News Backgrounder
ANA tempted by Skymark’s valuable Haneda slots?
September 1st 2015
Will Skymark be able to maintain its independence now that Japan’s biggest air transport group, ANA Holdings, is a shareholder? Read More »
That is the question interested parties in Japan are asking since the deal to rehabilitate Skymark was approved last month.
 |
| Tokyo Haneda airport: Skymark’s slots at the downtown airport could be used ANA |
Before its recent bankruptcy, Skymark was regarded as Japan’s truly independent airline. It was domestic aviation’s “Third Pillar”, operating in the market between the oligopoly of All Nippon Airways (ANA) and Japan Airlines (JAL) and the emerging force of Japan low-cost carriers (LCCs).
The first of the independent airlines to be established in Japan, in 1998, Skymark offered cheaper fares than ANA and JAL and more service than the newer low-cost carriers.
To many in Japan, Skymark had demonstrated liberalization of aviation in Japan was possible.
Since the 1990s, there have been several airline start-ups in Japan, all them encouraged to fly by the country’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
After running into trouble, three of the newcomers were rescued by ANA via cash investments, code share services, use of the distressed carriers’ slots at the much prized down town Tokyo Haneda airport and the appointment of ANA staff to top management positions at the rescued airlines.
ANA’s shares in the ‘rescued’ domestic airlines are Air Do 13.6%, Solaseed 8.56% and Star Flyer 17.96%. Through code-sharing, using the smaller carriers’ Haneda slots, the ANA Group has boosted its domestic slot share at the airport from 37% to 52%. JAL has a 40% share.
Under the terms of the rescue package, ANA Holdings has acquired 16.5% of Skymark. The other providers of fresh capital are: Japanese equity company Integral (50.1%), and a joint fund owned by the Development Bank of Japan and Sumitomo Mitsui Banking (33.4%).
Another revival plan, which involved Delta Air Lines and lessor, Intrepid, was rejected. At the last minute, ANA persuaded major creditor, Airbus, to support its plan and not the Delta proposal.
Apparently, Japan’s biggest airline didn’t want Skymark’s Haneda slots going to another carrier, hence the last minute deal with Airbus.
Access to Skymark’s Haneda slots will increase ANA’s potential domestic slot share to 60%.
Skymark’s new top management takes over this month. Nobuo Sayama, Integral’s representative director on the Skymark board and the airline’s chairman from September 3, last month pledged that the carrier would maintain its policy of setting fares lower than market leaders ANA and JAL.
“We will never allow ANA’s intervention in Skymark’s management”, he told the Nihon Keizai Shimbun, Japan’s top business newspaper.
Sayama’s comment that ANA would stay away from the airline was echoed by ANA director, Toyoyuki Nagamine. At an August press conference, he said: “Skymark’s independence is ensured through contracts with shareholders. ANA won’t become involved in Skymark’s setting of air fares and routes.”
This was welcome news for the bureaucrats at the MLIT. For most of the last 20 years they have been encouraging competition in the aviation industry. Firstly, they supported the first wave of start-ups in the 1990s. More recently they were enthusiastic backers of the establishment of low-cost carriers in Japan, which have been operating since 2012.
Many MLIT officials were wary of ANA’s involvement in Skymark’s rehabilitation. They feared it would erode competition and initially favored a five-year limit on ANA’s participation in the recovery programme.
Reassured by pledges of maintaining competitiveness, the government softened its position, but warned it would keep a close eye on the aviation market.
To improve its market appeal, Skymark is negotiating with in-flight entertainment and IT companies to provide better quality and expanded Wi-Fi onboard. It may also introduce a mileage programme.
The airline returned to the black in the northern summer and bookings for September exceed forecasts. The carrier should report a profit for the current year to March 31, 2016. Taking a bullish stand, Sayama said the rehabilitated airline could relist in three years.
He sees his mission as a protector of Skymark’s position as the “Third Pillar” in Japan’s domestic aviation market. That said, some industry analysts wondered if his pledge to remain independent under the ANA umbrella, which has sheltered so many other carriers, is feasible.
