Is AirAsia considering a Skymark takeover?

On August 19th, the Nikkei Shimbun reported that the AirAsia Group has started considering an investment in ailing Skymark Airlines (BC/SKY), including a possible takeover. It said that the Malaysian LCC, a very important customer for Airbus, is also talking with the European manufacturer to reduce the penalties they are seeking with Skymark for the canceled Airbus A380 order (Skymark's Airbus A380 order in jeopardy.), if AirAsia takes control of Japan's third largest carrier.

AirAsia's Airbus A320-214 9M-AHD taxies at Kuala Lumpur. (Photo: Ryosuke Yano)

Skymark holds 36 precious slot-pairs at preferred Tokyo/Haneda (HND/RJTT), something AirAsia is craving for. The report said that AirAsia has initiated discussions with several Japanese financial firms to make a bid for Skymark through AirAsia Japan (Mk II), which is expected to launch services from Nagoya/Chubu Centrair (NGO/RJGG) by July 2015 (AirAsia Japan selects Nagoya Chubu Centrair.). As far as voting-rights are concerned, foreign ownership of Japanese airlines is capped at 33%. Shares of Skymark rose almost 28% and closed at 230 JPY today. Major shareholders include Shinichi Nishikubo, its President and CEO, controlling 30.57%, travel agency H.I.S. with 7.72%, and Master Trust Bank of Japan owning 3.24%.

However, both airlines denied the report. "There is nothing the company is aware of and we have not been approached by AirAsia regarding any financial support," said a press release from Skymark, while AirAsia Group CEO Tony Fernandes said "Never seen such rubbish. AirAsia has no interest in Skymark in Japan. There have been no discussions with Skymark. We (are) focused on new airline," through Twitter. But then again, almost always there's no smoke without fire, and Nikkei is usually a reliable source. AirAsia Japan CEO Yoshinori Odagiri hasn't denied as well, saying "Nothing has materialized, but we keep all doors open." It may well be that AirAsia is only dismissing the reports to help lower Skymark's shares as much as possible.

Skymark's Boeing 737-86N JA737L taxies at Narita. The aircraft was returned to its lessor in April this year, and fitted with winglets it now serves with Jeju Air as HL8019. (Photo: Aviation Wire)

The first child of Japan's deregulation, Skymark is the only start-up that has so far succeeded in cracking the ANA/JAL duopoly, under the leadership of hands-on and charismatic Mr. Nishikubo. It is also what forced All Nippon Airways (NH/ANA) and Japan Airlines (JL/JAL) to launch subsidiary LCCs Peach Aviation (MM/APJ) and Jetstar Japan (GK/JJP), respectively. However, increased competition with LCCs as well as the legacies lowering prices, coupled with a depreciated JPY, high fuel bills, and costs regarding the introduction of the A330 (Skymark Airlines inaugurates Airbus A330 service.) and A380, it tumbled to a full-year loss for the first time in five years for FY2013, announcing a 1.8 billion JPY loss.

It was dealt a further blow when Airbus unilaterally terminated Skymark's A380 order, doubting the carrier's ability to pay. The European planemaker is said to be seeking 70 billion JPY in penalties, in addition to already-paid deposits amounting to 26.5 billion JPY, which is unlikely to be refunded. The figure is only expected to grow, as Rolls-Royce and interior makers also prepare to seek compensation from Skymark. As if that weren't enough, they posted a whopping 5.7 billion JPY loss only in the first quarter of FY2014 (Skymark posts 5.7 billion JPY loss for 1Q FY2014.), prompting accountants to report "doubts about its ability to continue as a going concern." As of June, Skymark's cash and near-term assets stood at 7.2 billion JPY.

Skymark is realigning their business by cutting unprofitable routes and concentrating on their core markets (Skymark announces Narita closure and Yonago cuts.), while also raising fares and introducing a revamped fare system from October where the price will vary depending on availability. Financial support, something they have never asked for in their history, is desperately being sought for. However, with Mr. Nishikubo continuing to emphasize "We'll try to survive on our own," and ANA and JAL obviously not wanting an AirAsia brand in their by far most profitable (and protected) market, backroom political lobbying has probably already begun and it will not be easy for AirAsia.

I certainly hope Skymark can make it on their own. It would be too bittersweet (and to Mr. Nishikubo the most) for an icon that virtually revolutionized Japan's air industry to be swallowed up, even if that is by another respected carrier that transformed the market in Southeast Asia.

Reference: Nikkei Shimbun, August 19th. (in Japanese)
Reference: Bloomberg Japan, August 19th. (in Japanese)
Reference: Skymark Airlines, August 19th. (in Japanese)
Reference: Tony Fernandes @ Twitter (in English)

AirAsia Japan selects Nagoya Chubu Centrair.

AirAsia Japan (Mk II) has reportedly made its final decision to make Nagoya/Chubu Centrair (NGO/RJGG) its hub (New AirAsia Japan to be based at Nagoya Chubu Centrair.). On August 15th, CEO Yoshinori Odagiri revealed in an interview that they will set up a maintenance base at the airport serving Japan's third largest metropolitan area. "While there are no vacancies at Haneda and Narita not open 24 hours a day, Centrair is open around the clock," said Mr. Odagiri, adding "Kansai is attractive, but the situation is tough for a latecomer." Initial routes being considered are to Fukuoka (FUK/RJFF) and Sapporo/New Chitose (CTS/RJCC), with Taipei/Taoyuan (TPE/RCTP) expected to be their first international destination. 

On July 1st, AirAsia announced the reincarnation of their Japanese unit (AirAsia Japan is officially reborn; first flight June 2015.), this time with non-airline partners which includes Octave Japan Infrastructure Fund (19%), Rakuten (18%), Noevir Holdings (9%), and Alpen (5%) with an initial capital totaling 7 billion JPY together with AirAsia (49%). Voting-rights-based, AirAsia will control 33%, the maximum possible figure allowed under Japan's current airline foreign ownership laws, while Octave will have 28.2%, Rakuten 18%, Noevir 13.4%, and Alpen 7.4%.

Airbus A320-214 JA01AJ of AirAsia Japan (Mk I) sits at Narita in its final days in Japan. The aircraft is now with the group's Indonesian unit as PK-AZJ. (Photo: Ryosuke Yano)

Work is underway for a June 2015 launch, or "July 20th (2015) at latest," according to Mr. Odagiri, with a fleet of two 180-seat Airbus A320s supplied from AirAsia Group's huge order pool. It will likely start off with two routes from Chubu Centrair, most likely Fukuoka and New Chitose with three round-trips each, later expanding to other domestic and regional international destinations, with Taiwan expected to be the first of the latter. A 'Fly-Thru' product will also be offered including on AirAsia X (D7/XAX), which already serves Chubu Centrair four times weekly from Kuala Lumpur (KUL/WMKK). Two more A320s will be added before the end of 2015, with five to be added each year from 2016 onwards. A320neo aircraft will be added from 2016, putting Vietnam within range. Its first full-year profit is targeted by FY2017, its third year of operations.

The Chubu Centrair – New Chitose route is currently served by All Nippon Airways' (NH/ANA) Group seven times daily using Boeing 767s and 737s, Japan Airlines (JL/JAL) five times daily with 737s, Skymark Airlines (BC/SKY) twice daily with 737s, and Jetstar Japan (GK/JJP) once daily with A320s. The Fukuoka route is served by ANA six times daily with A320s, 737s, and Bombardier CRJs, Star Flyer (7G/SFJ) four times daily with A320s, de facto operating for ANA (Star Flyer to add ANA's code on all flights.), and Jetstar Japan once daily with A320s. Fuji Dream Airlines (JH/FDA) flies five round-trips connecting Nagoya/Komaki (NKM/RJNA) and Fukuoka, with JAL code-sharing on all flights.

However, Mr. Odagiri is bullish about getting slots at Tokyo/Haneda (HND/RJTT), saying Tokyo/Narita (NRT/RJAA) is too far and curfew-plagued, while Ibaraki (IBR/RJAH) is cost effective but again too far and also too small for a hub. "For 2020 (Tokyo Olympics/Paralympics), the MLIT (Japan Ministry of Land, Infrastructure, Transport, and Tourism) is considering all options, and we would like to make the necessary preparations," citing the government seriously talking about opening up airspace over metropolitan Tokyo, which could potentially create 50 or so more slot-pairs. Haneda operates four runways that are fully utilized, however, current airspace restrictions force all aircraft to arrive from and depart towards Tokyo Bay, meaning the number of movements per runway is kept low. A new runway would not make it before 2020.

AirAsia Japan (Mk I) and (Mk II) CEO Yoshinori Odagiri. (Photo: Aviation Wire)

If they fail to get slots at Haneda, Mr. Odagiri says they would have to consider Narita and Ibaraki, but at the same time ask to open up military airports in the Kanto (Greater Tokyo) region such as Japan Self Defense Force (JSDF)-controlled Atsugi (NTA/RJTA) and U.S. Air Force (USAF)-controlled Yokota (OKO/RJTY). Asked if AirAsia Japan (Mk II) is interested in partnering with troubled Skymark (Skymark posts 5.7 billion JPY loss for 1Q FY2014.), which currently holds 36 prized slot-pairs at Haneda, "Nothing has materialized, but we keep all doors open," he answered.

The Malaysia-based LCC group's first crack at the Japanese market with AirAsia Japan (JW/WAJ) (Mk I) (CoachFlyer JW8541: NRT - FUK on AirAsia Japan's Airbus A320.) ended in a divorce with joint-venture (JV) partner ANA, only 10 months after launching operations in August 2012, due to disagreements over how the airline would be run. "We would first listen to Tony (Fernandes), then bring it to ANA. But couldn't get expected responses in expected time frames," says Mr. Odagiri, who also headed the first incarnation. It ceased operations on October 26th, 2013, and relaunched as Vanilla Air (JW/VNL) under 100% ANA ownership on December 20th (Vanilla Air launches operations.). 

Another factor behind the failure was AirAsia's website being deemed difficult to use by the Japanese public; it asked to fill out passport information even on domestic flights, required to fill out the 'Issuing Bank' of a credit card which is not the norm in Japan, and simply took too much time. "What the Japanese feel as easy-to-use is something like Amazon.com," Mr. Odagiri said, adding "A Japanese manager has been assigned to take over AirAsia's website development. A revamped easy-to-use website for the entire group should be up by Spring 2015, and small bugs should be fixed by the time we start ops."

AirAsia Japan (Mk II) has already started crew recruiting. "Some employees remained with Vanilla Air for the sake of jobs, but they didn't enter the airline just to work for a company that would change its brand in just 10 months," said Mr. Odagiri, implying some if not many of the current employees at Vanilla could move to the red brand. It is rumored that AirAsia is offering crew salaries similar to ANA's figures, which could lure JAL crews, whose salaries were drastically cut during that group's restructuring. Pilot shortages have plagued LCCs Peach Aviation (MM/APJ) (Peach outlines Summer 2014 mass cancellations.) and Vanilla (Vanilla Air cancels 154 flights in June due to pilot shortage.) with mass cancellations.

Together with their recently-launched India unit, AirAsia Group's second attempt at the Japanese market is also part of their strategy to shift dependence from Southeast Asia, a still-growing but becoming an over-crowded market, to other parts of Asia and beyond, and to become a global brand. Although nothing has been decided yet, AirAsia is considering an affiliate in eastern Europe, as well as an AirAsia X India that would put Africa and Europe within range, and an AirAsia X Japan that would enable them to reach Canada, Hawaii, and west coast U.S.A. The group's recent order for 50 A330-900neo aircraft would obviously be too much for just the current AirAsia X brands in Indonesia, Malaysia, and Thailand to absorb.

Reference: Traicy, July 29th. (in Japanese)
Reference: Jiji Press, August 15th. (in Japanese)
Reference: Japan Times, August 16th. (in English)

Skymark announces Narita closure and Yonago cuts.

On August 14th, Skymark Airlines (BC/SKY) announced the first step of realigning their business. The proposed Winter 2014/2015 schedule effective October 26th through December 25th will see the number of direct links cut by six, including a complete withdrawal from Tokyo/Narita (NRT/RJAA) and cuts at Yonago (YGJ/RJOH) (Skymark mulls pull-out from Narita and Yonago.), reducing the total number of routes to 23.

Boeing 737-8HX JA737N at Tokyo's Haneda. It will be returned to lessor ACG in May 2015. All three remaining non-winglet 737s will be withdrawn from service by October 2015, reducing the 737 fleet to 27. (Photo: Ryosuke Yano)

Affected routes from Narita are Okinawa/Naha (OKA/ROAH), Sapporo/New Chitose (CTS/RJCC), and Yonago, while New Chitose and Tokyo/Haneda (HND/RJTT) will be cut from their Yonago focus city. Ibaraki (IBR/RJAH) – Nagoya/Chubu Centrair (NGO/RJGG), which has been seeing the lowest load factor in their network, is also being axed. The two slot-pairs at Haneda will be allocated to Fukuoka (FUK/RJFF) and Kobe (UKB/RJBE), with each receiving one.

Frequency Increases:
Fukuoka – Naha from 3 to 4 daily.
Haneda – Fukuoka from 10 to 11 daily. Airbus A330 operating on 10 round-trips.
Haneda – Kobe from 6 to 7 daily.

Suspensions:
Ibaraki – Chubu Centrair 1 daily.
Narita – Naha 2 daily.
Narita – New Chitose 2 daily. 
Narita – Yonago 2 daily.
Yonago – New Chitose 1 daily.
Yonago – Haneda 2 daily.

Load factors from Narita weren't bad, hovering around 65-70%, however, low-season rates dropped to 50-60% last year, and with the Naha and New Chitose routes directly competing with LCCs Jetstar Japan (GK/JJP) and Vanilla Air (JW/VNL), Skymark has had to keep prices down to remain in the race. The Yonago link, though without a competitor, has never been popular. Their shelving of long-haul Airbus A380 plans from Narita (Skymark's Airbus A380 order in jeopardy.) also made domestic operations there, originally aimed at feeding the A380s, redundant. Skymark first landed at Narita on October 30th, 2011.

Yonago, the newest focus city for Japan's third largest airline which was only launched last December, has been observing low load factors around 30-40% for all routes except for Haneda (Skymark commences Sendai – Okinawa.). New Chitose and Haneda have been axed, however, a one-stop through-fare will be offered via their second biggest hub at Kobe. The Yonago – Haneda route sees heavy competition from All Nippon Airways (NH/ANA), which flies five round-trips and slashed fares predatorily to match Skymark after their entry. 

The Ibaraki – Chubu Centrair route, which was only started on April 18th (Skymark adds Fukuoka and Nagoya from Ibaraki.), has seen load factors treading around 10-20% ever since launch. Ibaraki, Japan's first and so far only LCC-dedicated airport, will still have non-stop flights to Fukuoka, Kobe, and New Chitose.

Airbus is said to be seeking around 70 billion JPY in penalties for the A380 cancellation, in addition to already-paid deposits amounting to 26.5 billion JPY, which is unlikely to be refunded. The figure is only expected to grow, as Rolls-Royce and interior makers also prepare to seek compensation from Skymark. On the other hand, the airline posted a full-year loss for the first time in five years for FY2013, announcing a 1.8 billion JPY loss. It lost another 5.7 billion JPY only in the first quarter of FY2014, prompting its accountants to report "doubts about its ability to continue as a going concern." Their cash and near-term assets stood at 7.2 billion JPY as of June, and they are desperate for financial support, something they have never asked for in their history.

Skymark's latest strategy tweak also includes a revamp of their fare system, offering prices that vary depending on availability, from October 26th onwards. Fares have also been raised. Its resource deployment will concentrate on its lucrative Haneda slots; increase frequency on trunk routes and bring up utilization of its A330s. However, this doesn't promise good returns; remember Star Flyer? Dumping Haneda slots into trunk routes led to increased passenger volume, but lower load factors and lower yields (Star Flyer to add Yamaguchi-Ube; but reduce Fukuoka.). I certainly hope they survive; ANA and JAL have no mercy in slashing fares when Skymark enters, but also notorious for bringing fares back up high in markets Skymark has exited.

Reference: Aviation Wire, August 14th. (in Japanese)

*Post edited/updated on August 19th.

JAL to resume Kansai – Los Angeles in Winter 2014/2015.

Japan Airlines (JL/JAL) will reportedly launch Osaka/Kansai (KIX/RJBB) – Los Angeles (LAX/KLAX) service from sometime during the Winter 2014/2015 timetable, which begins on October 26th, using Boeing 787-8 Dreamliners. Nothing official has been released from the airline as of yet.

Boeing 787-8 JA823J at Tokyo's Haneda Airport with illuminated Tokyo Gate Bridge in the background. (Photo: Ryosuke Yano)

Japan's second largest carrier suspended the route in September 2006, however, the local business community along with Kansai Airport had been pushing for the resumption. Japanese corporations are loyal customers of ANA and JAL. Currently, United Airlines (UA/UAL) and China Airlines (CI/CAL) offer the only non-stop flights to mainland U.S.A, flying to San Francisco (SFO/KSFO) and New York/John F. Kennedy (JFK/KJFK), respectively, though the latter will be suspended this October.

JAL had been considering resuming both Los Angeles and London (JAL to resume Kansai to London and Los Angeles in 2015.) from Japan's second largest metropolis, however, relaunch of the latter has been put on hold for now. "Once we start, it becomes difficult to quit even if it's unprofitable," said a JAL staff who spoke on anonymity. The London link was also suspended in March 2009. JAL's modest international network from Kansai presently includes Bangkok/Suvarnabhumi (BKK/VTBS), Honolulu (HNL/PHNL), Seoul/Gimpo (GMP/RKSS), Shanghai/Pudong (PVG/ZSPD), and Taipei/Taoyuan (TPE/RCTP).

Reference: Nikkei Shimbun, August 14th. (in Japanese)

Skymark commences Sendai – Okinawa.

On August 9th, Skymark Airlines (BC/SKY) launched seasonal service between Sendai (SDJ/RJSS) and Okinawa/Naha (OKA/ROAH). The route will be operated once daily with 177-seat Boeing 737-800s through September 15th.

Boeing 737-82Y(WL) JA73NE taxies past its fellow 737s as it arrives at Haneda. (Photo: Ryosuke Yano)

Flight Schedule (Aug/1 - Sep/15):
Sendai – Naha NEW 1 daily with 737-800.
BC583 SDJ 0910 – 1205 OKA 73H/738 Daily
BC586 OKA 1820 – 2100 SDJ 73H/738 Daily

In other news, Japan's third largest carrier released their July load factors. The figure was 74.4% system-wide, up 2.8% compared to the same period last year; number of available seats rose 6.7% to 920,949, while passengers carried increased 9.7% to 666,834. Their 36 slot-pairs at Tokyo/Haneda (HND/RJTT) continue to post high figures with all above 70%; the six routes from the preferred airport serving the capital generate roughly 80% of their revenue. Sendai is getting there, with numbers exceeding 60%, along with routes from Naha to Ishigaki (ISG/ROIG) and Miyako (MMY/ROMY), both of which posted over 70%.

Meanwhile, load factors from their new focus city at Yonago (YGJ/RJOH) continue to tread around 30-40%, excluding the double-daily Haneda link, while Tokyo/Narita (NRT/RJAA) sees load factors exceeding 70%, however, with heavy competition with LCCs yield is believed to be low (Skymark mulls pull-out from Narita and Yonago.). In the current fare war, the breakeven point for their Narita operations is estimated around 80-85%.

TOKYO/HANEDA
Sapporo/New Chitose (CTS/RJCC) was the highest, recording 90.9%, up 5.2% from the same period last year. The Fukuoka (FUK/RJFF) route saw the figure decrease by 7.2% to 73.1% as a result of capacity increase following the introduction of the Airbus A330 (Skymark Airlines inaugurates Airbus A330 service.). Kagoshima (KOJ/RJFK) was at 74.6%, Kobe (UKB/RJBE) saw 73.4%, Naha 86.1%, and Yonago 73.7%.

TOKYO/NARITA
Skymark competes with LCCs Jetstar Japan (GK/JJP) and Vanilla Air (JW/VNL) on two routes; New Chitose saw 77.2%, up 8.7% over last year, and Naha was at 76.4%, down 1.6%. The Yonago link sees no competitor, but the figure was 30.9%.

YONAGO
All routes except for Haneda are struggling. Naha saw 43.5% while New Chitose was at 42.6% (Skymark expands Yonago, axes Asahikawa and Kumamoto.). Kobe remained low at 37.3%, while the Narita link was even lower, as mentioned above. On August 8th, Governor of Shimane Prefecture Shinji Hirai reported that Shinichi Nishikubo, Skymark's President and CEO, promised that "a complete withdrawal will not happen," though it could also mean all routes except for Haneda are at danger of being axed.

IBARAKI
Kanto's (Greater Tokyo) third airport at Ibaraki (IBR/RJAF) saw its Fukuoka route at 48.2%, and Nagoya/Chubu Centrair (NGO/RJGG) worst in the system at 24.3% (Skymark adds Fukuoka and Nagoya from Ibaraki.). New Chitose was 72.4%, up 6.4%.

SENDAI
Kobe saw 55.7% (Skymark announces Yonago and Sendai expansion.), while Fukuoka saw 64.6% (up 2.1%) and New Chitose saw 64.1% (up 2.2%).

OKINAWA/NAHA
Naha – Ishigaki posted 73.3%, an increase of 17.0% over the same period last year, while Naha – Miyako saw 70.9%, also an increase of 15.2%.

Reference: Aviation Wire, August 11th. (in Japanese)

ANA's Boeing 787-9 enters service.

All Nippon Airways (NH/ANA) became the first airline in the world to place the Boeing 787-9 into scheduled revenue service on August 7th, when JA830A, their first of the stretched Dreamliner, inaugurated operations on the Tokyo/Haneda (HND/RJTT) – Fukuoka (FUK/RJFF) route (ANA to fly Boeing 787-9 inaugural on August 7th.). The aircraft also flew to Osaka/Itami (ITM/RJOO) and Matsuyama (MYJ/RJOM) later in the day.

Boeing 787-9 JA830A at Spot 60 at Haneda Airport with staff carrying a banner reading 'Fly with ANA on the 787-9 Dreamliner'. (Photo: Aviation Wire)

The inaugural flight, NH241, departed Spot 60 of Haneda's Terminal 2 at 0730 JST with 387 passengers (including 11 infants) and 11 crew. It was piloted by Captains Katsuki Ikeda and Yuichi Yamamoto, with Ikeda-san in command, while the Chief Purser was Kazuyo Nishizono. President and CEO Osamu Shinobe was also present at the ceremony that took place at the gate. ANA took delivery of JA830A on August 27th and it arrived at Haneda on July 29th (ANA takes delivery of first Boeing 787-9.). It operated a special sightseeing flight carrying Japanese and American primary (elementary) school students on August 4th (ANA flies world's first Boeing 787-9 passenger flight.).

Compared to the 787-8, the Dash 9 incorporates an additional 3.05-meter section in both the forward and aft of the fuselage, stretching the airframe by 6.1 meters. It can fly approximately 555 kilometers farther than the original version. Compared to the 767-300ER, the second member of the Dreamliner family can carry 1.2 times more passengers and cargo, and fuel economy will also be 23% better, according to ANA. The airline has said the 787-8 is 20% better than the 767-300ER.

Powered by two Rolls-Royce Trent 1000 engines, ANA's domestic 787-9s are being configured in a 395-seat layout with 18 Premium Class (six abreast; 2-2-2) and 377 economy class (nine abreast; 3-3-3) seats, carrying 60 more passengers (six Premium Class and 54 economy) than their domestic 787-8s. Another domestic 787-9, registered JA833A, will be delivered this autumn, while the first long-haul international 787-9 configured with 215 seats (48 business, 21 premium economy, and 146 economy) will be delivered in early 2015. ANA is the biggest 787 customer to date, with orders counting 36 787-8s (28 delivered), and 44 787-9s (1 delivered).

Reference: Aviation Wire, August 7th. (in Japanese)

Vanilla Air announces Hong Kong and Kaohsiung.

On August 7th, Vanilla Air (JW/VNL) announced that they will launch Hong Kong (HKG/VHHH) in November and Kaohsiung (KHH/RCKH) in February 2015, from their hub at Tokyo/Narita (NRT/RJAA). President Tomonori Ishii reported in a press conference held in Tokyo.

Airbus A320-216(SL) JA01VA taxies for departure from Sapporo's New Chitose on a sunny winter day. (Photo: Vanilla Air)

The Hong Kong route will initially operate with three weekly round-trips, increasing to two daily by March 2015, the end of FY2014. One of the flights will fly on a red-eye schedule. Kaohsiung, which becomes Vanilla's second destination in Taiwan, will see a daily round-trip from the beginning. Details of the timetable along with fares will be released in September.

Network Overview (Oct/26/2014 - Mar/28/2015):
Narita – Amami 1 daily. (no change)
Narita – Hong Kong NEW 3 weekly, to be increased to 2 daily by Mar/2015.
Narita – Kaohsiung NEW 1 daily.
Narita – Okinawa/Naha up to 2 daily. (no change)
Narita – Sapporo/New Chitose from 5 to up to 4 daily. (reduction)
Narita – Seoul/Incheon from 2 to 1 daily. (reduction) 
Narita – Taipei/Taoyuan from 1 to 3 daily. (increase)

The wholly-owned subsidiary LCC of ANA Holdings, parent of All Nippon Airways (NH/ANA), currently operates three brand-new 180-seat Airbus A320s and three secondhand 166-seat A320s provided by sister ANA. The latter three will be replaced by three factory-fresh examples between September and November, while another two will be delivered in early 2015, bringing the fleet to eight.

In recent interviews, Mr. Ishii had revealed that other cities under consideration include Guam, Macau, Saipan, and Taichung. Vanilla's June load factor saw 58.7% for domestic and 72.7% for international flights. For the latter, Taiwan is doing particularly well seeing around 80%, while Korea is declining, due to continued political tensions between the two countries, and not made better by the ferry disaster in April, which prompted many Koreans to cancel trips and refrain from travelling for leisure for the remainder of the year. As for the former, they still haven't been able to make Narita work as a domestic airport.

Reference: Aviation Wire, August 1st. (in Japanese)
Reference: Aviation Wire, August 7th. (in Japanese)

Skymark mulls pull-out from Narita and Yonago.

Skymark Airlines (BC/SKY) is considering completely pulling out of Tokyo/Narita (NRT/RJAA) on October 25th, the end of the Summer 2014 timetable, and possibly downgrade Yonago (YGJ/RJOH) to a spoke city, in an effort to cut unprofitable routes and restructure their network after heavy losses (Skymark posts 5.7 billion JPY loss for 1Q FY2014.) and a likely hefty penalty from Airbus for the A380 cancellation (Skymark's Airbus A380 order in jeopardy.).

Boeing 737-8HX(WL) JA73NB taxies at Okinawa's Naha Airport. (Photo: Ryosuke Yano)

From Narita, Japan's third largest carrier currently operates two daily round-trips each to Okinawa/Naha (OKA/ROAH), Sapporo/New Chitose (CTS/RJCC), and Yonago, but these were intended to feed their long-haul international routes that were to be operated by the Airbus A380. Now that the order has been canceled and international plans shelved, there is no need for them to keep a domestic network at Narita, which used to include Asahikawa (AKJ/RJEC), Ishigaki (ISG/ROIG), and Kobe (UKB/RJBE) as well.

Although Naha and New Chitose show latest load factors (June) of 64.5% and 67.9%, respectively, above the system-wide average of 65.6%, low-season rates dropped to 50-60% in FY2013. With both routes directly competing with LCCs Jetstar Japan (GK/JJP) and Vanilla Air (JW/VNL), Skymark has had to keep prices down to remain in the race, and thus hasn't been able to produce enough yield. The Yonago link continues to bleed with a June load factor of 28.1%.

Meanwhile, its Yonago focus city, which was only added to the network on December 20th last year and expanded from April (Skymark expands Yonago, axes Asahikawa and Kumamoto.), has not seen improved results. The latest load factor (June) for the daily New Chitose round-trip was 43.6%, while the also once-daily Naha link was at 45.6%, and their Kobe flight at 45.0%. Their twice-daily Tokyo/Haneda (HND/RJTT) service was doing best at 59.0%, but still below the system-wide average, while the Narita link was at a miserable 28.1%, as aforementioned. Yonago could see all but its Haneda flights axed, if not a complete closure.

Although international ambitions for Narita have been shelved, Skymark will now ask the government for midnight slots at Haneda to use its A330s (Skymark Airlines inaugurates Airbus A330 service.) for routes to Hawaii, Singapore, and Thailand. The A330s currently serve only domestic routes, and therefore sit on the ground at night, so this would enable them to increase utilization and go international without additional aircraft acquisition costs. Their A330s are fully equipped with long-haul-compatible galleys. However, this plan does have its share of regulatory hurdles it has to overcome.

Meanwhile, rumors of an AirAsia Japan (Mk II) (AirAsia Japan is officially reborn; first flight June 2015.) tie-up (and investment in Skymark) are circulating, though their CEO Yoshinori Odagiri has commented "Nothing has materialized, but we keep all doors open." AirAsia Japan is craving for Haneda rights and Skymark has 36 precious slot-pairs there, however, these generate roughly 80% of their revenue and it is unlikely they would let them go. Skymark hopes they can continue to go it alone, but with cash reserves dwindling and Airbus seeking up to 70 billion JPY for the A380 cancellation, the airline has admitted their business is at risk without outside financial support.

Reference: Aviation Wire, July 11th. (in Japanese) 
Reference: Aviation Wire, August 6th. (in Japanese)

ANA flies world's first Boeing 787-9 passenger flight.

On August 4th, All Nippon Airways (NH/ANA) operated the world's first passenger Boeing 787-9 flight, when JA830A (ANA takes delivery of first Boeing 787-9.), flew a sightseeing trip from Tokyo/Haneda (HND/RJTT) and back with 171 Japanese and American primary (elementary) school students residing in Japan as part of the TOMODACHI Initiative. Flight NH2051 departed Haneda at 1324 JST, and flew over Mt. Fuji, Nagoya, Kyoto, Miyatsu, Lake Biwa, Tokyo Disney Resort, before landing back at the same airport at 1527. The young flyers were chosen by officials at ANA, Boeing, and the U.S. Embassy in Tokyo, and tickets were not available to the public.

Officials of ANA, Boeing, and the U.S. Embassy in Tokyo wave hands as Boeing 787-9 JA830A, their first of the stretched Dreamliner, departs for its first passenger flight. (Photo: Aviation Wire)

Born out of support for Japan’s recovery from the Great East Japan Earthquake, TOMODACHI Initiative is a public-private partnership between the U.S.-Japan Council and the U.S. Embassy in Tokyo investing in the next generation of Japanese and American leaders through educational and cultural exchanges as well as leadership programs. Present at the inaugural ceremony was Caroline Bouvier Kennedy, U.S. Ambassador to Japan, along with ANA officials including Shinichiro Ito, President and CEO of ANA Holdings, and Yoji Ohashi, Chairman. "It's a symbol of our deep and continuing relationship between Japan and the U.S.," said Mrs. Kennedy.

Powered by two Rolls-Royce Trent 1000 series engines, ANA's domestic 787-9s are being configured in a 395-seat layout with 18 Premium Class (six abreast; 2-2-2) and 377 economy class (nine abreast; 3-3-3) seats, including JA830A. Another domestic 787-9, registered JA833A, will be delivered this autumn, while the first long-haul international 787-9 configured with 215 seats (48 business, 21 premium economy, and 146 economy) will be delivered in early 2015. JA830A is planned to inaugurate scheduled revenue service on August 7th (ANA to fly Boeing 787-9 inaugural on August 7th.) on routes from Haneda to Fukuoka (FUK/RJFF), Osaka/Itami (ITM/RJOO), and Matsuyama (MYJ/RJOM).

Although the 787-9 is expected to start replacing 777-200/200ERs, none of them will leave this year. A report for shareholders released on June 24th revealed that FY2014 will see one 747-400D (already retired; End of an Era: ANA retires the Boeing 747.), five 767-300s, four Airbus A320-200s, and one Bombardier DHC-8-300Q (already retired; ANA quietly retires the Bombardier DHC-8-300Q.) withdrawn from service, while in FY2015, two 777-200s, three 767-300s, and three A320-200s will leave the fleet.

Reference: Aviation Wire, August 4th. (in Japanese)

JAL starts Summer 2014 seasonal routes.

On August 1st, Japan Airlines (JL/JAL) launched six summer seasonal routes. From Nagoya/Chubu Centrair (NGO/RJGG), they have launched three-times weekly Kushiro (KUH/RJCK) and four-times weekly Obihiro (OBO/RJCB) service, while from Osaka/Itami (ITM/RJOO), daily service to Matsumoto (MMJ/RJAF) and Memanbetsu (MMB/RJCM) have been added. Sapporo/New Chitose (CTS/RJCC) sees new four-times weekly service to Izumo (IZO/RJOC) and three-times weekly to Tokushima (TKS/RJOS).

Boeing 737-846(WL) JA314J arrives at Aomori. JAL Express has started to repaint their aircraft with 'Japan Airlines' titles in anticipation of their merger into JAL on October 1st. Catch them while you can. (Photo: Ryosuke Yano)

The seasonal flights from Chubu Centrair and New Chitose are operated with JAL Express' (JC/JEX) (JAL Express to be absorbed by JAL on October 1st.) 165-seat (20 Class J and 145 economy) Boeing 737-800s, while the Itami flights are flown with J-Air's (XM/JLJ) 76-seat (all economy) Embraer ERJ170-100STDs (E170s). All six will operate until August 31st.

Flight Schedule (Aug/1 - Aug/31/2014 only):
Nagoya/Chubu Centrair – Kushiro NEW 3 weekly with 737-800.
JL3131 NGO 1130 – 1320 KUH 73H Tu/Th/Sa *Operated by JAL Express as JC3131.
JL3132 KUH 1450 – 1650 NGO 73H Tu/Th/Sa *Operated by JAL Express as JC3132.

Nagoya/Chubu Centrair – Obihiro NEW 4 weekly with 737-800.
JL3303 NGO 1100 – 1300 OBO 73H Mo/We/Fr/Su *Operated by JAL Express as JC3303.
JL3304 OBO 1520 – 1715 NGO 73H Mo/We/Fr/Su *Operated by JAL Express as JC3304.

Osaka/Itami – Matsumoto NEW 1 daily with E170.
JL2271 ITM 1330 – 1420 MMJ E70 Daily *Operated by J-Air as XM2271.
JL2272 MMJ 1500 – 1555 ITM E70 Daily *Operated by J-Air as XM2272.

Osaka/Itami – Memanbetsu NEW 1 daily with E170.
JL2101 ITM 0815 – 1020 MMB E70 Daily *Operated by J-Air as XM2101.
JL2102 MMB 1050 – 1300 ITM E70 Daily *Operated by J-Air as XM2102.

Sapporo/New Chitose – Izumo NEW 4 weekly with 737-800.
JL3426 CTS 1200 – 1405 IZO 73H Mo/We/Fr/Su *Operated by JAL Express as JC3426.
JL3421 IZO 1455 – 1650 CTS 73H Mo/We/Fr/Su *Operated by JAL Express as JC3421.

Sapporo/New Chitose – Tokushima NEW 3 weekly with 737-800.
JL3436 CTS 1200 – 1355 TKS 73H Tu/Th/Sa *Operated by JAL Express as JC3436.
JL3437 TKS 1455 – 1655 CTS 73H Tu/Th/Sa *Operated by JAL Express as JC3437. 

All of these routes are actually resumptions. Chubu Centrair – Kushiro was suspended in May 2010, Chubu Centrair – Obihiro in October 2010, Itami – Matsumoto in June 2010, Itami – Memanbetsu in April 2005 (moved to Kansai but suspended in March 2009), and both New Chitose – Izumo and New Chitose – Tokushima in March 2011; all during JAL Group's restructuring. Originally announced in January (JAL to resume six domestic routes for Summer 2014.), these routes are probably candidates for a full resumption, as part of JAL's intention to "restart rural routes that are potentially profitable in due course."

Spring Airlines Japan commences operations.

Spring Airlines Japan (IJ/SJO) launched operations on August 1st, linking Tokyo/Narita (NRT/RJAA) with Hiroshima (HIJ/RJOA), Saga (HSG/RJFS), and Takamatsu (TAK/RJOT) using 189-seat Boeing 737-800s. The former two destinations are served twice daily, while the latter is served once daily. They become the fourth LCC to be launched in Japan, but the first of its kind that is not affiliated with an existing Japanese carrier.

Boeing 737-86N(WL) JA02GR takes off for Saga on the inaugural day. (Photo: Aviation Wire)

The inaugural flight, IJ621, departed Narita on-time at 0655 JST with 148 passengers (load factor 78.3%) and took off at 0714, arriving at Hiroshima at 0831. It was operated by 737-81D(WL) JA01GR. Their second flight, IJ601, service from Narita to Saga, was operated by 737-86N(WL) JA02GR. For the first day, flights operated with two pilots and five cabin attendants, instead of the usual four.
 
Flight Schedule (Aug/1 – Oct/25/2014):
Narita – Hiroshima NEW 2 daily with 737-800.
IJ621 NRT 0655 – 0835 HIJ 73H Daily
IJ623 NRT 1625 – 1805 HIJ 73H Daily
IJ622 HIJ 0920 – 1050 NRT 73H Daily
IJ624 HIJ 1850 – 2020 NRT 73H Daily

Narita – Saga NEW 2 daily with 737-800.
IJ601 NRT 1055 – 1255 HSG 73H Daily
IJ603 NRT 1655 – 1855 HSG 73H Daily
IJ602 HSG 1340 – 1525 NRT 73H Daily
IJ604 HSG 1940 – 2125 NRT 73H Daily

Narita – Takamatsu NEW 1 daily with 737-800.
IJ613 NRT 1150 – 1315 TAK 73H Daily
IJ614 TAK 1410 – 1525 NRT 73H Daily

The ribbon-cutting ceremony at Narita was attended by officials from the destination prefectures, Narita Airport, and the airline including Representative Director Hiroshi Ukai, Executive Director Minoru Uchida, Chairman Wang Wei, and Wang Zhenghua, Chairman of Spring Airlines. (Photo: Spring Airlines Japan)

From Narita, fares to Hiroshima start at 5,690 JPY, to Saga from 5,700 JPY, and to Takamatsu from 5,630 JPY. Its highest fare for each route has been set at around 25,000 JPY, but the airline says that price is "for government paperwork purposes," and in reality they have no intention to offer that fare. Competitor Jetstar Japan (GK/JJP) already serves the Narita – Takamatsu market twice daily offering fares as low as 3,990 JPY, but Spring Airlines Group Chairman Wang Zhenghua emphasizes they "don't want to get into a fare war."

Spring Airlines Japan is the Japanese unit of China's largest LCC Spring Airlines (9C/CQH). Japanese largest travel agency JTB also holds a minority interest. Flights were originally planned for May, however, paperwork delays and crew training taking more time forced them to postpone their launch twice (Spring Airlines Japan delays launch to August 1st.).

Spring Airlines Japan flies their Boeing 737-800s in a 189-seat layout. (Photo: Aviation Wire)

Unlike its Chinese parent, which flies 42 Airbus A320s, Japan's newest LCC opted for the 737, taking advantage of Japan's historical relationship with Boeing and hence the larger population of Japanese aviation professionals working with American-assembled airplanes. Shortage of Airbus-rated pilots in Japan have caused massive travel disruptions at competitors Peach Aviation (MM/APJ) (Peach outlines Summer 2014 mass cancellations.) and Vanilla Air (JW/VNL) (Vanilla Air cancels 154 flights in June due to pilot shortage.).

Spring Airlines Japan will add five aircraft each year from 2015 onwards, targeting to reach a fleet of 20 sometime in 2017. It is reportedly considering adding its fourth domestic destination early next year.

Reference: Spring Airlines Japan @ Facebook. (in Japanese)
Reference: Aviation Wire, August 1st. (in Japanese)
Reference: Traicy, August 1st. (in Japanese)

ANA to fly Boeing 787-9 inaugural on August 7th.

All Nippon Airways (NH/ANA) will operate the world's first scheduled revenue flight of the Boeing 787-9, the second member of the Dreamliner family, on August 7th. Their first example, registered JA830A, was delivered to Japan on July 29th (ANA takes delivery of first Boeing 787-9.).

Boeing 787-9 JA830A takes off from Paine Field. (Photo: Boeing)

The newest Dreamliner will operate a round-trip each from Tokyo/Haneda (HND/RJTT) to Fukuoka (FUK/RJFF), Osaka/Itami (ITM/RJOO), and Matsuyama (MYJ/RJOM) from that date. Powered by two Rolls-Royce Trent 1000 series engines, ANA's domestic-configured 787-9s seat 395, including 18 in Premium Class (six abreast; 2-2-2) and 377 in economy (nine abreast; 3-3-3), carrying 60 more passengers (six Premium Class and 54 economy) than their domestic 787-8s.

Flight Schedule (effective Jul/1/2014):
Haneda – Fukuoka 1 of 18 daily operated with 787-9.
NH241 HND 0725 – 0915 FUK 789 Daily
NH248 FUK 1005 – 1150 HND 789 Daily

Haneda – Itami 1 of 15 daily operated with 787-9.
NH025 HND 1300 – 1405 ITM 789 Daily
NH030 ITM 1500 – 1615 HND 789 Daily

Haneda – Matsuyama 1 of 6 daily operated with 787-9.
NH595 HND 1715 – 1840 MYJ 789 Daily
NH598 MYJ 1930 – 2100 HND 789 Daily 

ANA will also fly a Mt. Fuji sightseeing charter flight from Haneda and back with the first stretch of the Dreamliner on August 4th, carrying Japanese and American primary (elementary) school students in Japan as part of the TOMODACHI Initiative (ANA to receive first Boeing 787-9 on July 27th.).

The first two 787-9s, JA830A and JA833A, are being configured in a domestic layout. Meanwhile, Japan's largest carrier has released the seat layout for their long-haul international 787-9s; 48 business, 21 premium economy, and 146 economy (total 215). ANA's third example, to be registered JA836A, will be delivered in this arrangement, with all five aircraft to follow to have the same. On which long-haul routes will these be placed into service?

Reference: All Nippon Airways, July 31st. (in Japanese)