ANA orders Boeing 787-10s, 737s, and Airbus A321ceos.

On January 30th, ANA Holdings, parent of All Nippon Airways [NH/ANA], announced their intention to order three Boeing 787-10s, five 737-800s, and seven Airbus A321s, including four current-generation A321ceos. Japan's largest carrier becomes only the fifth airline to order the Dreamliner's ultimate stretch, and the first in Asia. The A321ceo is a reappearance, as ANA operated the type between 1998 and 2008.

Boeing 787-10 in ANA livery. It will be used to replace the 777-300 on trunk domestic routes. Some orders for the 787-9 may be converted to the larger variant. (Image: Boeing)

Deliveries of the 787-10 will start in FY2019, while all five 737-800s will be delivered in FY2015. The acquisition of three A321neos comes on top of an order for 23 announced in March (ANA selects Boeing 777-9X and Airbus A321neo.), while the four A321ceos, which will be delivered in FY2016, are likely to be a stop-gap measure until the A321neo starts arriving later during that fiscal year.

Airbus A321neo in the colors of ANA. A321ceos and 737-800s ordered will be acquired on a sale-&-lease-back basis, and are only meant as a stop-gap measure until the A320neo family arrives. (Image: Airbus)

For wide-body equipment, ANA also has 20 777-9Xs on order for delivery from FY2021 to replace the 777-300ERs, though three of the current-generation variant will be added this year, with another six due in FY2018-2019 for a total of 28 to meet the 2020 Tokyo Olympics/Paralympics demand.

The total number of 787s ordered increases to 83 (three 787-10s, 44 787-9s, and 36 787-8s), of which two 787-9s and 32 787-8s have already been delivered. Some orders for the 787-9 are likely to be converted to the 787-10. The Dreamliners are expected to replace the entire 777-200/200ER/300 and 767-300/300ER fleets, though in some cases the A321 may be the successor as ANA also downsizes domestic capacity to cope with a declining population.

For narrow-body jet aircraft, ANA currently flies 30 737-800s, two 737-700ERs, a dozen 737-700s, and 17 737-500s. Another Dash 800 is due in March, completing deliveries of already-ordered 737s. ANA has a smaller fleet of a dozen A320ceos in service, however, all were delivered between 1993 and 1997, and most are due to be retired before the A321/320neos arrive, hence ANA's decision to order four current-generation A321s as an interim measure. The first of 15 Mitsubishi MRJ90s (First Mitsubishi Regional Jet is rolled out.) will start arriving in FY2017 to replace 737-500s.

Source: ANA Holdings, January 30th. (in Japanese)
Source: Airbus, January 30th. (in English)
Source: Boeing, January 30th. (in English)

Skymark to cut 15% of flights, ground all Airbus A330s.

Follow-up from Skymark to file for bankruptcy.

On January 29th, Skymark Airlines [BC/SKY] announced that its filing for bankruptcy protection (Skymark to file for bankruptcy.) with the Tokyo District Court had been accepted. During a press conference held by new President and CEO Masakazu Arimori and Representative Chairman Takashi Ide, it was announced that 15% of flights would be suspended and its entire Airbus A330 fleet grounded effective February 1st. Further network reductions will come into effect from March 29th, the beginning of the Summer 2015 timetable.

Skymark will move back to an all-Boeing 737 operator effective February 1st. The 271-seat all-premium Airbus A330s had only entered service on June 14th, 2014. (Photo: Aviation Wire)

Japan's third largest carrier currently flies 152 daily flights covering 23 nonstop routes, however, that will be reduced to 126 on Wednesdays and 128 on other days effective February 1st. A dozen routes spanning the following cities will be affected: Fukuoka [FUK/RJFF], Ibaraki [IBR/RJAH], Ishigaki [ISG/ROIG], Kobe [UKB/RJBE], Miyako [MMY/ROMY], Nagoya/Chubu Centrair [NGO/RJGG], Okinawa/Naha [OKA/ROAH], Sapporo/New Chitose [CTS/RJCC], Sendai [SDJ/RJSS], and Yonago [YGJ/RJOH].

Flight Reductions effective February 1st:
Fukuoka – Ibaraki from 2 daily to 1 daily. 
Fukuoka – Naha from 4 daily to 2 daily. 
Fukuoka – Sendai from 2 daily to 6 weekly. *Suspension from Mar/29.
Kobe – Naha from 2 daily to 1 daily. 
Kobe – New Chitose from 2 daily to 1 daily. 
Kobe – Yonago from 2 daily to 1 daily.
Chubu Centrair – Naha from 2 daily to 1 daily. 
Chubu Centrair – New Chitose from 2 daily to 1 daily.
Naha – Ishigaki from 3 daily to 2 daily. *Suspension from Mar/29.
Naha – Miyako from 3 daily to 2 daily. *Suspension from Mar/29.
New Chitose – Ibaraki from 2 daily to 1 daily.
New Chitose – Sendai from 3 daily to 2 daily. *Suspension from Mar/29.

From March 29th, in addition to the previously announced suspension of New Chitose – Sendai (Skymark takes ANA & JAL dual tie-up, axes Sendai – Sapporo.), Skymark will also axe Fukuoka – Sendai, plus Ishigaki and Miyako entirely. Further terminations are likely as the airline reorganizes, with Kobe – Kagoshima [KOJ/RJFK], Kobe – Sendai, and Yonago – Naha probably next up; these three along with New Chitose – Sendai recorded load factors in the 30-40% range for December, one of the peak travel months. Yonago, only launched on December 20th, 2013 as a focus city boasting five routes last summer, as well as Sendai are likely to be closed down entirely (Skymark mulls Yonago pull-out and Sendai cuts.).

As for its fleet, the all-premium 271-seat A330-300s (Skymark Airlines inaugurates Airbus A330 service.) they had only introduced in June last year will be grounded effective February 1st. Six have been delivered so far, though the sixth was only recently handed over and was awaiting a ferry flight from France. Five are leased from Intrepid Aviation and one from CIT Aerospace, with four more on order for delivery by September this year, but Skymark will negotiate to return all airframes and cancel the remaining on order. As it dumped capacity on trunk routes, Skymark often had to slash price of the A330s' premium seats to below that of rivals' economy fares; the more Skymark flew the A330, the more they hemorrhaged. Pilots certified for the A330 will be retrained for the Boeing 737.

Total debt stood at 71 billion JPY, not including the 700 million USD in penalties Airbus is seeking for the cancellation of the Airbus A380 order (Skymark hopes to settle Airbus A380 penalty in October.). As it also needs to cancel A330 contracts, the figure is only estimated to grow in the following months.

Investment fund Integral Corporation will provide finance and help Skymark continue flying while it reorganizes, and Mr. Arimori added "No specific airline has shown interest yet, but we will continue to look for sponsors according to law." Prospect for foreign investment is not zero, but ownership change exceeding 20% will necessitate relinquishing Skymark's 36 prized slot-pairs at Tokyo/Haneda [HND/RJTT], which decreases the appetite of airlines abroad (Skymark's fate: MLIT discourages foreign investment.). Domestically, ANA Holdings, parent of All Nippon Airways [NH/ANA], is the only airline in a position to assist, as the controversial 8.10 Paper prohibits Japan Airlines [JL/JAL] from making any new investments until FY2017.

Skymark also said it will continue discussions with both ANA and JAL to reach a code-share deal (Skymark takes ANA & JAL dual tie-up, axes Sendai – Sapporo.), however, the plan is likely to be reviewed as it was aimed to fill the excess capacity of the A330s. Layoff of staff is not planned, and its approximately 2,200 workforce will be retained at least for now.

The quarterly earnings report, which was due today, has been postponed to February 4th. Shares of Japan's troubled third largest carrier plunged 25% today on January 29th, down by 80 JPY, the maximum possible drop in a day, to 237 JPY per share. The carrier will be de-listed from the Tokyo Stock Exchange effective March 1st, so shareholders have until February 27th to manage their stocks.

But again, the biggest question is how will they restructure? Which market will they go after? Skymark will revert to an all-737 operator flying a network that is a fraction the size of ANA and JAL, without any loyalty program nor premium product. Fares will still be more affordable than ANA and JAL, but will be far from matching those of LCCs based at Tokyo/Narita [NRT/RJAA], its access of which has improved greatly both in terms of time and cost. As has been the case with its post-deregulation peers, will it eventually choose to come under the umbrella of ANA (Running out of time: Will Skymark join ANA?)? Or will it become Japan's first airline to be liquidated?

Source: Skymark Airlines, January 29th. (in Japanese)
Source: Skymark Airlines, January 29th. (in Japanese) 
Source: Nikkei Shimbun, January 29th. (in Japanese)
Source: Aviation Wire, January 29th. (in Japanese)
Source: Skymark Airlines, January 29th. (in Japanese) 

*Edited/updated on February 12th.

Skymark to file for bankruptcy.

Skymark Airlines [BC/SKY] has reportedly decided to file for bankruptcy protection with the Tokyo District Court, after an emergency board meeting was held on the night of January 28th. Investment fund Integral Corporation has been named by officials close to the matter, which will finance and help Japan's third largest carrier continue operations as normal. This becomes the second airline bankruptcy in Japan in five years, after Japan Airlines [JL/JAL] sought for bankruptcy protection in 2010.

Boeing 737-86N(WL) JA737R thunders out of Tokyo International Airport at Haneda, where Skymark controls 36 slot-pairs. This aircraft is leased from Avolon Aerospace. (Photo: Ryosuke Yano)

Charismatic and hands-on President and CEO Shinichi Nishikubo, who is also the airline's biggest shareholder controlling over 30%, is expected to step down. Managing Director Masakazu Arimori will assume leadership. Total debt is estimated to amount to over 100 billion JPY, including the 700 million USD in penalties Airbus is seeking for the cancellation of the Airbus A380 order (Skymark hopes to settle Airbus A380 penalty in October.).

Although predicting a 354 million JPY net profit for FY2014 only a year ago, its financial health quickly deteriorated from increased costs due to the introduction of the Airbus A330s (Skymark Airlines inaugurates Airbus A330 service.) and now-canceled A380s, continued depreciation of the JPY, high fuel costs (until a few months ago), and intensified competition with the LCCs as well as full-service carriers, which have become more aggressive.

The cash-strapped airline burned 2.5 billion JPY in cash reserves just in the six months to September 2014, bringing down the total on hand to 4.5 billion JPY, but after then they were probably bleeding at an even faster rate. Skymark's continued negative media coverage has apparently kept passengers from choosing to fly with them. They also enjoy no loyalty program, which was planned but shelved and is now considered one of their biggest mistakes in a country where brand affinity counts significantly. Its predicted record loss for FY2014 (Skymark braces for 13.7 billion JPY loss in FY2014.) is expected to be even greater.

A number of aircraft lessors as well as airlines are reportedly already showing interest in sponsoring Skymark's restructuring. Intrepid Aviation, which owns five of Skymark's six A330s (the other is owned by CIT Aerospace), as well as AWAS, GECAS, among others, along with Airbus are the biggest creditors, which probably will have a say in the decision. However, concerning financial assistance from airlines, unless the controversial 8.10 Paper, which prohibits JAL from making any new investments until FY2017, is reviewed, All Nippon Airways [NH/ANA] is virtually the only carrier able to give a hand. 

Mr. Nishikubo had said an investment from ANA would be the last thing they would be looking into, however, their reported consideration of it (Running out of time: Will Skymark join ANA?) and rejection probably illustrated their dire financial health. A dual partnership with ANA and JAL (Skymark takes ANA & JAL dual tie-up, axes Sendai – Sapporo.) was being orchestrated by Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) after the regulator was hesitant to accept Skymark's tie-up with JAL (Skymark in talks with JAL for broad tie-up.) and tried to keep Skymark afloat as Japan's third force and the last child of deregulation that remains independent.

Skymark currently operates 23 non-stop routes covering only domestic destinations using a fleet of five A330-300s and 27 Boeing 737-800s, and employs approximately 2,200 staff. Its 3Q FY2014 results will be released tomorrow on January 29th.

But the biggest question remains; how will they restructure?

Source: Nikkei Shimbun, January 28th. (in Japanese)

*Edited/updated on February 12th.

Solaseed Air loads Okinawa to Ishigaki and Nagoya.

On January 21st, Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air) announced the details of its new routes from Okinawa/Naha [OKA/ROAH] to Ishigaki [ISG/ROIG] and Nagoya/Chubu Centrair [NGO/RJGG] (Solaseed Air to add Ishigaki and Nagoya from Okinawa.) that will be launched from March 29th, the beginning of the Summer 2015 timetable.

Boeing 737-86N(WL) JA805X Nishimera Karikobozu Go is seen between flights at Miyazaki Airport. Nishimera, a village in Miyazaki prefecture, is the sponsor for the billboard title, and Karikobozu is their mascot. (Photo: Solaseed Air)

The former will be served twice daily and the latter once daily using 174-seat Boeing 737-800s. For scheduled flights, both destinations are seeing the airline for the first time. All Nippon Airways [NH/ANA], whose parent ANA Holdings owns 8.56% of Solaseed Air, will put its code on all three round-trips, and instead will drop an identical number of frequencies on the same routes.

Flight Schedule:
Naha – Ishigaki NEW 2 daily with 737-800. (Mar/29 - Oct/24)
6J045 OKA 1115 – 1215 ISG 73H Daily *Departs/arrives 10 minutes early Jul/1 - Sep/30.
6J049 OKA 1745 – 1845 ISG 73H Daily
6J046 ISG 1250 – 1345 OKA 73H Daily *Departs/arrives 10 minutes early Jul/1 - Sep/30.
6J050 ISG 1920 – 2015 OKA 73H Daily

Naha – Chubu Centrair NEW daily with 737-800. (Mar/29 - Oct/24)
6J070 OKA 1200 – 1410 NGO 73H Daily *Arrives 5 minutes late Jul/1 - Sep/30.
6J069 NGO 1445 – 1710 OKA 73H Daily *Departs 5 minutes late Jul/1 - Sep/30. 

The Miyazaki [KMI/RJFM]-based carrier is taking delivery of its 12th 737-800 in March, and it has been anticipated that new routes would be launched, in addition to planned international charters (Solaseed Air eyes international charters in FY2015.) to China, South Korea, and Taiwan. Although not designated a hub, Solaseed Air has a growing Naha operation, with two daily flights to Kagoshima [KOJ/RJFK], three to Kobe [UKB/RJBE], and one to Miyazaki.

The mid-cost carrier code-shares with ANA throughout its entire network, coordinating closely with its de facto parent. As witnessed, Solaseed Air's launch of these two new routes is virtually another transfer of some flights from ANA.

Source: Skynet Asia Airways, January 21st. (in Japanese)

Skymark takes ANA & JAL dual tie-up, axes Sendai – Sapporo.

Skymark Airlines [BC/SKY] is preparing to submit a code-share pact with both All Nippon Airways [NH/ANA] and Japan Airlines [JL/JAL] to the Japan Civil Aviation Bureau (JCAB), hopefully in time for March 29th, the beginning of the Summer 2015 timetable. The deadline for applying for domestic routes for this summer was January 21st, but the three carriers put off submitting the dual partnership as "preparations couldn't make it in time," according to both ANA and JAL.

Airbus A330-343E JA330B is pushed back at Haneda. What was a product to better compete with ANA and JAL became part of their cost burden, decreased load factors, and is now calling for its two archrivals to help fill its seats. (Photo: Aviation Wire)

"We need to understand the details of Skymark's policies," said an ANA spokesperson, while its counterpart at JAL also said "We are currently evaluating the proposal to make it in time for March 29th." Under the scheme, ANA would place its code on all five of Skymark's five routes from Tokyo/Haneda [HND/RJTT]; Fukuoka [FUK/RJFF], Kagoshima [KOJ/RJFK], Kobe [UKB/RJBE], Okinawa/Naha [OKA/ROAH], and Sapporo/New Chitose [CTS/RJCC]. JAL will place its code on all but to Kobe, where it no longer has a presence. There's no deadline for code-sharing, however, the more it is delayed, the shorter the time they have to sell the seats.

The code-share pact is vital for Japan's third largest carrier to stay afloat, as selling 20% of its seats on routes from Haneda is expected to generate an annual 8 billion JPY in increased revenue. Skymark is also negotiating with four financial institutions for capital injection through third-party allocation of new shares. The number of shares is expected to be increased by up to 25%, and to receive approval they have called for an extraordinary (emergency) shareholders' meeting, though the February 18th date has been postponed to a later date.

Rumors circulated in early January that Skymark was evaluating an investment from ANA (Running out of time: Will Skymark join ANA?), however, that seems to have been shelved. ANA's reported acquisition of just a few points short of 20% of Skymark's shares on condition that the Airbus A380 cancellation penalty (Skymark hopes to settle Airbus A380 penalty in October.) is settled and most significantly, current senior executives are replaced by those from ANA, was probably unacceptable to the troubled carrier, whose President and CEO Shinichi Nishikubo has reiterated "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."

Meanwhile, the cash-strapped airline also announced they would be suspending its three-times daily Sendai [SDJ/RJSS] – New Chitose service on March 28th. Its load factor has been hovering around 30-40% in recent months. The route sees competition from AIRDO [HD/ADO] (d.b.a. Air Do), ANA, IBEX Airlines [FW/IBX], and JAL. Its until recently focus city of Yonago [YGJ/RJOH] (Skymark mulls Yonago pull-out and Sendai cuts.) will continue to see nonstop service to Kobe and Naha, however, if load factors do not improve during Summer 2015, they are probably the next in line for the axe.

In other news, Skymark's all-premium 271-seat Airbus A330 (Skymark Airlines inaugurates Airbus A330 service.) will be deployed on the Haneda – Naha route starting on June 1st, when the southern beach resorts become popular in the summer months. It becomes the third A330 route after Fukuoka and New Chitose.

Source: Skymark Airlines, January 21st. (in Japanese) 
Source: Nikkei Shimbun, January 21st. (in Japanese)

Spring Japan receives 900 million JPY injection.

Spring Airlines Japan [IJ/SJO] received a 900 million JPY capital injection on December 22nd, according to Traicy. Cash was raised by third-party allocation of new shares, the amount of which was increased by 30%. Total capital now stands at 6.9 billion JPY, and the number of shares increased from 600,000 to 780,000. Japan's newest LCC has not released who bought the new non-voting stocks, however, parent Spring Airlines [9C/CQH] is most likely.

Boeing 737-86N(WL) JA03GR is leased from GECAS. Spring Japan's original plans call for five new aircraft each year for a fleet of 20 by 2017. (Photo: Spring Airlines Japan)

As far as voting rights are concerned, Chinese LCC Spring Airlines [9C/CQH] controls 33%, the maximum possible under foreign ownership rules of Japanese airlines. The remainder is held by venture capital Skystar Financial Management, Pachinko-slot manufacturer Yamasa, Ibis LCC Investment Partners, Spring Airlines Japan Investment Partners, SMBC Venture Capital, as well as Japan's largest travel agency JTB (Spring Airlines Japan to launch services on June 27th.).

The Tokyo/Narita [NRT/RJAA]-based LCC only launched service last year on August 1st (Spring Airlines Japan commences operations.). It currently operates twice daily to Hiroshima [HIJ/RJOA] and once daily each to Saga [HSG/RJFS] and Takamatsu [TAK/RJOT] using three 189-seat Boeing 737-800s. Its system-wide load factor for the 2014/2015 peak new year holiday season was 64.6%, probably well below the breakeven line.

Spring Japan was reported to be planning regional international flights to China from Spring 2015 (Spring Japan considering Chongqing and Wuhan.) along with its fourth domestic route to Sapporo/New Chitose [CTS/RJCC] (Spring Japan eyes Sapporo and China in 2015.), however, nothing official has been released as of yet.

Source: Traicy, January 16th. (in Japanese)

Jetstar Japan to start Nagoya – Okinawa.

On January 21st, Jetstar Japan [GK/JJP] announced that they will inaugurate Nagoya/Chubu Centrair [NGO/RJGG] – Okinawa/Naha [OKA/ROAH] on March 29th, the beginning of the Summer 2015 timetable. The new service will be flown once daily using 180-seat Airbus A320s.

Airbus A320-232(SL) JA20JJ arrives at Narita on delivery from Toulouse on December 19th. Jetstar Japan's 20th aircraft is actually their 23rd, as three others have been sub-leased to other carriers. The 24th will also be leased out, and the fleet will be kept at 20. New routes will be added by increasing utilization. (Photo: Aviation Wire)

One way fares will start from 7,390 JPY, excluding the processing fee and airport taxes. For the peak travel periods of April/May's Golden Week holidays and summer vacation season, fares will start from 7,990 JPY. To promote the route, the Tokyo/Narita [NRT/RJAA]-headquartered LCC is offering 750 seats at just 990 JPY for travel between March 29th through April 28th and May 12th through June 25th. The sale will end at 1000 JST on January 28th.

Flight Schedule:
Chubu Centrair – Naha NEW 1 daily with A320-200. (2015/Mar/29 - Oct/24)
GK381 NGO 1155 – 1415 OKA 32A/320 Daily
GK382 OKA 1505 – 1715 NGO 32A/320 Daily

Naha becomes Jetstar Japan's fifth nonstop destination from Chubu Centrair, after Fukuoka [FUK/RJFF], Kagoshima [KOJ/RJFK], Kumamoto [KMJ/RJFT] (Jetstar Japan starts three routes from Kumamoto.), and Sapporo/New Chitose [CTS/RJCC]. The central Japan airport serving the nation's third largest metropolitan region is expected to become their third hub now that its second hub at Osaka/Kansai [KIX/RJBB] (Jetstar Japan launches Kansai hub.) is up and running.

The Chubu Centrair – Naha route is already served by All Nippon Airways [NH/ANA] three times daily, Japan Airlines [JL/JAL]-affiliate Japan Transocean Air [NU/JTA] four times daily, and Skymark Airlines [BC/SKY] double daily. Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air) will also be entering the market from the Summer 2015 schedule (Solaseed Air to add Ishigaki and Nagoya from Okinawa.), though it would be a de facto transfer of a round-trip from ANA.

Meanwhile, Jetstar Japan started code-sharing with Qantas Airways [QF/QFA] on January 15th, placing its 33.33% owner's code on all nine routes from Narita; Fukuoka, Kagoshima [KOJ/RJFK], Kumamoto, Matsuyama [MYJ/RJOM], Oita [OIT/RJFO], Naha, Kansai, New Chitose, and Takamatsu [TAK/RJOT]. It already code-shares with American Airlines [AA/AAL] and 33.33% owner JAL.

Source: Jetstar Japan, January 15th. (in Japanese)
Source: Jetstar Japan, January 21st. (in Japanese)

JAL Boeing 787-9 due in July; expands Sky Suite cities.

Japan Airlines [JL/JAL] will place its first Boeing 787-9 in service on the Tokyo/Narita [NRT/RJAA] – Jakarta/Soukarno-Hatta [CGK/WIII] route in July. The stretched variant of the Dreamliner will boast JAL's latest Sky Suite product with a generous layout of only 195 seats; 44 fully lie-flat Sky Suite (business class) seats, 35 Sky Premium (premium economy), and 116 Sky Wider II (economy class).

Boeing 777-346/ER JA736J on final approach to Narita. JAL has completed reconfiguring all 13 flagship 777-300ERs with the Sky Suite product. (Photo: Ryosuke Yano)

The 787-9s will basically have the same seats as the Sky Suite-configured 787-8s, the first of which entered service on the Narita – Frankfurt/Main [FRA/EDDF] route on December 1st (JAL's Sky Suite 787 makes debut.). The Sky Suite 787-8s also seat only 161, which includes 38 Sky Suite, 35 Sky Premium, and 88 Sky Wider II seats.

Meanwhile, Japan's second largest carrier is expanding Sky Suite destinations during the Summer 2015 timetable. New routes to receive the Sky Suite 787 are from Narita to Delhi/Indira Gandhi [DEL/VIDP] from March 29th, Helsinki/Vantaa [HEL/EFHK] from June 1st, and to Paris/Charles de Gaulle [CDG/LFPG] from March 29th. The Sky Suite 767 will be expanded to include Honolulu [HNL/PHNL] and Manila/Ninoy Aquino [MNL/RPLL] from Narita on March 29th.

Aimed at evoking a one-class higher feel, JAL's award-winning Sky Suite product is now available on 13 777-300ERs, four 787-8s, and nine 767-300ERs. The first Sky Suite 777 entered service on Narita – London/Heathrow [LHR/EGLL] in January 2013, and the Sky Suite 767 followed on the Narita – Vancouver [YVR/CYVR] route in December that year. In the new configuration, the 777-300ER seats eight in first, 49 in business, 40 in premium economy, and 135 in economy (232 total), and the 767-300ER seats 24 in business and 175 in economy (199 total).

Source: Japan Airlines, January 21st. (in Japanese)
Source: Japan Airlines, January 21st. (in Japanese)

ANA reveals Kuala Lumpur and expansion at Narita.

On January 21st, All Nippon Airways [NH/ANA] revealed the resumption of Tokyo/Narita [NRT/RJAA] – Kuala Lumpur/Sepang [KUL/WMKK] from September 1st, to be flown daily with 240-seat (42 business and 198 economy class) Boeing 787-8s. Malaysia's capital was served via Bangkok/Don Mueang [DMK/VTBD] until December 2001.

Boeing 767-381 JA8291 left Japan on January 19th as NH9432, heading to Victorville (via Anchorage), where it will be scrapped. ANA's non-ER 767 fleet is now down to 18. As additional 787s arrive, more 767-300ERs will be converted to domestic configuration, replacing the older non-ER 767s. (Photo: Ryosuke Yano)

The route sees competition from AirAsia X [D7/XAX], which operates daily from Tokyo/Haneda [HND/RJTT] and four times weekly from Narita, Japan Airlines [JL/JAL] with a daily flight from Narita, and Malaysian Airline System [MH/MAS] (d.b.a. Malaysia Airlines) with 10 times weekly from Narita.

Flight Schedule:
Narita – Kuala Lumpur/Sepang NEW 1 daily with 787-8. (2015/Sep/1 - Oct/24)
NH815 NRT 1720 – 2335 KUL 788 Daily
NH816 KUL 0700 – 1500 NRT 788 Daily

Meanwhile, additional frequencies from its Narita hub were also announced, strengthening its Haneda/Narita dual-hub strategy for Tokyo. The resumption of its second daily flights to Bangkok/Suvarnabhumi [BKK/VTBS] and Singapore/Changi [SIN/WSSS], along with new daily service to Houston/George Bush [IAH/KIAH] had been previously announced (ANA announces Houston and Southeast Asia expansion.), but a second daily flight to Honolulu [HNL/PHNL] from July 17th has been added to the list.

Flight Schedule:
Narita – Honolulu increase from 1 to 2 daily. (2015/Jul/17 - Oct/24)
NH184/NQ184 NRT 2035 – 0910 HNL 76W/763 Daily *NEW from Jul/17.
NH182/NQ182 NRT 2130 – 1005 HNL 76W/763 Daily
NH183/NQ183 HNL 1140 – 1455(+1) NRT 76W/763 Daily *NEW from Jul/17.
NH181/NQ181 HNL 1300 – 1615(+1) NRT 76W/763 Daily

It will also continue its second daily Haneda – Hong Kong [HKG/VHHH] service twice a week (ANA adds Haneda – Hong Kong midnight flight.), and increase its Narita – Chengdu [CTU/ZUUU] route from four times weekly to daily from March 29th.

ANA is also reportedly working to launch Haneda – Sydney [SYD/YSSY] during FY2015, possibly from the Winter 2015/2016 timetable. Economic ties are expected to grow after the Australia-Japan Economic Partnership Agreement (EPA) came into effect this month, and Qantas Airways [QF/QFA] has already announced plans to start flying the route in August using Haneda's midnight slots. Japan's now largest carrier operated Narita – Sydney, via Brisbane [BNE/YBBN], until June 1998, and Osaka/Kansai [KIX/RJBB] – Sydney until March 1999.

Other routes that seem to be on ANA's wishlist are Haneda – Istanbul/Atatürk [IST/LTBA] (ANA considering Haneda – Istanbul.) and a non-stop route to Cambodia (either Phnom Penh or Siem Reap), which would be a first for any scheduled carrier.

Source: All Nippon Airways, January 21st. (in Japanese)

Fuji Dream confirms Izumo and Kitakyushu.

Fuji Dream Airlines [JH/FDA] has officially announced the launch of two new routes from Nagoya/Komaki [NKM/RJNA] on March 29th, the beginning of the Summer 2015 timetable: Izumo [IZO/RJOC] and Kitakyushu [KKJ/RJFR]. As previously rumored (Fuji Dream plans Izumo, Kitakyushu, and Chubu Centrair.), the former would be served daily while frequency for the latter would be twice daily. Both routes will code-share with Japan Airlines [JL/JAL].

Embraer ERJ170-100STD (E170) JA01FJ Dream Red prepares for takeoff from Fukuoka. Looking worse for wear, FDA's first aircraft is finally receiving a new coat of paint this month. (Photo: Aviation Wire)

The new flights will be operated by either 76-seat Embraer ERJ170-100s (E170s) or 84-seat ERJ170-200s (E175s). It will coincide with the delivery of their ninth aircraft, which would be their sixth E175, in March. What color the newest airframe will wear remains unannounced.

Flight Schedule (2015/Mar/29 - Oct/24):
Komaki – Izumo NEW 1 daily with E170 or E175.
JH415 NKM 1420 – 1520 IZO E70/E75 Daily
JH416 IZO 1550 – 1650 NKM E70/E75 Daily

Komaki – Kitakyushu NEW 2 daily with E170 or E175.
JH401 NKM 0720 – 0840 KKJ E70/E75 Daily
JH407 NKM 1820 – 1940 KKJ E70/E75 Daily
JH402 KKJ 0910 – 1030 NKM E70/E75 Daily
JH408 KKJ 2010 – 2130 NKM E70/E75 Daily 

Both routes were previously served by JAL subsidiary J-Air [XM/JLJ] until 2005 and 2007, respectively. FDA's network at Nagoya's convenient airport near downtown includes Aomori [AOJ/RJSA], Fukuoka [FUK/RJFF], Hanamaki [HNA/RJSI], Kochi [KCZ/RJOK], Kumamoto [KMJ/RJFT], Niigata [KIJ/RJSN], Yamagata [GAJ/RJSC], and the new cities are their eighth and ninth non-stop destinations.

The niche regional carrier will receive its 10th aircraft in March 2016, however, they revealed that running a base at Nagoya/Chubu Centrair [NGO/RJGG] alongside Komaki is currently under consideration, as apron parking space at the older airport will be full after the arrival of the ninth aircraft. The Aichi Government and local business communities have also been trying to consolidate all Nagoya flights at Chubu Centrair, and further FDA expansion at Komaki would go against that. Adding back flights at its hometown of Shizuoka [FSZ/RJNS] has been talked about, but that does not seem to be high in priority.

However, FDA has largely been able to gain popularity due to them being the sole carrier at Nagoya's more convenient airport near downtown, essentially filling the void left by J-Air. Although the airline says any Chubu Centrair flight would code-share with JAL, All Nippon Airways [NH/ANA] is the dominant carrier there, and with LCCs Jetstar Japan [GK/JJP] expanding (Jetstar Japan starts three routes from Kumamoto.) and AirAsia Japan (Mk II) setting up a hub (AirAsia Japan is officially reborn; first flight June 2015.), the niche commuter carrier could drag itself into a new battleground.

Source: Fuji Dream Airlines, January 15th. (PDF; in Japanese)
Source: Fuji Dream Airlines, January 19th. (PDF; in Japanese)

Peach plans Narita hub and Haneda – Taipei.

Peach Aviation [MM/APJ] is planning to add Tokyo/Haneda [HND/RJTT] – Taipei/Taoyuan [TPE/RCTP] this summer, becoming the first Japanese LCC to operate into the heavily-regulated downtown Tokyo airport. It will also make Tokyo/Narita [NRT/RJAA] its third hub after Osaka/Kansai [KIX/RJBB] and Okinawa/Naha [OKA/ROAH], and will launch flights from Narita to Fukuoka [FUK/RJFF] and Sapporo/New Chitose [CTS/RJCC] as early as March.

Airbus A320-214 JA810P Wing of Tohoku rests between flights at Kansai. Three aircraft will be added in 2015 for a total of 17, as the carrier grows conservatively yet ambitiously. (Photo: Peach)

Peach would only become the third LCC serving Haneda, after AirAsia X [D7/XAX] and Hong Kong Express Airways [UO/HKE] (d.b.a. HK Express). The new link to Taipei would depart around 0200 or 0300 JST and operate daily with 180-seat Airbus A320s, using the airport's midnight (2300 - 0600) slots, which are underutilized, with only 27 slot-pairs currently used out of 40 total available.

Last November, Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) introduced a scheme where landing fees would be discounted 50% for the first year, 30% for the second, and 20% for the third for new routes using the midnight slots, in a bid to lure more airlines. Unpopularity of the midnights slots is largely due to public transportation being almost non-existent during those times, with the only choice being taxis. But that is gradually showing signs of improvement, with new midnight buses and extended train schedules.

Meanwhile, Peach has reportedly decided to establish its hub to serve the Kanto (Greater Tokyo) region at Narita. Last month, CEO Shinichi Inoue had revealed that the carrier was considering opening hubs in Sapporo and Tokyo, as well as Bangkok, Ho Chi Minh City, and Seoul. Japan's so far most successful LCC already operates three times daily to Narita from its Kansai base. Their second hub at Naha was only opened last July (Peach launches Naha hub; but Naha – Ishigaki axed.), and Hong Kong is the next route to be launched on February 21st (Peach announces Okinawa – Hong Kong.), becoming the fourth spoke from its southern base.

Peach, however, has decided against moving into Narita's new controversial LCC Terminal, dubbed Terminal 3, which is slated to open on April 8th. It currently uses Terminal 1, which houses All Nippon Airways [NH/ANA], subsidiary of Peach's 38.67% and largest shareholder ANA Holdings. Launching a Narita hub would translate to Peach going head to head with ANA Holdings' wholly-owned subsidiary Vanilla Air [JW/VNL]. Tomonori Ishii, President of the fledgling Narita-based LCC, had previously said that it wants to avoid competing with its Kansai-based sister.

Source: Nikkei Shimbun, January 2nd. (in Japanese)
Source: Traicy,  January 13th. (in Japanese)
Source: Nikkei Shimbun, January 16th. (in Japanese)

New AirAsia Japan eyes launch by year-end 2015.

AirAsia Japan (Mk II) hopes to launch operations "by the end of 2015," according to AirAsia Group CEO Tony Fernandes in an interview carried out by Nikkei Shimbun. Mr. Fernandes admitted that paperwork preparations with Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) are taking more time than expected. Original plans had set an in-service target for June.

Airbus A320-214 JA02AJ of the first AirAsia Japan (Mk I) basks in the sun at Narita. The aircraft now flies with Indonesia AirAsia as PK-AZI. The new AirAsia Japan (Mk II) will be based at Nagoya's Chubu Centrair. (Photo: Aviation Wire)

"We are the only LCC with a network covering all of Asia. Look at our name. We are AirAsia. Myanmar, Laos, and Cambodia are also on our horizon. Japan would be our North Asia hub and India our South Asia hub. We will continue to expand our network as Asia's largest LCC. 2015 will see us fly to Sapporo, Hawaii, and London," said Mr. Fernandes, reiterating the importance of Japan. The reincarnation of AirAsia Japan (Mk II) is also part of a strategy to shift dependence from Southeast Asia, where the market is becoming saturated and competition is fiercer than ever.

Meanwhile, the new Japanese unit has started hiring flight attendants. Applicants must have at least one year of experience and are required to go through a two-month training program in Malaysia sometime after May 2015. The airline is also requiring them to live within a radius of an hour commuting time by public transportation from Nagoya/Chubu Centrair [NGO/RJGG] or another airport the company specifies. Applicants will be hired as trainees and will become contract employees upon completion of training and qualification. Applications will be accepted from January 8th to February 1st. 

Headed by Yoshinori Odagiri, former CEO of the first incarnation, AirAsia Japan (Mk II) was officially relaunched last summer (AirAsia Japan is officially reborn; first flight June 2015.) with an initial capital totaling 7 billion JPY from AirAsia [AK/AXM] (49%), Octave Japan Infrastructure Fund (19%), Rakuten (18%), Noevir Holdings (9%), and Alpen (5%). The Malaysia-based LCC group's first crack at the Japanese market with AirAsia Japan (Mk I) [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.) ended in a divorce with joint-venture (JV) partner ANA Holdings due to managerial differences only 10 months after launching operations in August 2012. It now operates as Vanilla Air [JW/VNL] under 100% ANA ownership.

Will some employees defect Vanilla Air to join the new AirAsia Japan (Mk II)?

Source: Nikkei Shimbun, December 26th. (in Japanese)
Source: AirAsia Japan, January 8th. (in Japanese)

Running out of time: Will Skymark join ANA?

On January 9th and 10th, the Yomiuri Shimbun and Asahi Shimbun reported Skymark Airlines [BC/SKY] had given up on restructuring themselves on their own, and that Japan's struggling third largest carrier is seeking to come under the umbrella of ANA Holdings, parent of All Nippon Airways [NH/ANA].

Boeing 737-8FZ(WL) JA737U awaits its next flight at Haneda. Skymark controls 36 prized slot-pairs at the heavily-regulated downtown Tokyo airport. (Photo: Ryosuke Yano)

Quoting senior ANA officials familiar with the matter, ANA would take control of a few points short of 20% of Skymark's shares on condition that the Airbus A380 cancellation penalty (Skymark hopes to settle Airbus A380 penalty in October.) is settled and current senior executives, including President and CEO Shinichi Nishikubo, are replaced by those from ANA. A 20% or more ownership change of carriers holdings slots at Tokyo/Haneda [HND/RJTT] would require it to relinquish them for redistribution. The plan also calls for Development Bank of Japan and Sumitomo Mitsui Banking (SMBC) to provide financial support. The articles also say the transaction already has government rapport.

However, Skymark quickly denied the reports. According to Aviation Wire, "We have asked them for a code-share pact, but nothing regarding an investment. Nothing about management change either," said a senior official at Skymark. An interview by Kyodo Press also quoted a Skymark spokesperson saying "There is no change in our independent management policy and we have no plan to be an affiliate of ANA," though adding "But we are considering all options." An ANA official was also quoted as saying "It's not something we decide. If they bring it up to us, we will consider it."

Airbus A320-211 JA8394 taxies at Haneda. Only a dozen A320s remain with the carrier, however, phase-out is gradual as ANA now needs more narrow-body aircraft. The first of 30 A321/320neos on order will arrive in FY2016. ANA wants to take advantage of its comfortable relationship with the current government to further widen its market share at Haneda against JAL. (Photo: Ryosuke Yano)

In December, Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) was orchestrating a Skymark tie-up with both ANA and Japan Airlines [JL/JAL] (Skymark forced to seek ANA & JAL dual tie-up.) in a bid to keep Skymark as Japan's third force, after the troubled airline started non-investment partnership talks with JAL (Skymark in talks with JAL for broad tie-up.). Also, the Liberal Democratic Party (LDP)-controlled government is not comfortable about JAL, bailed out in 2010 by then-Democratic Party of Japan (DPJ)-led regime, expanding through the tie-up. Under the scheme, both ANA and JAL would place their codes on Skymark's five routes from Haneda from the Summer 2015 timetable for five years, together selling about 20% of its seats, generating an estimated annual 8 billion JPY.

Skymark is also negotiating with four financial institutions for capital injection through third-party allocation of new shares. The number of shares will be increased by up to 25%, and they have called for an extraordinary (emergency) shareholders' meeting on February 18th to receive approval.

However, Skymark's financial health seems to be deteriorating faster than even they had estimated themselves; system-wide load factor for December was 54.5%, its worst record since starting to post figures in April 2010. Of their 23 non-stop routes, a dozen turned out less than 50%, and four, Kobe [UKB/RJBE]– Kagoshima [KOJ/RJFK], Sendai [SDJ/RJSS] – Sapporo/New Chitose [CTS/RJCC], Kobe – Sendai, and Yonago [YGJ/RJOH] – Okinawa/Naha [OKA/ROAH] showed less than 40%. Most critically, none of its core Haneda routes exceeded 70%. The five routes from the downtown Tokyo airport have performed in the 70-90% range, generating roughly 80% of their revenue.

Skymark burned 2.5 billion JPY in cash reserves just in the six months to September 2014, bringing down the total on hand to 4.5 billion JPY, but they are probably now bleeding at an even faster rate. Adding to the already fierce competition with legacy carriers as well as the expanding LCCs, the struggling airline's continued negative media coverage is apparently keeping passengers from choosing to fly with them. Skymark has no loyalty program, which was planned but shelved and is now considered one of their biggest mistakes in a country where brand affinity counts significantly.

Boeing 737-846(WL) JA307J lines up for takeoff from New Chitose near Sapporo. The last thing JAL wants to see is a ANA/Skymark tie-up, further widening the gap at Haneda. (Photo: Ryosuke Yano)

In other news, Airbus is preparing to file a lawsuit against Skymark for the A380 cancellation (Skymark's Airbus A380 order in jeopardy.) with a commerce court in the U.K., seeking around 7 million USD (83.9 billion JPY), in addition to already-made deposits amounting to 26.5 billion JPY, which are unlikely to be refunded.

As I have reiterated, Skymark's independence is crucial to keeping prices low at heavily-regulated Haneda. But with that now almost impossible with time and cash running out, the next best scenario would be a ANA/JAL dual or JAL solo partnership. Slot-count-wise, JAL controls 40.0% at 184.5 slot-pairs and All Nippon Airways [NH/ANA] 37.4% at 172.5 slot-pairs, while Skymark holds 7.8% with 36 slot-pairs. However, when slots of AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ], all of which code-share with ANA throughout their networks and are de facto controlled by Japan's largest carrier (New Star Flyer President is from ANA.) are combined, ANA's share rises to 52.2%.

An ANA investment would be detrimental to the flying public. Skymark would become merely a feeder carrier for ANA, joining the likes of three other minority-owned carriers, ANA would virtually control a dominant 60% of slot-pairs at Haneda, higher airfares will come back on some routes, and it would also translate to the failure of aviation deregulation in Japan where the ANA/JAL duopoly persists.

Source: Asahi Shimbun, December 15th. (in Japanese)
Source: Yomiuri Shimbun, January 9th. (in Japanese)
Source: Aviation Wire, January 9th. (in Japanese)
Source: Asahi Shimbun, January 10th. (in Japanese) 
Source: Skymark Airlines, January 10th. (PDF; in Japanese)
Source: Mainichi Shimbun, January 11th. (in English)

Fuji Dream plans Izumo, Kitakyushu, and Chubu Centrair.

Fuji Dream Airlines [JH/FDA] is planning to add Izumo [IZO/RJOC] and Kitakyushu [KKJ/RJFR] from its hub at Nagoya/Komaki [NKM/RJNA] from the Summer 2015 timetable starting on March 29th. The latter link would be served twice daily while frequency for the former remains undecided.

Embraer ERJ170-200STD (E175) JA07FJ Yellow arrives at Komaki. (Photo: Ryosuke Yano)

It will coincide with the March delivery of their ninth aircraft, which would be their sixth Embraer ERJ170-200 (E175). Both routes were previously served by Japan Airlines' [JL/JAL] subsidiary J-Air [XM/JLJ] until 2005 and 2007, respectively. For the latter, the Greater Nagoya region and Kitakyushu are significant automobile industry hubs, notably with many of Toyota's factories and related companies located in the two cities, and local businesses had been pushing for the resumption.

FDA continues to expand at Komaki, with a network that covers Aomori [AOJ/RJSA], Fukuoka [FUK/RJFF], Hanamaki [HNA/RJSI], Kochi [KCZ/RJOK], Kumamoto [KMJ/RJFT], Niigata [KIJ/RJSN], and Yamagata [GAJ/RJSC], essentially filling the void left by J-Air. However, FDA revealed that they are considering launching a hub at Nagoya/Chubu Centrair [NGO/RJGG] as well, as their 10th aircraft, which is planned for delivery in March 2016, currently cannot be allocated to Komaki due to limited parking space, and further expansion at Komaki would come against the Aichi Government and local business community's desire to consolidate all flights at Chubu Centrair. A gentleman's agreement also prohibits flights over 1,000 kilometers from Komaki.

FDA has largely been able to gain popularity due to it being the sole carrier at Nagoya's older but more convenient and preferred airport near downtown. Although the airline says any Chubu Centrair flight would also carry the JAL code, All Nippon Airways [NH/ANA] is the dominant carrier there, and with LCCs Jetstar Japan [GK/JJP] expanding (Jetstar Japan starts three routes from Kumamoto.) and AirAsia Japan (Mk II) setting up a hub (AirAsia Japan is officially reborn; first flight June 2015.), the niche regional carrier could drag itself into a new battleground.

Source: San-in Chuo Shimpo, December 20th. (in Japanese)
Source: The Mid-Japan Economist, January 1st. (in Japanese)
Source: Mainichi Shimbun, January 6th. (in Japanese)