Skymark Airlines A380 orders are in serious doubt as Airbus recommends an 'umbrella' solution

The allure of big boys' toys appears likely to cost Japan's low-cost Skymark Airlines its reputation, a lot of money and most importantly management focus at the very time when Skymark needed to respond to a raft of new LCC competition in its domestic heartland. Skymark is putting a bold face on the planned delay - or even cancellation - of six A380s it has had on order since 2010, taking the position that the best defence is a strong offence. A statement talked of Airbus imposing "an exorbitant penalty that evades common sense" if the order is cancelled. It appears from the statement that Airbus has sought to find a way out for independent Skymark, "to enter under the umbrella of a major airline."

Negotiations to delay delivery or cancel have, according to Skymark, been under way since Apr-2014. Skymark gives the reason for its move as a "business environment [that] has become severe due to increased competition and the depreciation of the yen in recent years".

Its international route plans had shortcomings for Skymark's first international excursion. Airbus has already begun trial flights with the first new aircraft, complete with Skymark's logo and partial interior. Two A380s were due for delivery in 2014, with another two in each of 2015 and 2016. The order - valued at USD1.3 billion at rack rates - was always a strange one that few in the industry considered a safe one.

There will be much to come out in the wash but Skymark can recover and emerge stronger. A cancellation of Skymark Airlines' six A380s would enable - and force - Skymark to hone the strengths it created in Japan's domestic market before it overly-ambitiously leaps from operating only domestically to long-haul all-premium A380 services.