Skymark Airlines [BC/SKY] is bankrupt (Skymark to file for bankruptcy.). But the biggest question does not change: who will come to save them? ANA Holdings, parent of Japan's largest carrier All Nippon Airways [NH/ANA], financial services group Orix, travel agency H.I.S., Shinsei Bank, and major trading firm Sojitz seem to be some of the high-profile names that have shown interest so far. At the center of the picture is the cash-strapped airline's 36 slot-pairs at Tokyo/Haneda [HND/RJTT], the preferred but heavily-regulated downtown airport serving the capital.
Last spring, a few months before Skymark's Airbus A380 issue (Skymark's Airbus A380 order in jeopardy.) came into light, Japan Civil Aviation Bureau (JCAB) was already aware of the troubled airline's deteriorating financial health and had approached Delta Air Lines [DL/DAL] to assist. ANA and Japan Airlines [JL/JAL] furiously lobbied the government not to allow an airline holding Haneda's domestic slots to slip into foreign hands.
When JAL filed for bankruptcy in 2010, JCAB succeeded in bringing Delta to the table to discuss a plan to save JAL together with Japanese investment firms. JAL eventually chose government bailout and remained aligned with Oneworld partner American Airlines [AA/AAL]. However, this time with Skymark, the Skyteam carrier concluded to keep its hands off, probably considering the embattled carrier's growing debt and Airbus A380 problem (Skymark hopes to settle Airbus A380 penalty in October.), along with the uncertainty of their 36 slot-pairs at Haneda, which would need to be relinquished if ownership change exceeds 20%.
Meanwhile, knowing that accepting financial aid from ANA would "deny Skymark's meaning of existence as Japan's third force," former President and CEO Shinichi Nishikubo had looked overseas for investors from early 2014. Reportedly, Mr. Nishikubo talked with the AirAsia Group the most. Actually, AirAsia Japan (Mk I) [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.), the failed joint-venture between the Malaysia-based pan-Asian LCC group and ANA, was originally planned to have Skymark as its partner, until ANA came in fearing the potential of the combination.
Although group CEO Tony Fernandes denied rumors then (Is AirAsia considering a Skymark takeover?), a three-way deal was discussed where Airbus would significantly reduce the A380 cancellation penalty if AirAsia [AK/AXM] took over Skymark. "We seriously thought we could hand over management to Tony," current Representative Chairman Takashi Ide revealed. But Skymark was in the middle of transforming themselves into a low-fare premium airline (Skymark Airlines inaugurates Airbus A330 service.), and after JCAB officially quoted that ownership change exceeding 20% would necessitate giving all Haneda slots back to the regulator (Skymark's fate: MLIT discourages foreign investment.), talks ended in November.
However, discussions with Mr. Fernandes quietly resumed again in early January, this time with Singaporean and different Japanese investment funds. The deal included reconfiguring Skymark's A330s (Skymark Airbus A330 operates last revenue flight.) in a high-density layout and placing them on international routes, hinting an AirAsia X Japan. But the plan was reportedly shelved before February after one of the investment funds withdrew. At the same time, Mr. Nishikubo also approached Spring Airlines [9C/CQH] and its Japanese affiliate Spring Airlines Japan [IJ/SJO] for help. Response from the Chinese LCC group was positive, however, they needed to carry out due diligence, and Skymark ran out of time.
According to an interview on February 16th, Mr. Ide revealed that the proposed three-way code-share with ANA and JAL would likely be scrapped (Skymark seeks investor airline; scraps ANA & JAL dual tie-up.). The planned partnership was aimed at filling seats of Skymark's Airbus A330s, but those aircraft have now been grounded. Probably shocking for former chief Mr. Nishikubo, Mr. Ide said he now prefers sponsorship from a Japanese major airline rather than an overseas airline, adding "Our brand was stuck in the middle (of full-service carriers and LCCs). There are lots of things we can learn from the major carriers, for example in service quality." He said if a Japanese major carrier offered financial assistance, Skymark would accept it.
After the bankruptcy filing, a JAL spokesperson said "We have never considered an investment in Skymark, and have no plans to." Also, the controversial 8.10 Paper prohibits JAL, itself saved from bankruptcy by a government bailout in 2010, from making any new investments until FY2017. Meanwhile, on February 13th, ANA Holdings' outgoing President Shinichiro Ito publicly said "We have been very interested in Skymark. We are evaluating how Japan's air industry should be shaped, and how we could do that." Shinya Katanozaka, incoming President effective April 1st, added "Air Do, Skynet Asia, Star Flyer all have important roles to play under the ANA umbrella. I could see Skymark's role there too as a community-focused airline. We don't really see a need for a third force."
Delta and JAL are out, and AirAsia and Spring may be considering. But ANA is surely creeping towards putting Skymark's lucrative 36 Haneda slot-pairs into their hands, with a roadmap reportedly already in place since last year to transform it into a feeder carrier for ANA, replicating what it did with AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. And Skymark is likely to accept that offer, now that charismatic Mr. Nishikubo is no longer at helm (Running out of time: Will Skymark join ANA?). For sponsorship contenders, deadline for application by non-airline firms is February 19th, while for airlines is 23rd, according to Skymark's financial advisor GCA Savvian.
JAL controls 40.0% of domestic slot-pairs (184.5) at Haneda with ANA holding 37.4% (172.5), however, the latter virtually controls 52.2% when combining those of Air Do, Solaseed Air, and Star Flyer, in which ANA owns minority stakes and implements extensive code-sharing and schedule coordinating. Placing Skymark, which controls 7.8% (36), under the umbrella of Japan's largest airline would virtually have ANA dominate 60.0% of slots at Haneda, which is the last thing JAL wants to see. And needless to say, a return to the ANA/JAL duopoly era would be detrimental to the flying public.
Source: Aviation Wire, February 2nd. (in Japanese)
Source: Nikkei Shimbun, February 13th. (in Japanese)
Source: Mainichi Shimbun, February 13th. (in Japanese)
Source: Nikkei Shimbun, February 14th. (in Japanese)
Source: Mainichi Shimbun, February 16th. (in Japanese)
Source: Sankei Shimbun, February 17th. (in Japanese)
Source: Nikkei Shimbun, February 20th. (in Japanese)
Source: Toyo Keizai, February 20th. (in Japanese)
*Edited/updated on February 20th.
 |
| ANA, JAL, and Skymark aircraft at Haneda. The flagship all-premium A330s were grounded only three days after announcing its bankruptcy filing. An ANA/Skymark tie-up is appearing likely, which is the last thing JAL wants to see. (Photo: Aviation Wire) |
Last spring, a few months before Skymark's Airbus A380 issue (Skymark's Airbus A380 order in jeopardy.) came into light, Japan Civil Aviation Bureau (JCAB) was already aware of the troubled airline's deteriorating financial health and had approached Delta Air Lines [DL/DAL] to assist. ANA and Japan Airlines [JL/JAL] furiously lobbied the government not to allow an airline holding Haneda's domestic slots to slip into foreign hands.
When JAL filed for bankruptcy in 2010, JCAB succeeded in bringing Delta to the table to discuss a plan to save JAL together with Japanese investment firms. JAL eventually chose government bailout and remained aligned with Oneworld partner American Airlines [AA/AAL]. However, this time with Skymark, the Skyteam carrier concluded to keep its hands off, probably considering the embattled carrier's growing debt and Airbus A380 problem (Skymark hopes to settle Airbus A380 penalty in October.), along with the uncertainty of their 36 slot-pairs at Haneda, which would need to be relinquished if ownership change exceeds 20%.
 |
| Boeing 757-2Q8(WL) N624AG taxies at New York's JFK Airport. Although Delta fought fiercely to lure then-bankrupt JAL, it has apparently decided to keep its hands off of Skymark. With ANA/United and JAL/American joint-ventures now well established, Delta is at a disadvantage in the Japan market. (Photo: Ryosuke Yano) |
Meanwhile, knowing that accepting financial aid from ANA would "deny Skymark's meaning of existence as Japan's third force," former President and CEO Shinichi Nishikubo had looked overseas for investors from early 2014. Reportedly, Mr. Nishikubo talked with the AirAsia Group the most. Actually, AirAsia Japan (Mk I) [JW/WAJ] (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.), the failed joint-venture between the Malaysia-based pan-Asian LCC group and ANA, was originally planned to have Skymark as its partner, until ANA came in fearing the potential of the combination.
Although group CEO Tony Fernandes denied rumors then (Is AirAsia considering a Skymark takeover?), a three-way deal was discussed where Airbus would significantly reduce the A380 cancellation penalty if AirAsia [AK/AXM] took over Skymark. "We seriously thought we could hand over management to Tony," current Representative Chairman Takashi Ide revealed. But Skymark was in the middle of transforming themselves into a low-fare premium airline (Skymark Airlines inaugurates Airbus A330 service.), and after JCAB officially quoted that ownership change exceeding 20% would necessitate giving all Haneda slots back to the regulator (Skymark's fate: MLIT discourages foreign investment.), talks ended in November.
 |
| Airbus A320-216 HS-ABB of Thai AirAsia taxies at Khon Kaen. Asia's largest LCC group has discussed a potential tie-up with Skymark several times to gain access to the preferred but heavily-regulated airport in Japan's by far most important market. (Photo: Ryosuke Yano) |
However, discussions with Mr. Fernandes quietly resumed again in early January, this time with Singaporean and different Japanese investment funds. The deal included reconfiguring Skymark's A330s (Skymark Airbus A330 operates last revenue flight.) in a high-density layout and placing them on international routes, hinting an AirAsia X Japan. But the plan was reportedly shelved before February after one of the investment funds withdrew. At the same time, Mr. Nishikubo also approached Spring Airlines [9C/CQH] and its Japanese affiliate Spring Airlines Japan [IJ/SJO] for help. Response from the Chinese LCC group was positive, however, they needed to carry out due diligence, and Skymark ran out of time.
According to an interview on February 16th, Mr. Ide revealed that the proposed three-way code-share with ANA and JAL would likely be scrapped (Skymark seeks investor airline; scraps ANA & JAL dual tie-up.). The planned partnership was aimed at filling seats of Skymark's Airbus A330s, but those aircraft have now been grounded. Probably shocking for former chief Mr. Nishikubo, Mr. Ide said he now prefers sponsorship from a Japanese major airline rather than an overseas airline, adding "Our brand was stuck in the middle (of full-service carriers and LCCs). There are lots of things we can learn from the major carriers, for example in service quality." He said if a Japanese major carrier offered financial assistance, Skymark would accept it.
 |
| Airbus A320-214 B-6706 of Spring Airlines at Ibaraki. China's first and largest LCC group, which already flies 13 routes to Japan covering six destinations, also showed interest in aiding Skymark. Its Japanese unit currently operates domestic routes, with Chinese destinations to be launched later this year, with an all-Boeing 737 fleet. (Photo: Aviation Wire) |
After the bankruptcy filing, a JAL spokesperson said "We have never considered an investment in Skymark, and have no plans to." Also, the controversial 8.10 Paper prohibits JAL, itself saved from bankruptcy by a government bailout in 2010, from making any new investments until FY2017. Meanwhile, on February 13th, ANA Holdings' outgoing President Shinichiro Ito publicly said "We have been very interested in Skymark. We are evaluating how Japan's air industry should be shaped, and how we could do that." Shinya Katanozaka, incoming President effective April 1st, added "Air Do, Skynet Asia, Star Flyer all have important roles to play under the ANA umbrella. I could see Skymark's role there too as a community-focused airline. We don't really see a need for a third force."
Delta and JAL are out, and AirAsia and Spring may be considering. But ANA is surely creeping towards putting Skymark's lucrative 36 Haneda slot-pairs into their hands, with a roadmap reportedly already in place since last year to transform it into a feeder carrier for ANA, replicating what it did with AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. And Skymark is likely to accept that offer, now that charismatic Mr. Nishikubo is no longer at helm (Running out of time: Will Skymark join ANA?). For sponsorship contenders, deadline for application by non-airline firms is February 19th, while for airlines is 23rd, according to Skymark's financial advisor GCA Savvian.
JAL controls 40.0% of domestic slot-pairs (184.5) at Haneda with ANA holding 37.4% (172.5), however, the latter virtually controls 52.2% when combining those of Air Do, Solaseed Air, and Star Flyer, in which ANA owns minority stakes and implements extensive code-sharing and schedule coordinating. Placing Skymark, which controls 7.8% (36), under the umbrella of Japan's largest airline would virtually have ANA dominate 60.0% of slots at Haneda, which is the last thing JAL wants to see. And needless to say, a return to the ANA/JAL duopoly era would be detrimental to the flying public.
Source: Aviation Wire, February 2nd. (in Japanese)
Source: Nikkei Shimbun, February 13th. (in Japanese)
Source: Mainichi Shimbun, February 13th. (in Japanese)
Source: Nikkei Shimbun, February 14th. (in Japanese)
Source: Mainichi Shimbun, February 16th. (in Japanese)
Source: Sankei Shimbun, February 17th. (in Japanese)
Source: Nikkei Shimbun, February 20th. (in Japanese)
Source: Toyo Keizai, February 20th. (in Japanese)
*Edited/updated on February 20th.
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