Skymark Airlines Part 2: shrinking to achieve profitability with 33% capacity cuts, A330 grounding

Having declared bankruptcy, Skymark Airlines is seeking to shore up revenues and cut costs by unwinding its aggressive growth of recent years. Skymark will cut 33% of capacity in 2015 compared to a year prior, returning to its size from 2010/2011. Skymark will reduce frequency or cut routes in addition to withdrawing what was to be its domestic flagship A330 fleet. Skymark's final commercial A330 flight was on 31-Jan-2015 after only eight months of service.

Skymark made a costly error buying A330s, but this only compounded its weak domestic position. Just a few years ago Skymark was profitable but became loss-making due to aggressive growth and as its focus became blurred. This climaxed with the introduction of large capacity A330s that added seats but no holistic customer proposition, for example including corporate access or loyalty programme. The A330s saw Skymark grow Tokyo Haneda-Fukuoka capacity by 46% but passenger volumes increased at a slower 18%. Load factors declined an astonishing 25ppt.

The airline's weak A330 performance was coupled with high introductory costs that did not appear to be adequately planned for. This was one of many decisions that ultimately led to Skymark's bankruptcy and the exit of CEO Shinichi Nishikubo, along with his personal investment in the airline.