Skymark posts 5.7 billion JPY loss for 1Q FY2014.

On July 31st, Skymark Airlines (BC/SKY) posted a staggering 5.7 billion JPY net loss for just the first quarter of FY2014. It posted an annual 1.8 billion JPY net loss for FY2013. Total revenue was 18.2 billion JPY, down 1.5% from the same period last year, while its operating loss was 5.5 billion JPY (2.5 billion JPY loss for 1Q FY2013) and ordinary loss was 5.4 billion JPY (1.2 billion JPY loss for 1Q FY2013). Aircraft acquisition expenses increased 25.4%, and coupled with crew training costs, spare parts acquisitions, higher fuel bills, its total cost rose 14.0% to 22.9 billion JPY.

Airbus A380-841 F-WWSL/JA380A taxies at Toulouse. Together with heavy losses, penalties for the cancellation are threatening the long-term viability of Japan's first child of deregulation. (Photo: Airbus)

Meanwhile, on July 29th, Airbus unilaterally canceled Skymark's order for six A380s (Skymark's Airbus A380 order in jeopardy.) over concerns of the airline's ability to make payments. The European manufacturer said they were "reserving all its rights and remedies," implying a legal action ahead. According to sources, Airbus is seeking around 70 billion JPY, in addition to pre-deposits amounting to 26.5 billion JPY, which is unlikely to be refunded. "There's no rationality behind the figure. We're considering all measures, including bringing the case to court," said President and CEO Shinichi Nishikubo. As of June, Skymark's cash and near-term assets stood at 7.2 billion JPY. Together with increased losses, should Skymark be obliged to pay a huge penalty, the airline would be at risk of going out of business.

The bitter relationship with the planemaker "will have no affect on future A330 deliveries," the airline says, as all are being leased from Intrepid Aviation. Skymark said they will embark on reorganizing; increase utilization of the A330 (Skymark Airlines inaugurates Airbus A330 service.), lure more passengers by offering a premium product at attractive prices, suspend unprofitable routes, and receive financing from banks. Until now, Japan's third largest airline had made themselves proud by never borrowing cash, but ironically, due to that they don't have any rapport with financial institutions, and many doubt how much support they can get with their shares plummeting 32% after the A380 cancellation and the case with Airbus not yet settled.

A darling of the industry only one year ago is now seeing a nightmare; but not uncommon in the airline industry. They are now rated as "(there is) material uncertainty over whether the company will remain a going concern." Mr. Nishikubo admits "In some aspects, I think we were too optimistic." I certainly do hope they can survive, but in any case they would have to make painful decisions and their independence is certainly in doubt. However, with the A330s on-line, it's also true that they have a superior product at a much affordable cost than its rivals. If I may put my two cents in, what Skymark is missing but can fill is a frequent-flyer program, which was planned but postponed. But obviously only that would be far from enough... now who will come to the rescue?

Reference: Aviation Wire, July 31st. (in Japanese)
Reference: Japan Times, August 1st. (in English) 

*Edited/updated on August 3rd, 2014.

ANA takes delivery of first Boeing 787-9.

All Nippon Airways (NH/ANA) took delivery of their first Boeing 787-9, the first stretched variant of the Dreamliner, on July 27th (PDT). It arrived at their Tokyo/Haneda (HND/RJTT) base on July 29th (JST). JA830A departed Paine Field (PAE/KPAE) at 2103 PDT on July 28th as flight NH9399 and touched down on 'Runway D' of Tokyo's downtown airport at 2237 JST on July 29th.

Boeing 787-9 JA830A touches Japanese soil for the first time. (Photo: Aviation Wire)

Powered by two Rolls-Royce Trent 1000 series engines, ANA's first 787-9 is configured in a 395-seat domestic layout with 18 Premium Class (six abreast; 2-2-2) and 377 economy class (nine abreast; 3-3-3) seats, carrying 60 more passengers (six Premium Class and 54 economy) than their domestic 787-8s. By March 2015, Japan's largest carrier is planned to take delivery of two more machines; one more domestic coming next plus their first international-configured aircraft towards the end of the fiscal year.

ANA will become the first airline in the world to carry passengers on the 787-9 on August 4th, when it will operate a Mt. Fuji sightseeing charter flight from Haneda carrying Japanese and American primary (elementary) school students in Japan as part of the TOMODACHI Initiative (ANA to receive first Boeing 787-9 on July 27th.). Scheduled revenue flights are expected to commence later in August.

ANA is the biggest 787 customer to date, with orders counting 36 787-8s, of which 28 have been delivered, and 44 787-9s. The stretched Dreamliners will enable ANA to start replacing their 777-200/200ERs, which seat either 223 (70 business, 36 premium economy, and 117 economy) or 306 (35 business and 271 economy) for international, and 405 (21 Premium Class and 384 economy) for domestic.

Reference: Aviation Wire, July 29th. (in Japanese)

Skymark's Airbus A380 order in jeopardy.

On July 29th, Airbus announced that they had terminated Skymark Airlines' (BC/SKY) order for six Airbus A380s, just hours after Japan's third largest airline reported it was locked in tough negotiations with the European manufacturer to amend the order.

The first aircraft has already completed its first flight (Skymark's first Airbus A380 completes maiden flight.) and was planned for delivery in October or November this year, though a 2.5-to-six-month delay was announced in June (Skymark's Airbus A380 to be delayed up to six months.) due to interior components not meeting required specifications and needing a redesign. Skymark originally planned to launch super-jumbo operations between Tokyo/Narita (NRT/RJAA) and New York/John F. Kennedy (JFK/KJFK) as early as December in an all-premium 394-seat layout, including 114 business class and 280 premium economy seats.

Airbus A380-841 F-WWSL/JA380A is now unlikely to be delivered to Skymark. (Photo: Airbus)

"Our economic and business environment has become severe due to the depreciated yen and harsh competition, and we have to change the direction of this project," President and CEO Shinichi Nishikubo said, revealing talks to amend the contract had been underway since April, but "have not been making good progress." Mr. Nishikubo told that Airbus is demanding that the carrier join a larger airline group as a condition for making any changes, and should they refuse, the European manufacturer would request "outrageous cancellation penalties beyond the realm of common sense."

NHK, Japan's national public broadcaster, reports the figure is around 70 billion JPY, though Skymark declined to comment. This may be in addition to the 26.5 billion JPY that the airline has already deposited; 7 billion JPY each for the first two machines and 12.5 billion JPY for the remaining four. For the six airframes, Skymark had calculated the acquisition cost to total 191.6 billion JPY as of May. With the first already complete except for the interior and their second almost there, Skymark would need to pay a hefty fine. These have been tailored to the airline's specifications, so it would be difficult for Airbus to re-sell them without an expensive modification, which would obviously be included in the penalty.

Mr. Nishikubo went on to say "Skymark has been contributing to the Japanese aviation industry throughout its history by offering reasonable airfares, resulting in the conservative or bureaucratic industry becoming very competitive. We take great pride that we have been independent without the help of any major carriers, which has enabled us to change the industry significantly. We definitely cannot accept their forceful way of negotiations that threatens our independent business management," adding "It is absolutely unthinkable for us to become a subsidiary of any major airline."

Skymark's President and CEO Shinichi Nishikubo at today's press conference. (Photo: Aviation Wire)

Hours later, the planemaker denied Skymark's claims and said in a press release "Following discussions with Skymark and in light of the airline's expressed intentions in respect of the A380, Airbus has in accordance with its contractual rights, notified Skymark that the purchase order for the six A380s signed in 2011 has been terminated," adding "Airbus is reserving all its rights and remedies," probably implying they are prepared to take legal action.

The airline revealed it had been requesting a six-to-12-month deferral for the first two examples and indefinitely postpone the remaining four, or convert some to the smaller A330, which entered service with Skymark in June (Skymark Airlines inaugurates Airbus A330 service.). After Airbus's announcement, Mr. Nishikubo responded "We were informed with a fax on Sunday that the contract had been terminated because we hadn't made pre-payments after April," adding "We haven't talked enough. Questions like what would happen to the pre-deposits or whether we have the option to convert the order to other types have not been answered. Official meetings haven't been held either." He regretted "It has been unilateral. And this has been leaked to local media (in Europe). It's against the rules."

Skymark reported a net loss of 1.8 billion JPY for FY2013, its first full-year loss since FY2008, amid increasing competition from LCCs, a depreciated JPY, and fuel costs remaining high, as well as costs related to bringing in the A330, the service entry of which was delayed four times, and the now jeopardized A380. Their foray into second and third-tier markets to avoid LCC competition is not bearing fruit so far (Skymark's new routes suffering low load factors.) as well. Its balance sheet has deteriorated, and having avoided borrowing any cash from banks since its birth, ironically, it does not have any rapport with financial institutions to receive support.

Simply put, Skymark just couldn't afford to take delivery of the behemoth. Although in line with their strategy to pursue the under-served market for affordable premium travel (Skymark posts loss but optimistic with strategy tweaks.), an all-Boeing 737 (until the A330s) domestic-only airline making a shot at the scheduled international long-haul market with the world's largest passenger aircraft in an unprecedented all-premium layout without any partners was way too ambitious. However, Mr. Nishikubo reiterated they haven't given up on international dreams, saying "Our A330s can be deployed on international routes as well. New York is not possible, but we would certainly like to consider Bangkok, Hawaii, and Singapore. We want to push (the government) for international slots from Haneda."

With cash reserves dwindling and the domestic market becoming even more competitive, and notwithstanding Airbus's expected lawsuit against the airline, can Skymark manage to get itself back on a profitable track?

Reference: Aviation Wire, July 29th. (in Japanese)
Reference: Skymark Airlines, July 29th. (PDF; in Japanese)
Reference: Bloomberg Japan, July 29th. (in Japanese)
Reference: Centre for Aviation, July 29th. (in English)
Reference: Nikkei Shimbun, July 29th. (in Japanese)

*Edited/updated on July 30th.

ANA strongly considers Tokyo – Mexico City.

All Nippon Airways (NH/ANA) is considering launching a direct flight to Mexico City, according to a comment by Shinichiro Ito, President and CEO of ANA Holdings, parent of ANA. Japan's largest carrier, both domestically and internationally, plans to use Mexico City as the gateway to Latin America. The flight would likely be operated by the Boeing 787 Dreamliner.

Boeing 787-8 JA827A with ANA's new Inspiration of JAPAN titles. (Photo: ANA)

"I'm with renewed feelings about the momentum of Japanese companies entering the market here," Mr. Ito said during his visit accompanying Prime Minister Shinzo Abe on a trip through five Latin American countries including Mexico, Trinidad and Tobago, Colombia, Chile, and Brazil. "We're very positive for a direct flight," he added. Japanese firms doing business in Mexico increased from 680 to over 800 in just one year, as companies start to look beyond Southeast Asia. Annual Japanese visitors to Mexico numbered 52,000 for 2009, but exceeded 100,000 in 2013.

Japan Airlines' (JL/JAL) Tokyo/Narita (NRT/RJAA) – Vancouver (YVR/CYVR) route used to extend to Mexico City/Benito Juárez (MEX/MMMX) until it was axed in 2010 during JAL's restructuring. Currently, AeroMéxico (AM/AMX) is the sole carrier serving the market with four-times-weekly direct flights operated by 787s. The eastbound leg is non-stop, while the westbound journey refuels at Tijuana (TIJ/MMTJ), though the intermediate stop is expected to be changed to Monterrey/Mariano Escobedo (MTY/MMMY) from September 18th.

Mr. Ito also emphasized they would look into the Asia – Latin America (connection at Narita?) market as well before making a final decision. In FY2015, the once-exclusively domestic carrier expects for the first time in its history to have more international than domestic capacity. By FY2016, ANA plans to have 45% more international flights compared to FY2013, a figure which includes their Haneda expansion (ANA's Summer 2014 international expansion.) this spring. Other new destinations under consideration include Istanbul (ANA considering Haneda – Istanbul.).

Reference: Nikkei Shimbun, July 27th. (in Japanese)

ANA to resume Haneda – Nagoya in October.

As rumored, All Nippon Airways (NH/ANA) has officially announced they will launch Tokyo/Haneda (HND/RJTT) – Nagoya/Chubu Centrair (NGO/RJGG) from October 26th, the beginning of the Winter 2014/2015 timetable. Although schedules and fares will be released at a later date before it goes on sale on August 26th, ANA plans to time the arrival into Haneda to enable onwards connections to their expanded daytime international operations (ANA's Summer 2014 international expansion.) at Tokyo's downtown airport.

Airbus A320-211 JA8947 and Boeing 737-781(WL) JA14AN await their next assignment at Nagoya's Chubu Centrair on an early spring evening. (Photo: Ryosuke Yano)

It will use one of the Haneda slot-pairs to be freed by ANA's transferring of some Haneda – Yamaguchi-Ube (UBJ/RJDC) flights to Star Flyer (7G/SFJ) (Star Flyer to add Yamaguchi-Ube; but reduce Fukuoka.), cutting two round-trips operated with their own metal on the route.

Japan's largest carrier currently operates two round-trips between Tokyo/Narita (NRT/RJAA) and Chubu Centrair to feed ANA and Star Alliance partners' international network from Narita. These flights are flown by either 166-seat Airbus A320s or 126-seat Boeing 737-500s and managed to record a load factor of 75.3% in FY2013, above the domestic system-wide average of 73.9%. With their Haneda international network having grown to 23 round-trips covering 17 routes, ANA will go ahead to resume the link which was axed 32 years ago in June 1982. Nagoya's older Komaki (NKM/RJNA) was the main airport serving the city then.

Archrival Japan Airlines (JL/JAL) launched the same route on March 31st, 2013 for the same purpose with one daily round-trip, and increased to double daily from March 30th this year. It operates with 144-seat 737-800s (12 Business, 132 economy) and 244-seat 777-300ERs (eight First, 49 Business, 40 Premium Economy, and 147 economy), both international-configured aircraft, making good use of the time between international flights rather than have them just sit on the ground. Load factor was 61.0% for FY2013. Fares start from as low as 8,300 JPY one-way.

From a point-to-point perspective (not considering international connections), the Tokyo – Nagoya link is conveniently served five times every hour, going up to eight during rush hours, by the super-efficient Shinkansen (bullet train) as a section of the Tokaido Shinkansen line which goes to Osaka. Travel time is one hour and 40 minutes and fares start from 10,360 JPY. However, next year AirAsia Japan (Mk II) is widely expected to launch an initial hub at Chubu Centrair (AirAsia Japan is officially reborn; first flight June 2015.) with flights to Tokyo rumored as well. The choices are Ibaraki (IBR/RJAH) and Narita, since Haneda slots are still unavailable, but it could potentially spark a fare war. ANA's launching of the Haneda – Chubu Centrair route may have this in mind as well.

Reference: All Nippon Airways, July 23rd. (in Japanese)
Reference: Aviation Wire, July 23rd. (in Japanese)

JAL re-times international flights in Winter 2014/2015.

From the Winter 2014/2015 timetable effective October 26th, Japan Airlines (JL/JAL) will be re-timing some international flights at both Tokyo/Haneda (HND/RJTT) and Narita (NRT/RJAA) airports to increase flight connection opportunities.

Boeing 767-346/ER(WL) JA617J Sky Suite 767 arrives at Haneda. (Photo: Ryosuke Yano)

Haneda – Ho Chi Minh City/Tan Son Nhat (SGN/VVTS) will have its Haneda night arrival changed to a morning arrival, offering connections to all of JAL's domestic destinations from Haneda.

Flight Schedule (effective Oct/26/2014):
Haneda – Ho Chi Minh 1 daily with 767-300ER.
JL079 HND 0130 – 0550 SGN 76W Daily
JL070 SGN 2345 – 0655(+1) HND 76W Daily
 
Haneda – San Francisco (SFO/KSFO) will see its night arrival into Haneda moved to early morning, providing connections to all of their domestic flights as well as its seven flights to Asia from Haneda. Equipment will be up-gauged from a Boeing 787-8 to a Sky Suite 777-300ER, enhancing customer experience.

Flight Schedule (effective Dec/1/2014):
Haneda – San Francisco 1 daily with 777-300ER.
JL002 HND 0005 – 1625(-1) SFO 77W Daily
JL001 SFO 0035 – 0500(+1) HND 77W Daily

Narita – Boston (BOS/KBOS) will have its Narita morning departure moved to the evening, increasing cities connecting from Asia from seven to 15.

Flight Schedule (effective Oct/26/2014):
Narita – Boston 1 daily with 787-8.
JL008 NRT 1820 – 1650 BOS 788 Daily
JL007 BOS 1150 – 1535(+1) NRT 788 Daily

Narita – Ho Chi Minh City/Tan Son Nhat will see its early morning Narita arrival moved to the afternoon to reduce connection times for three North American routes from four to three hours. The number of possible connections reaches seven, including code-share flights with joint-venture (JV) and Oneworld partner American Airlines (AA/AAL).

Flight Schedule (effective Oct/26/2014):
Narita – Ho Chi Minh 1 daily with 767-300ER.
JL759 NRT 1755 – 2230 SGN 76W Daily
JL750 SGN 0810 – 1535 NRT 76W Daily

As reported before, JAL views Narita catering for Asia – North America connections and Haneda serving Tokyo and domestic – international connections.

Reference: Japan Airlines, July 24th. (in Japanese)

ANA to receive first Boeing 787-9 on July 27th.

All Nippon Airways (NH/ANA) will take delivery of its first Boeing 787-9, the stretched version of the Dreamliner, on July 27th (PDT). JA830A will leave Paine Field (PAE/KPAE) on July 28th (PDT) and arrive at Tokyo/Haneda (HND/RJTT) on July 29th (JST).

Boeing 787-9 N1792B/JA830A at Paine Field. (Photo: Steve Bailey/AirlinersGallery.com)

Powered by two Rolls-Royce Trent 1000 series engines, ANA's first 787-9 will be configured in a 395-seat domestic layout with 18 Premium Class (six abreast; 2-2-2) and 377 economy class (nine abreast; 3-3-3) seats, carrying 60 more passengers (six Premium Class and 54 economy) compared to their domestic 787-8s. Japan's largest carrier believes the stretched Dreamliner will have 23% better fuel efficiency and carry 20% more belly cargo compared to the 767-300ER. Deliveries of 787-9s configured for international services will start in early 2015.

Boeing 787-9 JA830A will receive TOMODACHI decals. (Image: ANA)

ANA will become the first airline in the world to carry passengers on the 787-9 on August 4th, when it will operate a Mt. Fuji sightseeing charter flight from Haneda carrying Japanese and American primary (elementary) school students in Japan. It will be carried out as part of the TOMODACHI Initiative, a public-private partnership between the U.S.-Japan Council and the U.S. Embassy in Tokyo born out of support for Japan’s recovery from the Great East Japan Earthquake. It invests in the next generation of Japanese and American leaders through educational and cultural exchanges as well as leadership programs. The young passengers will be chosen by ANA, Boeing, and the U.S. Embassy in Tokyo, and tickets will not be available to the public.

The second member of the 787 family will enter scheduled revenue service with ANA in August. Type certification was awarded by the U.S. Federal Aviation Administration (FAA) and European Aviation Safety Agency (EASA) on June 16th, followed by the Japan Civil Aviation Bureau (JCAB) on July 18th. Launch customer Air New Zealand (NZ/ANZ) took delivery of their first on July 9th. ANA is the biggest 787 customer to date, with orders counting 36 787-8s (28 delivered) and 44 787-9s. The stretched Dreamliners will enable ANA to start replacing their 777-200/200ERs.

Reference: All Nippon Airways, July 24th. (in Japanese)
Reference: All Nippon Airways, July 24th. (in Japanese)

Skymark to offer free Wi-Fi on Airbus A330.

On July 23rd, Skymark Airlines (BC/SKY) revealed that they would begin offering complimentary wireless internet connection, dubbed Skymark Free Wi-Fi, on board their brand-new Airbus A330s (Skymark Airlines' first two Airbus A330s delivered.) from August 7th. It would become the first Japanese carrier to offer free in-flight Wi-Fi.

Airbus A330-343E JA330A arrives at Tokyo's Haneda. (Photo: Aviation Wire)

Service will be initiated with their third example, A330-343E JA330D, which is expected to be delivered within the next week or two. Skymark plans to have its first two A330s, which have already entered service (Skymark Airlines inaugurates Airbus A330 service.), retrofitted with Wi-Fi by the end of this year as well. Panasonic Avionics eXConnect will provide the service.

Passengers with smartphones, tablets, and laptop computers will be able to use the service to surf the web, check e-mail, and update their social media, however, Skymark says it is not suited for YouTube downloading, movie watching, or anything that uses large bandwidth. Skymark's A330s currently serve Tokyo/Haneda (HND/RJTT) – Fukuoka (FUK/RJFF), with Sapporo/New Chitose (CTS/RJCC) (Skymark moves up Sapporo Airbus A330 ops to August 1st.) to be added from August.

Japan Airlines (JL/JAL) only introduced their in-flight internet product JAL SKY Wi-Fi yesterday (JAL SKY Wi-Fi to be launched on July 23rd.), but passengers need to pay a fee upon establishing a connection to surf on their own. The service is currently available on routes from Haneda to Fukuoka, Hakodate (HKD/RJCH), and Osaka/Itami (ITM/RJOO). In other words, Skymark is offering free Wi-Fi on all-premium A330s at the cost of economy seats less expensive than JAL, which charges 1,000 JPY for similar Class J seats and offers Wi-Fi at a cost.

How will JAL, and ANA even more so, respond? The battle is getting only fiercer. Skymark announcing this news on JAL's in-flight Wi-Fi debut date is no coincidence.

Reference: Skymark Airlines, July 23rd. (PDF; in Japanese)
Reference: Aviation Wire, July 23rd. (in Japanese)

Star Flyer to add Yamaguchi-Ube; but reduce Fukuoka.

On July 23rd, Star Flyer (7G/SFJ) officially announced that their new Tokyo/Haneda (HND/RJTT) – Yamaguchi-Ube (UBJ/RJDC) service would be inaugurated on October 26th, the beginning of the Winter 2014/2015 timetable, as previously rumored (Star Flyer to start Yamaguchi-Ube in October.). 150-seat Airbus A320s will operate the route.

Airbus A320-214 JA08MC Heart of Kitakyushu arrives at the airline's home base. (Photo: Aviation Wire)

The Kitakyushu (KKJ/RJFR)-based airline will cut three of its 10 current Haneda – Fukuoka (FUK/RJFF) round-trips to free up three slot-pairs at heavily-regulated Haneda, and will use all three for the new link to Yamaguchi-Ube. Along with the launch, Star Flyer will move all but its flights to Kitakyushu to Haneda's Terminal 2 (used by ANA Group). Last spring, it erred in dumping all of its five newly-awarded Haneda slot-pairs into the Fukuoka market, a high-demand link but also one of the most highly-contested, bringing passenger numbers up but lowering prices and hurting the all-important yield.

Meanwhile, All Nippon Airways (NH/ANA), subsidiary of ANA Holdings, which also owns 18% (and de facto parent) of Star Flyer, will axe two of its five Haneda – Yamaguchi-Ube round-trips and instead code-share on all three of Star Flyer's new flights. ANA is rumored to allocate at least one of the freed-up slot-pairs to launch Haneda –Nagoya/Chubu Centrair (NGO/RJGG), a short hop aimed at feeding its expanded Haneda international network (ANA's Summer 2014 international expansion.) from Nagoya.

Between March 2012 and January 2013, ANA deployed Boeing 787s on the Haneda – Yamaguchi-Ube route in a bid to compete against JAL's four daily round-trips operated by 737-800s and lure travelers. However, now all flights are operated by 270-seat 767-300s and load factors for FY2013 showed 53.2%, well below the company average of 61.6%. ANA had wanted to reduce flying the route without receiving bad publicity, and Star Flyer's restructuring was seen as a perfect vehicle.

Star Flyer has sadly joined the likes of AIRDO (HD/ADO) (d.b.a. Air Do) and Skynet Asia Airways (6J/SNJ) (d.b.a. Solaseed Air) in becoming merely a lower-cost feeder carrier for ANA. Why will ANA not simply take over these carriers? The biggest probable reason behind it is that if they are merged into ANA, they would likely be forced to relinquish some of the precious Haneda slots.

Reference: Star Flyer, July 23rd. (PDF; in Japanese)
Reference: Star Flyer, July 23rd. (PDF; in Japanese)
Reference: Aviation Wire, July 23rd. (in Japanese)

Peach launches Naha hub; but Naha – Ishigaki axed.

On July 19th, Peach Aviation (MM/APJ) officially launched their second hub at Okinawa/Naha (OKA/ROAH), commencing a daily round-trip connecting Naha and Fukuoka (FUK/RJFF) (Peach announces Naha – Fukuoka.) with 180-seat Airbus A320s. One aircraft will be based at Naha.

Departing for MM288's inaugural flight, Airbus A320-214 JA806P is seen off by employees of Peach and officials of Okinawa. (Photo: Peach)

The inaugural flight MM288 from Naha to Fukuoka departed at 1639 JST with 174 passengers, and arrived at the Kyushu airport at 1823. Return leg MM289 departed Fukuoka at 1906 with an identical number of passengers at 174, and arrived back at Naha at 2041. One-way fares range from 4,290 to 21,990 JPY. Naha will now offer three destinations, including Osaka/Kansai (KIX/RJBB) and Taipei/Taoyuan (TPE/RCTP). The Ishigaki (ISG/ROIG) link was suspended on the previous day on July 18th.

Flight Schedule (July 19th - September 20th):
Naha – Fukuoka NEW 1 daily with A320-200.
MM288 OKA 1635 – 1815 FUK 320 Daily
MM289 FUK 1845 – 2025 OKA 320 Daily

Flight Schedule (September 21st - October 25th):
Naha – Fukuoka 1 daily with A320-200.
MM288 OKA 1820 – 2000 FUK 320 Daily
MM289 FUK 2030 – 2210 OKA 320 Daily 

In April, the Kansai-based LCC announced major flight disruptions due to the lack of pilots (Peach outlines Summer 2014 mass cancellations.), resulting in 2,080 cancellations, a whopping 16.1% of its total 12,886 flights planned between May 1st and October 25th. Naha – Ishigaki was initially reported to be a temporary casualty, however, it was recently revealed that it would be suspended from July 19th, and will be terminated on August 31st, axing the route indefinitely. Peach will continue to maintain a once-daily Kansai – Ishigaki link.

CEO Shinichi Inoue said "Load factors weren't bad," adding "There are many carriers here, and we decided it would be wiser to use the aircraft somewhere else," citing heavy competition. ANA Group offers nine daily round-trips, JAL Group flies seven, while Skymark Airlines (BC/SKY) operates four round-trips, and Peach had one. After Skymark and Peach entered the market with fares as low as 4,200 JPY and 3,290 JPY, respectively, ANA (parent ANA Holdings minority-owns Peach) and JAL slashed their fares from around 20,000 JPY to 5,000 JPY, sparking a fare war. Naha – Ishigaki thus became Peach's first route to be terminated.

Peach becomes the second Japanese LCC to launch a second hub, after Tokyo/Narita (NRT/RJAA)-based Jetstar Japan (GK/JJP) launched their Kansai hub (Jetstar Japan launches Kansai hub.) on June 12th. Strategically located, Peach intends to use Naha as a scissors hub to funnel passengers between the main islands of Japan and Southeast Asia. "Our A320s cannot reach Southeast Asia from Kansai, but the Naha hub would enable us to meet the growing demand to and from that region," Mr. Inoue says. He added that Thailand and Vietnam are at the top of the list of destinations he would like to start flying to.

The Kansai-based LCC currently operates 10 A320 flying six international and 10 domestic routes. Peach is owned 38.67% by ANA Holdings, 33.33% by Hong Kong-based First Eastern Investment Group, and 28.0% by Innovation Network Corporation of Japan.

Reference: Nikkei Shimbun, July 18th. (in Japanese)
Reference: Peach Aviation @ Facebook. (in Japanese)
Reference: Aviation Wire, July 20th. (in Japanese)

Fuji Dream orders up to six more Embraer E175s.

At the Farnborough International Airshow, Fuji Dream Airlines (JH/FDA) and Embraer announced that they have signed an order for up to six ERJ170-200s (E175s), consisting of three firm and three options. This order was already included in the Brazilian manufacturer's 2014 second quarter backlog as an undisclosed customer. Based on 2014 list prices, the order is valued at USD 258.6 million if all options are exercised.

Yohei Suzuki, CEO and Chairman of FDA, is congratulated by Paulo Cesar Silva, President and CEO of Embraer Commercial Aviation. Showing off a new colorful carp-themed model, is a new round of special liveries coming up at FDA? (Photo: Aviation International)

"E-Jets tick all the right boxes that have been crucial to the success of Fuji Dream Airlines - efficiency, performance, exceptional economics and solid customer support that is second to none," said Yohei Suzuki, CEO and Chairman of FDA, at the biennial event. "These technologically-advanced jets have proven themselves over the years and we are confident of its capability to help us profitably expand our network and enhance our frequency. The additions to our fleet will provide our customers greater flexibility and choices, as well as the superior comfort they have enjoyed on the E-Jets." Deliveries will start in March 2015 and one will be added each March until 2017.

The newly-ordered E175s will be configured in a single-class 84-seat layout and will be equipped with the auto-land system to perform ILS CAT III approach and landing in limited visual conditions. FDA flies scheduled services to Aomori (AOJ/RJSA) (CoachFlyer JH366: AOJ – NKM on Fuji Dream Airlines' Embraer E175.) and Sapporo/New Chitose (CTS/RJCC), both CAT III-equipped airports notorious for foggy springs and snowy winters. The new E175s will also feature recent aerodynamic enhancements, such as a new wingtip and other technical improvements that reduce fuel burn.

Embraer ERJ170-200/STD (E175) JA06FJ Purple departs from the Komaki hub in Nagoya with ERJ170-100/STD (E170) JA01FJ Dream Red and E175 JA05FJ Orange in the background. (Photo: FDA)

This order is a blow to the Mitsubishi Regional Jet family, the factory of which is ironically located at FDA's biggest hub at Nagoya/Komaki (NKM/RJNA). However, the MRJ has been plagued by development delays which have postponed first delivery by four years to April 2017, and FDA probably couldn't wait for that.

The Komaki-based airline currently operates five E175s and three ERJ170-100s (E170s). With the new additions, FDA intends to re-expand operations at Shizuoka (FSZ/RJNS), its headquarters and hometown of parent Suzuyo. Kumamoto (KMJ/RJFT) is rumored to be the top candidate. It had earlier postponed these plans, citing the airport's curfew between 2030 and 0730, which is based on an agreement with local communities and cannot be changed until 2015. Currently, FDA's Shizuoka operations see three daily flights to Fukuoka (FUK/RJFF), a daily flight to Kagoshima (KOJ/RJFK), and summer seasonal service to Sapporo/New Chitose (CTS/RJCC) with four weekly flights.

Now that most fingers point to an AirAsia Japan (Mk II) hub at Nagoya/Chubu Centrair (NGO/RJGG) (AirAsia Japan is officially reborn; first flight June 2015.), FDA will certainly be facing some new competition next year, though their location is at downtown Komaki and cater more to business travelers than leisure. How will FDA respond?

Reference: Embraer, July 15th. (in English)
Reference: PR Newswire, July 15th. (in English)

Hokkaido Air System to become a JAL subsidiary again.

Japan Airlines (JL/JAL) is moving forward with plans to make Hokkaido Air System (HC/NTH), which calls itself HAC, a subsidiary again by October this year. JAL will increase its shareholding in the struggling commuter carrier from the current 14.5% to 51%.

Saab SF340B-WT JA01HC arrives at Misawa. Will this be short-lived livery? (Photo: Ryosuke Yano)

Majority shareholder Hokkaido Government, which has loans to Hokkaido Air System totaling 360 million JPY, is reported to have agreed in principle to write-off around 100 million JPY of the airline's debts as part of its restructuring. September 2013 saw liabilities exceeding HAC's assets by 136 million JPY. JAL is expected to cover for about 33% of the debt write-off as well.

Meanwhile, HAC will be increasing frequency on the Okadama – Misawa and Okadama – Rishiri (RIS/RJER) routes for the peak Obon homecoming season in August.

Flight Schedule (August 9th - 17th):
Okadama – Misawa 2 daily with SF340B.
HC331 OKD 1005 – 1105 MSJ SF3 Daily
HC937 OKD 1625 – 1725 MSJ SF3 Daily *Aug/9-17 only.
HC330 MSJ 1135 – 1235 OKD SF3 Daily
HC938 MSJ 1755 – 1855 OKD SF3 Daily *Aug/9-17 only. 

Okadama – Rishiri 2 daily with SF340B.
HC671 OKD 0825 – 0920 RIS SF3 Daily *Aug/9-17 only.
HC673 OKD 1410 – 1505 RIS SF3 Daily
HC672 RIS 0950 – 1045 OKD SF3 Daily *Aug/9-17 only.
HC674 RIS 1535 – 1630 OKD SF3 Daily

HAC celebrated their first anniversary of the Sapporo/Okadama (OKD/RJCO) – Misawa (MSJ/RJSM) route (CoachFlyer HC330: MSJ – OKD on Hokkaido Air System's Saab SF340.), which was launched on July 1st last year, filling the void left by JAL when they terminated the link in 2007. Load factor from inauguration through May this year was 53.2%, above the break-even line. However, their seasonal Hakodate (HKD/RJCH) – Misawa route, which ran from August to November last year, saw a dismal 10.0%, prompting HAC to change strategy by making it a weekends-and-holidays-only service (Hokkaido Air System to resume Hakodate – Misawa.) from April.

A bigger challenge HAC will need to face this year is All Nippon Airways' (NH/ANA) double-daily Aomori (AOJ/RJSA) – Sapporo/New Chitose (CTS/RJCC) service (ANA returns to Aomori with Osaka and Sapporo flights.), which just inaugurated this past July 1st. JAL already flies the link three-times-daily. The city of Aomori is only a two-hour drive from Misawa.

HAC is currently owned 36.47% by Hokkaido Government, 14.49% by JAL, 13.53% by City of Sapporo, 5.02% by City of Hakodate, 4.74% by Hokkaido Bank, 4.74% by North Pacific Bank, 4.74% by Hokkaido Electric Power, 3.04% by the City of Kushiro, 1.97% by Seicomart, 1.01% by the City of Asahikawa, 1.01% by Hokkaido Chuo Bus, 1.01% by Sapporo Breweries, etc.

Reference: Nikkan Kogyo Shimbun, July 4th. (in Japanese) 
Reference: Yomiuri Shimbun, July 11th. (in Japanese)
Reference: Hokkaido Air System, July 14th. (in Japanese)

Jetstar Japan to start Kansai – Oita in October.

On July 11th, Jetstar Japan (GK/JJP) announced that they will commence Osaka/Kansai (KIX/RJBB) – Oita (OIT/RJFO) from October 9th. The route, which becomes the 15th for the Tokyo/Narita (NRT/RJAA)-based LCC, will see one daily round-trip operated by 180-seat Airbus A320s.

Airbus A320-232 JA06JJ arrives at Jetstar Japan's second hub at Kansai. (Photo: Aviation Wire)

Flight Schedule (October 9th -):
Kansai – Oita NEW 1 daily with A320-200.
GK651 KIX 1455 – 1600 OIT 32A/320 Mon/Tue/Wed/Thu/Sat/Sun
GK651 KIX 1510 – 1615 OIT 32A/320 Fri
GK652 OIT 1645 – 1745 KIX 32A/320 Daily

Oita becomes the fifth destination from Jetstar Japan's recently-launched Kansai hub (Jetstar Japan launches Kansai hub.) after Fukuoka (FUK/RJFF), Okinawa/Naha (OKA/ROAH), Sapporo/New Chitose (CTS/RJCC), and Narita, bringing the number of their Kansai flights to up to 28 per day. This route was previously served by All Nippon Airways (NH/ANA), which suspended the service in December 2003.

One-way fares will range from 5,490 JPY to 17,990 JPY, excluding the 430 JPY processing fee. Next week, the Japanese unit of Australia's successful LCC will offer promotional tickets to mark the announcement of the new route.

Reference: Jetstar Japan, July 12th. (PDF; in Japanese)

Air Do celebrates 20 million passengers.

AIRDO (HD/ADO) (d.b.a. Air Do) carried the 20 millionth passenger on July 9th. A family on board flight HD016, service from Sapporo/New Chitose (CTS/RJCC) to Tokyo/Haneda (HND/RJTT), became the privileged guest, receiving a Bear Do stuffed doll and an Air Do model airplane, along with memorabilia signed by the staff.

Boeing 737-54K JA300K takes off from Haneda. All remaining 737-500s will be withdrawn from service by January 2016, replaced by 737-700s sourced from minority-owner ANA. (Photo: Ryosuke Yano)

The Sapporo-based carrier reached the milestone 15 years and seven months after launching operations on December 20th, 1998 with three round-trips between Haneda and New Chitose. They surpassed 5 million passengers on August 1st, 2005 and 10 million on November 12th, 2008. As part of the campaign, 20 million points will be given away for splitting between members of the My AIRDO frequent-flyer program (FFP), depending on the number of times flown between September 1st and November 30th.

Air Do was a child of Japan's deregulation, along with Skymark Airlines (BC/SKY) and Skynet Asia Airways (LQ/SNJ) (now operating as Solaseed Air). It was one of the first to try adopting the LCC model with no use of jet-bridges and eliminating most in-flight services. Although targeting 50% lower fares than All Nippon Airways (NH/ANA), Japan Air System (JD/JAS), or Japan Airlines (JL/JAL), the difference became 20-30% after higher-than-expected start-up costs, outsourcing of ground handling to JAL, as well as contracting JAL for aviation expertise.

Air Do celebrated 20 million passengers at the gate at Sapporo's New Chitose. (Photo: Air Do)

However, its reservations system was notoriously inconvenient, as tickets could only be booked through their call center and payment was only accepted at their office or the airport, and whenever the airline ran promotional fares, the call center couldn't handle enough calls. No FFP was offered, no package tours were offered (critical in Japan), and coupled with the three major carriers slashing fares, Air Do's load factors were around 40-60% for 1999. In a controversial bid to lure cigarette lovers, Air Do introduced smoking seats in December 2000, however, it lasted less than two months. In June 2002, it filed for bankruptcy protection.

A comprehensive partnership was signed with ANA in February 2003, which led the restructuring (and transformation) of Air Do into a feeder carrier for ANA. Now owned 14% by ANA Holdings, Air Do flies two Boeing 767-300ERs, two 767-300s, five 737-700s, and four 737-500s connecting Haneda with Sapporo as well as secondary cities of Hokkaido, and Sapporo with secondary cities mostly in east Japan.

Reference: Air Do, July 9th. (in Japanese)
Reference: Air Do @ Facebook (in Japanese)
Reference: Aviation Wire, July 10th. (in Japanese)

Skymark moves up Sapporo Airbus A330 ops to August 1st.

Skymark Airlines (BC/SKY) has moved forward the start date of Airbus A330 service to Sapporo/New Chitose (CTS/RJCC) to August 1st. Flights to be operated by the new Airbus wide-body are BC705/710, a morning round-trip linking the Hokkaido capital with Tokyo/Haneda (HND/RJTT). It is eight days earlier than previously announced (Skymark to fly Airbus A330s to Sapporo from August.).

Airbus A330-343E JA330A/F-WWKH takes off from Toulouse. (Photo: Airbus)

It will coincide with the delivery of their third A330, and the Haneda – Fukuoka (FUK/RJFF) route will also see increased A330 service, with the type operating on seven out of 10 daily round-trips. A330 frequency for the Sapporo route will be upped from October, when their fourth example enters service.

Airbus A330 Flight Schedule (August 1st - September 30th):
Haneda – New Chitose 1 of 8 daily operated with A330-300.
BC705 HND 0825 – 1000 CTS 333 Daily
BC710 CTS 1040 – 1220 HND 333 Daily

Haneda – Fukuoka 7 of 10 daily operated with A330-300.
BC003 HND 0740 – 0935 FUK 333 Daily
BC007 HND 0920 – 1110 FUK 333 Daily
BC013 HND 1235 – 1430 FUK 333 Daily
BC015 HND 1345 – 1540 FUK 333 Daily
BC017 HND 1505 – 1700 FUK 333 Daily
BC021 HND 1725 – 1915 FUK 333 Daily
BC025 HND 1835 – 2030 FUK 333 Daily
BC008 FUK 1015 – 1150 HND 333 Daily
BC010 FUK 1150 – 1325 HND 333 Daily
BC016 FUK 1510 – 1645 HND 333 Daily
BC018 FUK 1620 – 1755 HND 333 Daily
BC020 FUK 1740 – 1915 HND 333 Daily
BC024 FUK 1955 – 2130 HND 333 Daily
BC026 FUK 2110 – 2245 HND 333 Daily

Japan's third largest carrier has configured their brand-new A330s with 271 premium Green Seats, boasting a generous 38-inch (96.5 centimeters) seat pitch at seven-abreast (2-3-2), similar to Japan Airlines' (JL/JAL) Class J domestic business class. However, Green Seats offer a power port at every seat throughout the cabin, while Class J doesn't, and while JAL charges a minimum 1,000 JPY premium for Class J, Skymark has been keeping the price as same as their economy seats on the Boeing 737s.

After New Chitose, A330 operations will be expanded to Okinawa/Naha (OKA/ROAH) in February or March next year. A total of 10 aircraft will be acquired by September 2015.

Reference: Skymark Airlines, June 24th. (PDF; in Japanese)
Reference: Aviation Wire, July 4th. (in Japanese)