Skymark Airlines risks being caught in the middle of Japan's legacy heavyweights and new LCCs

Softening financials and profit downgrades are beginning to reflect strategic weakness at Skymark, Japan's third-largest airline that is still an entirely domestic-only carrier - but with significant expansion plans that over the next two years includes introducing A330 and A380 aircraft. Skymark increasingly looks caught in the middle of, at the top end, full-service carriers All Nippon Airways and Japan Airlines, which have wide networks, affording them considerable scale. That is something Skymark - one quarter the size of JAL, and less than a fifth the size of ANA - cannot match.

At the bottom end are Japan's new-entry low-cost carriers that are much smaller than Skymark but growing with a lower cost base. Skymark cannot match the low-cost of the LCCs or the premium and network advantages of ANA and JAL. It has succeeded so far in securing slots at the convenient Tokyo airport of Haneda, but this advantage is drying up.

While Skymark management has a mindset worlds away from the bloated legacy views that brought JAL into bankruptcy, Skymark has yet to capitalise on this to become an efficient hybrid carrier open to global partnerships - a possibility that could re-define Asian aviation.