Skymark Airlines will need significant strategic changes to avoid heavy A380 operating losses

This is the second part of CAPA's look at Japan's third largest airline. Skymark Airlines is one of a handful of low-cost carriers that has or plans to launch long-haul operations. But in this area history is not kind. Then-Virgin Blue's unfortunately timed launch of long-haul unit V Australia ran into severe and costly headwinds. Norwegian Air Shuttle and Cebu Pacific suffered profit falls after commencing long-haul flights. The problems involved in launching long-haul flights has made WestJet hesitate.

Although Japan's Skymark has posted its first loss in five years, it has previously been successful as Japan's third-largest domestic airline. But short-haul success does not guarantee long-haul prosperity. Skymark must make significant changes if it is to support an A380 operation. Partnerships, interlines, codeshares and loyalty programmes will need to be established. SkyTeam's Delta Air Lines, lacking a Japanese partner seems a likely prospect, but developments appear limited. Skymark may also need to re-consider its launch destination of New York.

It is now too late for Skymark to implement all of these changes in time for a stable A380 launch in Dec-2014 as it last planned. Skymark needs to consider delaying its A380s or contemplate whether it can endure - and survive - what will likely be significant losses.