Skymark to pull out of Sendai in October.

On April 24th, Skymark Airlines [BC/SKY] submitted plans to Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) to suspend its twice-daily Sendai [SDJ/RJSS] – Kobe [UKB/RJBE] service from the Winter 2015/2016 timetable, effective October 25th. The embattled airline would thus be dropping the city entirely, as it is the last remaining route from the former focus city (Skymark announces Yonago and Sendai expansion.).
 

Boeing 737-86N(WL) JA73NX taxies at Narita. Skymark axed Narita in October last year (Skymark announces Narita closure and Yonago cuts.), Ishigaki and Miyako in March, and will drop Yonago in August (Skymark decides to close Yonago, keep Ibaraki.), and now Sendai in October. (Photo: Ryosuke Yano)

Sendai used to see Skymark flights to Fukuoka [FUK/RJFF] and Sapporo/New Chitose [CTS/RJCC], but these were quickly axed (Skymark to cut 15% of flights, ground all Airbus A330s.) after they filed for bankruptcy protection (Skymark to file for bankruptcy.). Kobe, another focus city, was the last remaining route, but it was seen as a matter of time as load factors hovered around an embarrassing 20-40%. March 2015 was a better month at 43.7%. 177-seat Boeing 737-800s operate the route.

Japan's third largest airline entered Sendai, Tohoku (Northeastern Japan) region's biggest metropolitan area, on April 20th, 2013 with flights to Fukuoka and New Chitose, only eight days after LCC Peach Aviation [MM/APJ] launched flights from Osaka/Kansai [KIX/RJBB] on April 12th. Ironically, the latter has since increased to three-times daily and announced intentions to make Sendai a hub (Peach plans Sendai hub by Summer 2017.), while Skymark has decided to pull out completely. It is lower cost, but not as low as the LCCs to stimulate demand.

On April 22nd, Skymark signed a Memorandum of Understanding (MoU) with equity firm Integral and ANA Holdings, parent of All Nippon Airways [NH/ANA], to sponsor the cash-strapped airline out of bankruptcy (Skymark gives in to ANA; Japan reverts to duopoly.). Details of the corporation rehabilitation plan, which needs to be submitted to the Tokyo District Court by May 29th, have yet to be disclosed, however, it will likely include code-sharing, joint fuel purchasing, and joint crew training with ANA. A re-branding is also being considered, with SKY bee a reported contender (Skymark hints at new brand: SKY bee?).

Source: Kobe Shimbun, April 24th. (in Japanese) 
Source: Nikkei Shimbun, April 24th. (in Japanese)

Spring Japan posts heavy loss but mulls Asia expansion.

Spring Airlines Japan [IJ/SJO] reported a 4.92 billion JPY loss for 2014. Total revenue was 836 million JPY, operating loss stood at 4.89 billion JPY, while its ordinary loss was 4.94 billion JPY. In December, largest shareholder Spring Airlines [9Q/CQH] injected 900 million JPY in the form of third-party allocation of non-voting stocks, raising total capital to 6.9 billion JPY (Spring Japan receives 900 million JPY injection.). The Japanese unit of China's biggest LCC only started operations last August (Spring Airlines Japan commences operations.).

Boeing 737-86N(WL) JA02GR taxies for departure from Narita. Original plans called for adding five new aircraft each year to reach 20 by 2017, however, all new deliveries seem to have been postponed indefinitely. (Photo: Aviation Wire)

From its Tokyo/Narita [NRT/RJAA] hub using a small fleet of three 189-seat Boeing 737-800s, Spring Japan currently flies double-daily to Hiroshima [HIJ/RJOA], daily to Saga [HSG/RJFS], and four times weekly to Takamatsu [TAK/RJOT]. These secondary routes are still unprofitable, except maybe for Hiroshima. On April 8th, it moved into Narita's Terminal 3, which is dedicated for LCCs (Narita opens Tokyo's LCC gateway: Terminal 3.).

Japan's youngest operating LCC has talked of launching international flights to China by the end of this year (Spring Japan cuts flights but hopeful for China in 2015.) with Chongqing [CKG/ZUCK], Lanzhou [LHW/ZLLL], and Wuhan [WUH/ZHHH] to become its initial destinations (Spring Japan considering Chongqing and Wuhan.). In addition, parent Spring Airlines' CEO Zhang Xiuzhi revealed in March that Hong Kong, Macau, South Korea, Taiwan, and Southeast Asia are also on Spring Japan's radar, with Osaka/Kansai [KIX/RJBB] and Sapporo/New Chitose [CTS/RJCC] (Spring Japan eyes Sapporo and China in 2015.) on the wishlist for domestic cities.

However, Spring Japan's original mission had been to tap into secondary Chinese cities catering to mostly Chinese tourists traveling to Japan, with much less emphasis on Japan's domestic market. And with parent Spring Airlines now setting up its own hub at Kansai, envisioning 100 weekly flights serving 20 Chinese cities and basing 10 aircraft by 2020, they may not feel the need to tolerate the Japanese unit's red ink after all, especially if they deem the domestic market unimportant. System-wide average booking rate for the upcoming Golden Week peak travel period is a pale 57.6% so far. Will Spring Japan be able to live up to its ambitions?

Source: Aviation Wire, March 3rd. (in Japanese)
Source: Aviation Wire, April 8th. (in Japanese)
Source: Spring Airlines Japan, April 24th. (in Japanese)

Skymark gives in to ANA; Japan reverts to duopoly.

On April 22nd, Skymark Airlines [BC/SKY], Integral Corporation, and ANA Holdings jointly held a press conference at Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) announcing that an agreement had been reached with the private equity firm and the parent of All Nippon Airways [NH/ANA] to rebuild Japan's bankrupt third largest carrier (Skymark to file for bankruptcy.). It marks the bitter end of a fare war sparked by Skymark against the ANA/JAL duopoly. Founded in 1996, they were Japan's first child of deregulation and also the last to remain independent (Skymark accedes to ANA investment.).

Flying with Skymark until April 2009, Boeing 767-38E/ER JA767F now operates for Jetairfly as OO-JAP. Japan's first child of deregulation launched flights in September 1998 with a pair of 767s which grew to six at peak, but eventually moved to an all-737 fleet in September 2009. (Photo: Ryosuke Yano)

A total of 18 billion JPY will be injected into the cash-strapped airline. After performing a 100% capital reduction, a debt-equity swap will leave Integral controlling 50.1% and ANA Holdings 19.9%, with the remainder to be held by financial institutions that have a close relationship with ANA, including Development Bank of Japan and Sumitomo Mitsui Banking. The entire management including current Chairman Takashi Ide and President Masakazu Arimori would then be replaced. Six members will sit on the board, with three to be appointed by Integral and one by ANA, and the remaining two by ANA's partner banks. Its president will be selected by ANA, while the chairman will be chosen by Integral. All jobs will be retained, and ANA and Integral have agreed to re-list Skymark within five years.

Details of the new partnership and corporate rehabilitation plan, which need to be submitted to the Tokyo District Court by May 29th, will now be worked on. It has between today and May 8th to negotiate with creditors to reduce its 316 billion JPY debt (Skymark's total debts skyrocket to 300 billion JPY.), including 700 million USD (84 billion JPY) from Airbus for the A380 cancellation (Skymark hopes to settle Airbus A380 penalty in October.) and 900 million USD (108 billion JPY) from Intrepid Aviation for scrapping A330 leases (Skymark terminates all Airbus A330 leases.). A brand revamp is also being considered (Skymark hints at new brand: SKY bee?). ANA's original proposal called for Skymark to reduce its fleet to 20 aircraft, implement extensive code-sharing, joint ticket sales, joint fuel purchases, joint crew training, and align its network to complement that of ANA's, virtually transforming them into a feeder carrier, replicating how it controls AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ] through minority investments and sending in executives from ANA.

Boeing 787-8 JA816A rotates from Haneda. ANA and its affiliates now dominate 60% of the highly-coveted slots at the downtown Tokyo airport, including the 36 slot-pairs allocated to Skymark. Domestic routes still contribute to almost 70% of the largest Japanese carrier's revenue. (Photo: Ryosuke Yano)

However, all may not go in protectionist ANA's favor, as the agreement is fragile with conflicting interests and differences yet to be solved. Japan's biggest airline together with its partner banks initially demanded a 80% stake in Skymark to keep it under its influence once and for all and leave genuine domestic competition out of bread-and-butter Tokyo/Haneda [HND/RJTT] for as long as possible. But the idea was vehemently opposed by Integral, which wants to rebuild Skymark as an independent carrier. Regulator MLIT has also said it would limit any ANA investment in Skymark to five years to prevent a return to the ANA/JAL duopoly era at Tokyo/Haneda [HND/RJTT], though this may be invalidated by the governing Liberal Democratic Party (LDP), with which ANA enjoys a cozy relationship.

In any case, now all of Japan's mainline carriers are affiliated with either ANA or Japan Airlines [JL/JAL]. Air Do, Skymark, Solaseed Air, and Star Flyer along with LCCs Peach Aviation [MM/APJ] and Vanilla Air [JW/VNL] are all in the ANA flock, while Fuji Dream Airlines [JH/FDA], Japan Transocean Air [NU/JTA], and Jetstar Japan [GK/JJP] have JAL influence, leaving tiny and still highly-unprofitable LCC Spring Airlines Japan [IJ/SJO] as the only non-ANA/JAL carrier, though AirAsia Japan (Mk II) is preparing to challenge the duopoly next year (AirAsia admits Skymark bid defeat, Japan unit delay to 2016.). For Haneda, JAL holds 40% of domestic slot-pairs (184.5) and ANA 37.4% (172.5), however, when the slots of de facto subsidiaries Air Do, Skymark, Solaseed Air, and Star Flyer are combined, that figure jumps to a whopping 60%.

Source: Nikkei Shimbun, April 22nd. (in Japanese)
Source: Skymark Airlines, April 22nd. (in Japanese)

AirAsia admits Skymark bid defeat, Japan unit delay to 2016.

AirAsia Group has likely lost the bid to sponsor bankrupt Skymark Airlines [BC/SKY] (Skymark to file for bankruptcy.), according to Tony Fernandes, group CEO of the Malaysia-based pan-Asian LCC. Several reliable sources confirmed on April 18th that Japan's embattled third largest carrier had selected ANA Holdings, parent of All Nippon Airways [NH/ANA], from over 20 sponsorship proposals (Skymark accedes to ANA investment.). AirAsia [AK/AXM] was the only other airline that had submitted a plan (ANA and AirAsia bid to save Skymark.). 

Airbus A320-216(SL) JA04AJ of AirAsia Japan (Mk I) arrives at Chubu Centrair on delivery on March 29th, 2013. It now flies with AirAsia (Malaysia) as 9M-AQX. The failed original joint-venture (JV) between AirAsia and ANA had also designated Nagoya a hub, but is Kansai also on the cards for the second incarnation? (Photo: Aviation Wire)

"We had a look at it, but I think we lost that... it's complicated, so we don't think our suggestion is going to go through," Mr. Fernandes told during an interview at the World Economic Forum in Jakarta on April 19th. ANA Holdings will control just under 20% in Skymark, effectively putting the carrier's lucrative 36 domestic slot-pairs at heavily-regulated Tokyo/Haneda [HND/RJTT] at the disposal of Japan's largest airline. "It's a protective measure," said Shinya Katanozaka, President of ANA Holdings, which would now dominate 60% of Haneda's domestic slots, including those of similarly part-owned de facto subsidiaries AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. 

"I don't think that's good for Japan. They're going to end up with two airlines (ANA & JAL), really. And so hopefully AirAsia Japan (Mk II) can inject a little more choice," Mr. Fernandes said, again adding "We were really interested in Skymark, but I don't think it's going to happen." Along with ANA and Japan Airlines [JL/JAL], Japan's governing Liberal Democratic Party (LDP) is opposed to foreign presence in Haneda's domestic market, let alone a LCC with foreign affiliation, making it difficult for overseas carriers to invest in carriers holding slots at the downtown Tokyo airport. And the LDP wanting to portrait then-Democratic Party of Japan (DPJ)-controlled government's massive bailout of JAL from their 2010 bankruptcy a misuse of taxpayer's money put ANA in the only position to assist Skymark. Tokyo/Narita [NRT/RJAA], which opened its LCC terminal earlier this month (Narita opens Tokyo's LCC gateway: Terminal 3.), is also lobbying against letting LCCs into Haneda.

Mr. Fernandes, who was named as one of the 100 most influential persons in the world by TIME magazine, also admitted that AirAsia Japan's (Mk II) (AirAsia Japan is officially reborn; first flight June 2015.) launch would be delayed to early 2016 due to certification by the Japanese regulators taking much longer than expected. "We're going through the application process now, and we're very confident in our model. It has taken longer, because I think there are a few more airlines, and the regulators want to go through all their rules and regulations, but we're on schedule to start early next year," confirmed Mr. Fernandes. Their first aircraft was due this summer (New AirAsia Japan's first Airbus A320 due in July.) with a potential hub at Nagoya/Chubu Centrair [NGO/RJGG] (AirAsia Japan selects Nagoya Chubu Centrair.), though Osaka/Kansai [KIX/RJBB] is also a possibility now that sister AirAsia X [D7/XAX] has applied for a link between Kuala Lumpur/Sepang [KUL/WMKK] and Honolulu [HNL/PHNL] via Kansai.

Source: CNBC, April 20th. (in English)

Skymark accedes to ANA investment.

Skymark Airlines [BC/SKY] (Skymark to file for bankruptcy.) has reportedly decided to accept sponsorship from ANA Holdings, parent of Japan's largest carrier All Nippon Airways [NH/ANA]. Over 20 firms, including AirAsia [AK/AXM] and ANA (ANA and AirAsia bid to save Skymark.), had submitted proposals to help Japan's third largest carrier out of bankruptcy. ANA would co-sponsor the embattled carrier with investment fund Integral Corporation, which has already pledged 9 billion JPY to keep Skymark flying while it restructures. Details will be released next week, according to people close to the matter.

Boeing 737-8HX JA737N prepares to depart from Naha while another Skymark 737 arrives into the Okinawa airport. The fleet of 27 narrow-body Boeings could be reduced to 20 if ANA's proposal goes through. (Photo: Ryosuke Yano)

Under the plan, Integral would control 50% or more, while ANA Holdings and its partner financial institutions would together hold the remaining 50% or less (Skymark likely to accept ANA sponsorship.). ANA's actual shareholding would be kept under 20% so that Skymark would not need to relinquish their 36 lucrative slot-pairs at Tokyo/Haneda [HND/RJTT], which is required by Japan's Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) if that figure exceeds 20%. An initial capital of 18 billion JPY is to be injected into the ailing carrier; 9 billion JPY from Integral, 3.5 billion JPY from ANA, and the rest from ANA's partner financial firms.

Skymark also considered remaining independent from other airlines with support from only Integral, and the equity firm mulled being its sole sponsor. However, total liabilities grew to 316 billion JPY (Skymark's total debts skyrocket to 300 billion JPY.) after all creditors filed claims, including 700 million USD (84 billion JPY) from Airbus for the Airbus A380 cancellation (Skymark hopes to settle Airbus A380 penalty in October.) and 900 million USD (108 billion JPY) from aircraft lessor Intrepid Aviation for scrapping A330 contracts (Skymark terminates all Airbus A330 leases.). With Skymark's total assets having dwindled to just 5 billion JPY in February, management apparently deemed it difficult to reduce the charges without the negotiation power of a strong backing airline.

Domestic-configured Boeing 777-281/ER JA742A taxies for departure from Haneda. ANA will start retiring older 777-200s this year, with two to leave the fleet during FY2015. (Photo: Ryosuke Yano)

For ANA, the incentive had always been Skymark's 36 slot-pairs, or 7.8% of all domestic slot-pairs at heavily-regulated Haneda. Their proposal had called for sending in ANA's executives as advisers, reducing Skymark's fleet to around 20 aircraft, implementing extensive code-sharing, joint ticket sales, joint fuel purchases, joint crew training, and aligning its network to complement that of ANA's, virtually transforming Skymark into a feeder carrier for ANA, replicating how it controls AIRDO [HD/ADO] (d.b.a. Air Do), Skynet Asia Airways [6J/SNJ] (d.b.a. Solaseed Air), and Star Flyer [7G/SFJ]. Archrival Japan Airlines [JL/JAL] holds 40% of domestic slot-pairs (184.5) at Haneda with ANA 37.4% (172.5), however, the latter literally dominates 52.2% when combining those of Air Do, Solaseed Air, and Star Flyer. Adding Skymark would put all post-deregulation start-ups at Haneda under de facto ANA control and raise its share of slots to a whopping 60%.

However, ANA and Integral's agreement is reportedly fragile with conflicting interests and differences yet to be solved. ANA together with its partner banks initially demanded a 80% stake in Skymark, in effect taking full control, an idea vehemently opposed by Integral, which wants to rebuild Skymark as an independent carrier. Eventually re-listing the carrier and keeping all jobs are some of the terms that have been agreed on. Regulator MLIT has also said it would limit any ANA investment in Skymark to five years to prevent a return to the ANA/JAL duopoly era at Haneda, though this may be invalidated by the governing Liberal Democratic Party (LDP), with which ANA enjoys a cozy relationship. But if Integral holds majority control, sponsoring Skymark will not fully go in protectionist ANA's favor, which obviously wants to keep Skymark under its influence once and for all and keep genuine domestic competition out of bread-and-butter Haneda for as long as possible.

Time is running out. Skymark has between April 22nd and May 8th to negotiate with creditors to reduce its liabilities. A corporation rehabilitation plan must be handed in to the Tokyo District Court by May 29th, and it would need majority go-ahead at a creditor's meeting that would be held in late June for the plan to be implemented by the end of July. A new brand is also currently under consideration for launch as early as summer (Skymark hints at new brand: SKY bee?). In any case, the interests of the flying public seem to be out of the picture, completely.

Source: Nikkei Shimbun, April 15th. (in Japanese)
Source: Nikkei Shimbun, April 18th. (in Japanese)
Source: NHK, April 18th. (in Japanese)
Source: Asahi Shimbun, April 18th. (in Japanese)
Source: Sankei Shimbun, April 18th. (in Japanese)

ANA reveals Star Wars Project.

On April 17th, All Nippon Airways [NH/ANA] announced that they will introduce a Star Wars special theme livery featuring the iconic R2-D2 on a Boeing 787-9 Dreamliner in autumn to kick off a five-year ANA Star Wars Project and agreement with The Walt Disney Company (Japan). This marks the first time a Star Wars character will appear on the exterior of a commercial aircraft. Dubbed R2-D2 ANA JET, the design was unveiled to Star Wars fans at Star Wars Celebration in Anaheim, California, U.S.A.

The R2-D2 ANA JET scheme will be applied to Boeing 787-9 JA873A, the 345th Dreamliner and a Charleston-built example to be configured in an international layout. Delivery is planned for September. (Image: ANA)

The Star Wars Project is in line with ANA's strategy to bolster its international presence, slowly shifting dependence from the lucrative-but-shrinking domestic market, which currently generates almost 70% of their revenue.

Last spring, Japan's largest carrier expanded its international network from Tokyo/Haneda [HND/RJTT] (ANA's Summer 2014 international expansion.) after receiving a controversial (at least to JAL) 11 slot-pairs for international services, and is now on expansion mode at Tokyo/Narita [NRT/RJAA] as well, preparing to add Houston/George Bush [IAH/KIAH] in June (ANA announces Houston and Southeast Asia expansion.) and resume Kuala Lumpur/Sepang [KUL/WMKK] in September (ANA reveals Kuala Lumpur and expansion at Narita.), along with adding frequencies to several existing routes. ANA is expected to further strengthen its Narita hub to capture the Asia – North America market.

Other new destinations on ANA's short-term wishlist are Istanbul (ANA considering Haneda – Istanbul.), Mexico City, Phnom Penh (or Siem Reap), and Sydney. Rumors also point out to another route (or frequency increase) to North America and the addition (or resumption) of its Narita – London/Heathrow [LHR/EGLL] route, which was moved to Haneda last spring.

Source: All Nippon Airways, April 17th. (in Japanese)

Peach loads Kansai – Miyazaki.

On April 14th, Peach Aviation [MM/APJ] announced that they will inaugurate Miyazaki [KMI/RJFM] with a daily service from their Osaka/Kansai [KIX/RJBB] hub on August 28th, becoming the first LCC to serve the last prefecture in Kyushu yet to receive LCC flights. 180-seat Airbus A320s will operate the new round-trip, which is timed in the evening.

Another Airbus A320 of Peach prepares for departure from Kansai. (Photo: Aviation Wire)

Fares range from 4,590 JPY for a Happy Peach ticket, which only includes a 10-kilogram carry-on baggage allowance, and go up to 20,990 JPY for last-minute, flexible and inclusive tickets. They went on sale today on April 14th at 1500 JST.

Flight Schedule:
Kansai – Miyazaki NEW daily with A320-200. (Aug/28 - Oct/24)
MM189 KIX 1825 – 1930 KMI 320 Daily
MM190 KMI 2000 – 2105 KIX 320 Daily

Miyazaki becomes Peach's fourth destination in Kyushu after Fukuoka [FUK/RJFF], Kagoshima [KOJ/RJFK], and Nagasaki [NGS/RJFU]. Their 16th destination overall becomes the first new city from Kansai since February 1st, 2014, when they launched Matsuyama [MYJ/RJOM] (Peach commences Matsuyama.). Kansai – Miyazaki was formerly flown by All Nippon Airways [NH/ANA] until March 2007, though Osaka/Itami [ITM/RJOO] – Miyazaki continues to see six daily ANA round-trips and another five with Japan Airlines [JL/JAL].

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

Narita opens Tokyo's LCC gateway: Terminal 3.

On April 8th, Tokyo/Narita [NRT/RJAA] officially opened LCC-dedicated Terminal 3, its first new terminal since the inauguration of Terminal 2 on December 6th, 1992. Five airlines moved to the brand-new, 66,000-square meter facility: Jeju Air [7C/JJA], Jetstar Airways [JQ/JST], Jetstar Japan [GK/JJP], Spring Airlines Japan [IJ/SJO], and Vanilla Air [JW/VNL]. It is capable of handling 7.5 million domestic and international passengers per year.

Narita's official mascot Ku-tan and airport staff welcome the first passengers to Terminal 3 as it opened at 0330 JST on April 8th. (Photo: Aviation Wire)

The 24-hour terminal houses over 20 restaurant and shops, most of which are open from 4AM to 9PM, and a convenience store that is open around-the-clock. The first flight to depart from Terminal 3 became Jetstar Japan's flight GK101, service to Sapporo/New Chitose [CTS/RJCC], which left at 0611, four minutes ahead of schedule. It was operated by Airbus A320-232(SL) JA14JJ.

The Chiba airport becomes Japan's fourth to have a low-cost terminal after Ibaraki [IBR/RJAH], Okinawa/Naha [OKA/ROAH], and Osaka/Kansai [KIX/RJBB], which opened theirs on March 11th, 2010, October 18th, 2012, and October 28th, 2012, respectively. It reflects the dramatic increase of LCCs serving Kanto (Greater Tokyo) region's main international gateway; the 14 LCCs now account for 18% of Narita's seats, including 67% of domestic and 8% of international, up from almost zero only four years ago.

While Tokyo/Haneda [HND/RJTT] remains heavily regulated, LCCs wishing to serve the megalopolis have had to choose from either Narita or Ibaraki, and Haneda's recent addition of international slots have seen full-service carriers gradually shift some services to Haneda, which prompted Narita to become more aggressive in luring new airlines, with LCCs especially being an important target. Ibaraki, though having the distinction of having the nation's first LCC-dedicated terminal (its only one), has succeeded in attracting only one LCC: Spring Airlines [9C/CQH].

Narita's nine other LCCs that have yet to decide to move to Terminal 3 are Air Busan [BX/ABL], AirAsia X [D7/XAX], Cebu Air [5J/CEB] (d.b.a. Cebu Pacific Air), Eastar Jet [ZE/ESR], Hong Kong Express Airways [UO/HKE] (d.b.a. HK Express), Peach Aviation [MM/APJ], Scoot Airlines [TZ/SCO], Thai AirAsia X [XJ/TAX], and Tigerair Taiwan [IT/TTW], though the relatively small terminal lacks the capacity to house all of these carriers. On the list of LCCs waiting for regulatory clearance are long-haul carriers Indonesia AirAsia X [XT/IDX] and NokScoot Airlines [XW/NCT].

Source: CAPA Centre for Aviation, March 24th. (in English)
Source: Aviation Wire, April 8th. (in Japanese)
Source: Flightliner, April 8th. (in Japanese)

Jetstar Japan announces Narita – Hong Kong.

On April 7th, Jetstar Japan [GK/JJP] announced that they will commence Tokyo/Narita [NRT/RJAA] – Hong Kong [HKG/VHHH] on June 1st. It becomes the Narita-based LCC's second international route after Osaka/Kansai [KIX/RJBB] – Hong Kong (Jetstar Japan goes international with Kansai – Hong Kong.), which was started on February 28th, and the first overseas link from their home base. The new service will start out with three weekly flights, and will gradually increase to daily from September 1st.

Airbus A320-232(SL) JA18JJ approaching Narita. The fleet of 180-seat A320s is capped at 20 for now, and new services will come from increasing utilization. (Photo: Ryosuke Yano)

180-seat Airbus A320s will be deployed. One-way Starter fares, which include a seven-kilogram carry-on baggage allowance, will start from 7,500 JPY, excluding taxes and a fuel surcharge. Tickets will go on sale on April 8th at 1400 JST, and a 990-JPY promotional fare will be offered in limited numbers.

Flight Schedule:
Narita – Hong Kong NEW 3 weekly with A320-200. (June/1 - Jul/17)
GK21 NRT 0900 – 1240 HKG 32A/320 Mo/Tu/Th
GK22 HKG 1340 – 1900 NRT 32A/320 Mo/Tu/Th

Narita – Hong Kong 6 weekly with A320-200. (July/18 - Aug/7, Aug/17 - 31)
GK21 NRT 0900 – 1240 HKG 32A/320 Mo/Tu/Th/Fr
GK21 NRT 0935 – 1315 HKG 32A/320 We/Su
GK22 HKG 1340 – 1900 NRT 32A/320 Mo/Tu/Th/Fr
GK22 HKG 1415 – 1935 NRT 32A/320 We/Su

Narita – Hong Kong 4 weekly with A320-200. (Aug/8 - 16)
GK21 NRT 0900 – 1240 HKG 32A/320 Mo/Th/Fr
GK21 NRT 0935 – 1315 HKG 32A/320 Su
GK22 HKG 1340 – 1900 NRT 32A/320 Mo/Th/Fr
GK22 HKG 1415 – 1935 NRT 32A/320 Su

Narita – Hong Kong 1 daily with A320-200. (Sep/1 - Oct/24)
GK21 NRT 0900 – 1240 HKG 32A/320 Mo/Tu/Fr
GK21 NRT 0935 – 1315 HKG 32A/320 We/Th/Sa/Su
GK22 HKG 1340 – 1900 NRT 32A/320 Mo/Tu/Fr
GK22 HKG 1415 – 1935 NRT 32A/320 We/Th/Sa/Su

Jetstar Japan becomes the third LCC to enter the Tokyo – Hong Kong market, after Vanilla Air [JW/VNL], which operates twice daily from Narita (Vanilla Air inaugurates Hong Kong.), and Hong Kong Express Airways [UO/HKE] (d.b.a. HK Express), which operates twice daily from Tokyo/Haneda [HND/RJTT] and once daily from Narita. Full-service carriers All Nippon Airways [NH/ANA], Cathay Pacific Airways [CX/CPA], and Japan Airlines [JL/JAL] all serve the route from both Tokyo airports.

Meanwhile, the Kansai – Hong Kong service seems to be doing well so far, with load factors reportedly hovering well above 80%. Although they were expecting 60% of the passengers to be non-Japanese, that figure is more than 80%, according to the airline. The Japanese unit of the Australian-born LCC is also expanding its domestic network, having launched Nagoya/Chubu Centrair [NGO/RJGG] – Okinawa/Naha [OKA/ROAH] on March 29th (Jetstar Japan commences Nagoya – Okinawa.).

In other news, long-time Jetstar Group executive Gerry Turner has been appointed the new CEO of Jetstar Japan effective April 1st. Mr. Turner, a former Ryanair [FR/RYR] executive from Ireland who helped launch Jetstar Airways [JQ/JST] with now Qantas Airways [QF/QFA] boss Alan Joyce in 2004, replaces Miyuki Suzuki, who stepped down on March 31st for another executive role, understood to be at Cisco Japan. As Japanese carriers are required to have a Japanese president, Masaru Kataoka, Jetstar Group's regional general manager in Japan, has been promoted to become Chairman and Representative Director.

Source: Jetstar Japan, April 1st. (in Japanese)
Source: Sydney Morning Herald, April 1st. (in English)
Source: Jetstar Japan, April 7th. (in Japanese)
Source: Aviation Wire, April 7th. (in Japanese)

Skymark hints at new brand: SKY bee?

Bankrupt Skymark Airlines [BC/SKY] (Skymark to file for bankruptcy.) confirmed that it will change its name and livery, and revamp their product along with staff uniforms. The re-branding could take place as early as late July, which is when their corporation rehabilitation plan would be implemented, provided it wins majority approval from creditors (Skymark's total debts skyrocket to 300 billion JPY.) at a meeting to be held in late June. The plan must be submitted to the Tokyo District Court, where it filed for bankruptcy protection, by May 29th.

Boeing 737-82Y(WL) JA737Z arrives at Ishigaki as flight BC567 from Naha on March 28th as Skymark's last flight to the southern Okinawa airport. Along with Miyako, it was dropped as part of their restructuring. (Photo: Aviation Wire)

"We want to think from zero," said Nobuo Sayama, President of Integral Corporation, in a weekend news program, revealing SKY bee is one of their top candidates for the new identity. Together with advertising agencies Sunny Side Up and TYO, the investment fund, which has pledged 9 billion JPY to keep the cash-strapped airline flying while it reorganizes (Skymark to cut 15% of flights, ground all Airbus A330s.), disclosed a logo that uses a hornet. On April 6th, Skymark's President Masakazu Arimori confirmed "We have come a long way, so we want to renew the airline. We can't tell if it will be SKY bee, but SKY will remain part of it."

Meanwhile, the selection of sponsors to help Skymark out of bankruptcy (Skymark seeks investor airline; scraps ANA & JAL dual tie-up.) is taking much longer than expected. "If there is an airline who is sincerely willing to help rebuild Skymark, we would like to work with them," said Mr. Sayama, implying their view of both bidders AirAsia [AK/AXM] and ANA Holdings, parent of All Nippon Airways [NH/ANA] (ANA and AirAsia bid to save Skymark.), as having no genuine interest in Skymark except for the lucrative 36 slot-pairs Japan's third largest carrier controls at Tokyo/Haneda [HND/RJTT]. "If our employees don't feel comfortable about the sponsor, we won't get along," reiterating that Integral is prepared to become its sole sponsor, taking full control of Skymark's rehabilitation.

On March 30th, ANA Holdings' new President Shinya Katanozaka said "We can't let a competitor slip away with the slots," adding "That would be detrimental to our business." So that Skymark wouldn't need to relinquish its precious slots, ANA would keep its investment under 20%, but "Partnering without shareholding is out of question," said Mr. Katanozaka, adding "We need to be at the center of their restructuring." The Ministry of Land, Infrastructure, Transport, and Tourism (MLIT), which regulates Haneda, has notified they would limit any ANA investment to five years, in an effort to keep Skymark as Japan's third force, but ANA's chief opposes "It took over a decade to get rid of AIRDO's [HD/ADO] (d.b.a. Air Do) and Skynet Asia Airways' [6J/SNJ] (d.b.a. Solaseed Air) debts, so in that event we will urge MLIT to lift that."

AirAsia Group's CEO Tony Fernandes is also expected to visit Tokyo soon to pitch his proposal to the embattled airline. According to people close to the matter, the chief of Asia's largest LCC group will present details of a plan to help Skymark settle penalties charged by Airbus and aircraft lessors for the canceled A380s (Skymark's Airbus A380 order in jeopardy.) and A330s (Skymark terminates all Airbus A330 leases.) as well as cooperate on operations, and discuss a potential future investment. "Our plan guarantees Skymark's independence," said the source. Meanwhile, a Skymark spokesperson said "We haven't talked in detail, so at this point we can't say if AirAsia's plan is acceptable or not." Mr. Fernandes is also busy with AirAsia Japan (Mk II), which is currently preparing to launch operations from Nagoya/Chubu Centrair [NGO/RJGG] by the end of this year (New AirAsia Japan eyes launch by year-end 2015.).

However, with Skymark starting to tweak its product, including overhauling its brand, it may actually decide to go without any airline sponsors after all. Check-in baggage allowance has been increased from 15 to 20 kilograms, while stricter cosmetics and hairstyle rules for flight attendants have been implemented, which at least don't seem to go in the direction of a LCC. But opting not to name any airline sponsors is likely to have a negative effect on their negotiation power with creditors in reducing their huge debt (Skymark's total debts skyrocket to 300 billion JPY.). Stay tuned.

Source: Reuters Japan, March 31st. (in Japanese)
Source: Jiji Press, April 1st. (in Japanese)
Source: Mainichi Shimbun, April 4th. (in Japanese)
Source: Aviation Wire, April 6th. (in Japanese) 
Source: Nikkei Shimbun, April 7th. (in Japanese)

*Edited/updated on April 7th, 2015.

Fuji Dream launches Izumo and Kitakyushu.

On March 29th, Fuji Dream Airlines [JH/FDA] launched Izumo [IZO/RJOC] and Kitakyushu [KKJ/RJFR] from its hub at Nagoya/Komaki [NKM/RJNA] (Fuji Dream confirms Izumo and Kitakyushu.) with one and two round-trips, respectively. FDA's eighth and ninth cities from Nagoya's older but more convenient airport near downtown will be flown with either 76-seat Embraer ERJ170-100s (E170s) or 84-seat ERJ170-200s (E175s). All three new flights code-share with partner Japan Airlines [JL/JAL].

Embraer ERJ170-200/STD (E175) JA03FJ Pink was FDA's first 84-seat aircraft. The Komaki-based carrier now operates six alongside three 76-seat ERJ170-100s (E170), with another two E175s on order. (Photo: FDA)

One-way fares to Izumo start from 9,000 JPY booked 45 days in advance and go up to 26,000 JPY for last-minute tickets during peak periods, though a promotional 6,005 JPY-fare is being offered in limited numbers until April 30th. Prices for Kitakyushu range from 11,000 JPY for 45-day-advance tickets to 28,000 JPY for last-minute fares during peak season. A promotional fare is also available until April 30th at 9,990 JPY. Taxes and fuel surcharge are not included in the figures.

Flight Schedule:
Komaki – Izumo NEW 1 daily with E170 or E175. (2015/Mar/29 - Oct/24)
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. (2015/Mar/29 - Oct/24)
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

ERJ170-200/STD (E175) JA09FJ Gold was assigned to the inaugural flight to Kitakyushu, while ERJ170-200/STD (E175) JA07FJ Yellow operated the first round-trip to Izumo. The former aircraft, which is their ninth, had only arrived in Japan on March 23rd (Fuji Dream's ninth Embraer E-Jet is Gold.) after a four-day-long delivery flight from Brazil.

The niche regional carrier is scheduled to receive its 10th aircraft in March 2016 and 11th in March 2017, however, FDA revealed that opening a base at Nagoya/Chubu Centrair [NGO/RJGG], the region's main international gateway, while keeping Komaki is currently under consideration, as aircraft parking space at the older airport is now full. Besides the two new destinations, FDA currently serves Aomori [AOJ/RJSA], Fukuoka [FUK/RJFF], Hanamaki [HNA/RJSI], Kochi [KCZ/RJOK], Kumamoto [KMJ/RJFT], Niigata [KIJ/RJSN], Yamagata [GAJ/RJSC] from Komaki.

FDA has largely been able to gain popularity for Komaki's compact terminal and proximity to downtown. It essentially filled the void left by JAL subsidiary J-Air [XM/JLJ], which withdrew from Komaki in March 2011. The two new routes were also previously served by JAL's commuter arm until 2005 and 2007, respectively. 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 commences Nagoya – Okinawa.) and AirAsia Japan (Mk II) setting up a hub (New AirAsia Japan eyes launch by year-end 2015.), the small commuter carrier could drag itself into a new fare war.

Source: Travel Watch, March 30th. (in Japanese)

New AirAsia Japan mulls Nagoya – Sendai.

AirAsia Japan (Mk II) is reportedly considering Nagoya/Chubu Centrair [NGO/RJGG] – Sendai [SDJ/RJSS] as one of their first routes. The reincarnation of the pan-Asian LCC group's Japanese unit is currently preparing to launch flights before the end of 2015 with a hub at Chubu Centrair, which serves the nation's third largest metropolitan area (New AirAsia Japan eyes launch by year-end 2015.). CEO Yoshinori Odagiri had previously hinted Fukuoka [FUK/RJFF] and Sapporo/New Chitose [CTS/RJCC] as their first domestic cities and Taipei/Taoyuan [TPE/RCTP] as its first international destination.

Arriving at Trang is Airbus A320-214 HS-ABY of Thai AirAsia, the group's short-haul affiliate in Thailand. AirAsia Japan (Mk II) is also part of a strategy to shift dependence from Southeast Asia, where competition is fiercer than ever, with most of its siblings posting losses for 2014. (Photo: Ryosuke Yano)

Japan's latest LCC is planning to take delivery of its first aircraft, Airbus A320-216(SL) JA01DJ, the narrow-body family's 6676th to roll out of the production line, in July, with the second to arrive in August as JA02DJ (New AirAsia Japan's first Airbus A320 due in July.). The deadline for application for hiring flight attendants was February 1st, and applicants were required to have at least one year of experience. A two-month training program at AirAsia's [AK/AXM] Malaysia headquarters would start as early as May. However, the airline has yet to officially apply for an air operator's certificate (AOC) with regulatory paperwork taking more time than expected.

Meanwhile, Hiroshi Takeshi, President of Central Japan International Airport, which operates Chubu Centrair, has said "We're ready to begin work on the LCC terminal as soon as AirAsia makes its formal decision." The airport was on track to build an LCC-dedicated terminal capable of processing 5 million annual domestic and international passengers until the original AirAsia Japan (Mk I) [JW/WAJ] withdrew at the end of August 2013, after the first joint-venture (JV) with ANA Holdings failed. Chubu Centrair has set a target for 15 million passengers by 2020, which is double the current figures, but Mr. Kawakami believes "It's not impossible if we could attract more LCCs."

Also, AirAsia is currently bidding to sponsor Skymark Airlines [BC/SKY] out of bankruptcy, competing with former JV partner ANA (ANA and AirAsia bid to save Skymark.). Proposals from neither parties have been disclosed, however, the Malaysia-based LCC is reportedly calling for a re-branding of Skymark under AirAsia, launching a new JV long-haul subsidiary (a hint at AirAsia X Japan?), and a potential future merger with AirAsia Japan (Mk II), in exchange for initially investing up to 20% in Skymark and mediating discussions with Airbus and aircraft lessors to reduce the cash-strapped carrier's debts (Skymark's total debts skyrocket to 300 billion JPY.). AirAsia Japan's (Mk II) plans may change depending on the outcome of the Skymark proposal.

Source: Aviation Wire, April 1st 2013. 
Source: Aviation Wire, October 4th 2013.
Source: Nikkan Kogyo Shimbun, February 11th 2015.
Source: Nikkan Kogyo Shimbun, April 1st 2015. 
Source: Traicy, April 1st 2015.