skymark matches fares with LCCs at Narita.) from Jetstar Japan (GK/JJP) and Vanilla Air (JW/VNL). Its new focus city of Ibaraki (IBR/RJAH) saw new services to Fukuoka at 49.9% (new from April 18th) and Nagoya/Chubu Centrair (NGO/RJGG) at 22.8% (Skymark adds Fukuoka and Nagoya from Ibaraki.), while Kobe saw 57.1% (+2.2%).

Sendai's (SDJ/RJSS) new route to Kobe is showing 35.2% (new from April 1st), while Fukuoka was at 49.6% (+6.2%) and New Chitose at 39.4% (-3.3%). The Sapporo service sees competition from Air Do (HD/ADO).

Naha is doing the best at 46.3% (new from April 1st) (Skymark expands Yonago, axes Asahikawa and Kumamoto.), while Kobe showed 29.3%, New Chitose saw 18.7%, and Narita was at 22.2%.

Naha – Ishigaki (ISG/ROIG), which was launched on July 10th last year, saw 42.7%. Meanwhile, the Naha – Miyako (MMY/ROMY) route, which resumed on June 1st last year, recorded 57.8%.

As has been their profit structure (and similar for ANA and JAL as well), Haneda's 'bread-and-butter' operations account for over 80% of Skymark's revenue. Japan's third largest domestic carrier has been shifting strategy (Skymark posts loss but optimistic with strategy tweaks.) from a low-cost model to a hybrid model, as a means of survival and to differentiate itself among an increasing portfolio of LCCs. All-premium Airbus A380s and A330s (Skymark Airlines' first two Airbus A330s delivered.) will go after the affordable premium market for international and domestic, respectively, while the focus for domestic expansion is on secondary routes, where Skymark believes LCCs would not be able to produce enough yield.

President and CEO Shinichi Nishikubo reiterates that "Skymark now has (cash) strength to withstand initial losses," adding "we will not pull out in a short time like we used to." Will they be able to make these secondary markets work?

Source: Aviation Wire, May 14th. (in Japanese)

No comments:

Post a Comment