Star Flyer back in black, mulls international charters.

Star Flyer [7G/SFJ], which reported a 431 million JPY net profit for FY2014 ending on March 2015, announced its mid-term strategy dubbed Pursuit of Star Flyer-ness 2020. During the next five years, the Kitakyushu [KKJ/RJFR]-based carrier will consider midnight international charters to regional Asian destinations, as well as revamp its aircraft interiors and crew uniforms with an emphasis on its high service quality, which has earned the carrier first place for Japan Customer Satisfaction Index (JCSI) in the domestic long-distance travel category for six consecutive years.

Airbus A320-214(SL) JA20MC rotates from Haneda's Runway 34R. Star Flyer holds 19 slot-pairs at the heavily-regulated downtown Tokyo airport, with another four allocated for international/domestic connections which are specifically used for Haneda – Kansai. (Photo: Ryosuke Yano)

A reverse from a 3.04 billion JPY net loss in FY2013, Star Flyer's total sales stood at 34.7 billion JPY for FY2014 (5.2% increase over FY2013), operating profit was 247 million JPY (3.04 billion JPY operating loss in FY2013), while ordinary profit was 910 million JPY (2.64 billion JPY ordinary loss for FY2013). "Material uncertainty" whether the carrier could remain a going concern, warned in October 2013, was resolved by April 2014.

Star Flyer axed their four-times daily Osaka/Kansai [KIX/RJBB] – Fukuoka [FUK/RJFF] service in February 2014 as well as their double-daily Kitakyushu – Busan/Gimhae [PUS/RKPK] route, which was their sole but highly unprofitable international service, the following month, and instead shifted that capacity to launch Fukuoka – Nagoya/Chubu Centrair [NGO/RJGG] in March 2014, replacing the same number of ANA flights. In October, it reduced the hotly-contested Tokyo/Haneda [HND/RJTT]  – Fukuoka route from 10 to seven round-trips, and instead launched Haneda – Yamaguchi-Ube [UBJ/RJDC] (Star Flyer launches Yamaguchi-Ube.), again virtually taking over some ANA flights.

Network restructuring brought total passengers carried down by 18% to 141 million and available seat kilometers (ASK) down by 14.8%, but translated to a 2% system-wide load factor increase to 67.7%. All flights except for a single Haneda – Kitakyushu round-trip code-share with All Nippon Airways (Star Flyer to add ANA's code on all flights.), subsidiary of 17.26% owner ANA Holdings, and schedules are closely coordinated with them. Star Flyer earned a whopping 10.7 billion JPY just from code-sharing payments from ANA, an increase of 88% over the previous fiscal year, accounting for over 30% of their revenue. ANA veteran Sadami Matsuishi virtually took the helm in March 2014 and was officially installed as President in June (New Star Flyer President is from ANA.).

Sadami Matsuishi, former ANA Operations Director, heads Star Flyer. ANA virtually has the tiny carrier's slots at its disposal as seen through route swaps and heavy code-sharing. (Photo: Aviation Wire)

Their FY2015 forecast estimates total sales at 34.1 billion JPY, operating profit at 380 million JPY, and ordinary profit at 1.18 billion JPY, producing a net profit of 820 million JPY. Calculations are based on currency rates staying at 125 JPY per USD and 145 JPY per EUR, and kerosene price averaging 70 USD per barrel.

No new routes are planned for the moment, and Star Flyer will concentrate on increasing profitability on its five current routes, though frequency adjustments are not ruled out. Meanwhile, midnight international charters to neighboring Asian cities from Kitakyushu, Kansai, Chubu Centrair, and Haneda, all 24-hour airports, are being considered. Its fleet of 150-seat Airbus A320s will be kept at nine, with orders for two more aircraft deferred indefinitely. However, Mr. Matsuishi has said "It's difficult to make a profit with 150-seat aircraft," adding the interior product revamp could include raising capacity to 166 seats, which would be identical to ANA's A320s.

Source: Star Flyer, May 1st. (in Japanese)
Source: Aviation Wire, May 4th. (in Japanese)
Source: Traicy, May 7th. (in Japanese)
Source: Aviation Wire, May 7th. (in Japanese)

Star Flyer to start Yamaguchi-Ube in October.

Star Flyer (7G/SFJ), which is undergoing management change and restructuring (Star Flyer's President Shinichi Yonehara to step down.) after posting a whopping 3 billion JPY loss for fiscal year 2013, will reportedly launch Tokyo/Haneda (HND/RJTT) – Yamaguchi-Ube (UBJ/RJDC) from the Winter 2014/2015 schedule starting on October 26th.

Airbus A320-214 JA04MC City of Kitakyushu taxies at rainy Haneda. Delivered in 2007, it will be returned to the lessor this year, reducing the fleet to nine. (Photo: Ryosuke Yano)

Since the Kitakyushu (KKJ/RJFR)-based airline's total number of prized Haneda slots will remain at 27 slot-pairs, two of 10 round-trips between Haneda and Fukuoka (FUK/RJFF) and one of the dozen connecting the capital with Kitakyushu is expected to be suspended to provide room for the three new flight pairs. The other five slot-pairs are currently used for their Osaka/Kansai (KIX/RJBB) service.

However, Sadami Matsuishi, the new President to be sworn in on June 25th (New Star Flyer President is from ANA.), had repeatedly emphasized to Kitakyushu's business community that the airline's hometown would not see cuts, so if local criticism turns out to be strong, Fukuoka could see a third flight cut instead of Kitakyushu. Mr. Matsuishi is a veteran of All Nippon Airways (NH/ANA), a wholly owned subsidiary of ANA Holdings, which controls roughly 18% of Star Flyer's shares. His most recent position has been Chief of Department for Risk Management at IBEX Airlines (FW/IBX).

Meanwhile, ANA plans to code-share with Star Flyer on all three new flights and instead reduce flying their own metal on three of their five daily round-trips. This effectively frees up three of ANA's slot-pairs at Haneda, which sparks speculation about where ANA plans to use these precious slots to. The code-share allows Star Flyer to have a stable income from the now de facto parent while for ANA it could transfer second-tier routes to a (slightly) lower-cost partner and free-up Haneda slots at the same time. Operating under a similar scheme are Star Flyer's three Nagoya/Chubu Centrair (NGO/RJGG) – Fukuoka (FUK/RJFF) round-trips (Star Flyer to add ANA's code on all flights.), launched on March 30th, which replaced three of ANA's.

Now in its eighth year of service, Star Flyer's heavy losses not only stem from high costs (Cost of Available Seat-Kilometer, or CASK, was 11.8 JPY for FY2011), a depreciated JPY (same as everyone else), and LCC competition, but also from critical strategy errors. Last spring, it dumped all of its five new slot-pairs awarded at Haneda on the Fukuoka route, a high-demand link but also one of the most highly-contested. Load factors went up, but prices went down and hurt the all-important yield.

Star Flyer initially touted (and still does) itself as an affordable high-quality domestic airline, boasting Airbus A320s with only 150 seats, providing audio visual on-demand (AVOD) at every seat (the only domestic airline to do so), as well as serving Tully's-branded coffee accompanied by chocolate for free. However, with heavy losses and ANA's increased involvement, it is becoming merely another pawn of ANA, joining the likes of AIRDO (HD/ADO) (d.b.a. Air Do), IBEX Airlines, and Skynet Asia Airways (6J/SNJ) (d.b.a. Solaseed Air).

Source: Mainichi Shimbun, June 13th. (in Japanese)

New Star Flyer President is from ANA.

As rumored last week (Star Flyer's President Shinichi Yonehara to step down.), Star Flyer on February 28th announced that Shinichi Yonehara is resigning from his role as President of the Kitakyushu (KKJ/RJFR)-based airline on March 31st. An All Nippon Airways (NH/ANA) veteran and former head of IBEX Airlines' (FW/IBX) Department for Risk Management Sadami Matsuishi is expected to succeed his position.

Airbus A320-214 JA05MC 'City of Kitakyushu' taxiing in the Haneda morning sun. (Photo: Ryosuke Yano)

Star Flyer is expected to post a whopping 3.3 billion JPY loss for fiscal year 2013. Mr. Yonehara told during the press conference that he made the decision on his own, and that it was approved at a Board of Directors' meeting in February. "It's our first loss since we started operations, but a big one. 80 employees had to leave the company (as part of a restructuring plan to reduce costs) and I feel painful. I felt I need to take responsibility", he added. Mr. Yonehara is expected to remain with the carrier until at least June as Advisor, a ceremonial position. Meanwhile, Makoto Takahashi, Associate Senior Corporate Executive Officer, will be Acting President until the new leader is installed.

Mr. Yonehara (right) and Mr. Takahashi (left). (Photo: Aviation Wire)

60-year-old Mr. Matsuishi started his career with ANA in 1975 and eventually became ANA Operations Director. During his tenure, he was also briefly Vice President at Skynet Asia Airways (6J/SNJ) (d.b.a. Solaseed Air), and from March 2012 has been with IBEX Airlines, also an ANA feeder carrier. ANA Holdings currently owns 17.96% of Star Flyer, and effective March 30th, all services will code-share with ANA. It joins AIRDO (HD/ADO) (d.b.a. Air Do) (now 14% controlled by ANA) and Solaseed Air (now 12% controlled by ANA), which along with Star Flyer were new entrants born after deregulation to challenge the ANA/JAL duopoly, in becoming merely a feeder carrier for ANA. Skymark Airlines (BC/SKY) is now the only post-deregulation homegrown carrier truly independent from the mighty two.

Source: Yomiuri Shimbun, February 28th. (in Japanese)
Source: Aviation Wire, February 28th. (in Japanese)