Low-cost airline operations (1996–2010)
Skymark Airlines was founded in November 1996 as an independent domestic airline after deregulation of the Japanese airline industry and started operations on 19 September 1998.[2] It was originally owned by a consortium of investors led by the travel agency H.I.S. and headed by H.I.S. president Hideo Sawada;[7] another major early investor was the leasing company Orix. Its initial business plan called for it to be headquartered at Itami Airport in Osaka.[8] Takashi Ide, former head of British Airways' operation in Japan, was hired as the company's CEO in 1998.[9]
Skymark was able to obtain six slots at Haneda Airport in Tokyo in March 1997 and moved its headquarters to the Hamamatsucho district of Tokyo in March 1998. Its first scheduled flight from Haneda to Fukuoka was on 19 September 1998; it added routes from Itami to Fukuoka and Sapporo in 1999, but suspended these routes in 2000 in order to offer more frequencies on the Haneda-Fukuoka route.[10]
In 2002, Skymark took delivery of a third Boeing 767 aircraft and began service on the Haneda-Kagoshima route, as well as charter service from Haneda to Seoul. In 2003, with a fourth 767 dry-leased (leased without any crew members) from All Nippon Airways, it began service to Aomori and Tokushima.[10]
The airline incurred considerable losses in its first few years of operations. It briefly considered a recapitalization led by Commerzbank but decided not to accept such an investment due to Air Do's issues with banks interfering in management. In August 2003, Sawada invited internet entrepreneur Shinichi Nishikubo to become Skymark's largest shareholder with a personal cash investment of 3.5 billion yen (having made around 9 billion yen from the IPO of his internet company in 2000).[7] Nishikubo took over as CEO in 2004, maintaining Ide as a "co-pilot" due to Ide's experience in the aviation industry.[9]
On 11 December 2003, Skymark announced that it expected a profit of 470 million yen for the half-fiscal year ending on 31 October, the first profit made since the airline began operations.[11] By using more efficient aircraft and systems developed in-house, Skymark attempted to undercut JAL and ANA on costs in order to offer lower fares.[12]
Skymark had a code sharing partnership with Japan Airlines starting with a Haneda-Osaka Kansai service in 2005–06,[10] and later on the Tokyo Haneda-Kobe route from Kobe Airport's opening in 2006.[13] JAL withdrew from Kobe in 2010, while Skymark developed Kobe into a secondary base.[14] Skymark purchased the naming rights for the Kobe Sports Park Baseball Stadium from 2005 to 2010.
Skymark announced in April 2010 that it would commence a "Narita Shuttle" service from Narita International Airport to Asahikawa, Sapporo, Fukuoka, and Okinawa in late 2011 and early 2012.[15]
Shift to premium service (2010–2014)
In November 2010 Skymark announced negotiations with Airbus for an order of four Airbus A380 aircraft and two options, making it the first Japanese airline to order the type.[16][17][18] The airline announced its intent to use the aircraft on long-haul trunk routes out of Narita Airport such as London, Frankfurt, Paris and New York, and that they would be operated in a two-class, 394-seat configuration – with 114 seats in business class and 280 in a premium economy class.[19] Nishikubo envisioned an unheard-of fully-flat product in economy class, which the Skymark team calculated would break even at a one-way fare of 100,000 yen.[9]
Financial downturn and losses (2014–2015)
Skymark's finances were hit hard by foreign exchange rate fluctuations. In February 2011, when Skymark placed its initial A380 order, the Japanese yen was trading at historically high levels of around 82 yen to the U.S. dollar. After the introduction of the Abenomics policy in late 2012, the yen plunged in value, reaching around 102 yen to the dollar in early 2015. Many of Skymark's major investments and expenses were denominated in dollars—including the A380 orders, the A330 leases and its fuel costs—while its domestic ticket revenue was in yen, and the airline did not engage in exchange rate hedging.[29] Skymark recorded its first net loss in five years for the March 2013 – 2014 fiscal year.[12]
In early February 2014, Skymark announced that it would downsize the Narita operation to only three destinations (Sapporo, Yonago and Okinawa). Nishikubo stated that the base lost money in every month except August and that all LCCs were under pressure there. He also expressed some reservations about the A330 fleet plan, stating that while the airline had funding in place for the first two aircraft, the third and subsequent deliveries could be impacted by the performance of Skymark's domestic operation as well as the success of its initial international service. Skymark planned to re-deploy 737s from the Narita and Haneda bases for charter services to destinations such as Guam.[30]
Bankruptcy (2015–2016)
Skymark filed for bankruptcy protection under the Corporate Rehabilitation Law (equivalent to a Chapter 11 bankruptcy in the United States or an administration in the United Kingdom) at the Tokyo District Court in January 2015 after reporting ¥71 billion (or $571.3 million) in liabilities. It announced that Nishikubo would step down as CEO and would be replaced by CFO Masakazu Arimori.[31] Skymark announced that the A330s would be withdrawn from operation in March, and that various services to Okinawa and Kyushu would be eliminated. In an attempt to regain price competitiveness, Skymark introduced a fare of ¥8,000 on the Haneda-Fukuoka route, 1,800 cheaper than the next cheapest competitor, StarFlyer.[34] Skymark was approached by several potential sponsors early in its bankruptcy proceedings, including ANA, AirAsia, Delta Air Lines and American Airlines.[37]
Post-bankruptcy (2016–2020)
After exiting bankruptcy in 2016, Skymark's finances improved more quickly than expected; the company recorded 6.7 billion yen in operating profit in the March 2016 – 2017 fiscal year. Skymark focused its network expansion on its hubs in Kobe and Ibaraki, and announced plans for 150 daily flights in summer 2018, up from 138 in summer 2017.[44]
Skymark announced in June 2018 that it intended to offer international charter flights from Narita to Saipan and Palau, its first international services, with the flights to Saipan subsequently becoming scheduled flights in late 2019.[45][46]
COVID-19 pandemic, second financial losses, recovery (2020–present)
Since 2020, due to the COVID-19 pandemic, the Saipan route was cancelled and was never restored; in late 2022, the CEO of Skymark publicly stated that the airline has no plans to resume scheduled international service before 2026.[47]
In August 2020, the airline announced Shimojishima Airport as a new destination, with flights beginning in October 2020.[48]
In 2021, the first year after effect of COVID-19, Skymarks records ¥27 billion operating losses, become the company's worst losses since it exiting from bankruptcy.[49] The airline reported ¥17 billion operating losses once again in 2022.[1]
Skymark was re-listed on the Tokyo Stock Exchange in December 2022, after eight years as a privately held company.[47]
