Today Skymark made it official.  As the Airbus PR states:

“Skymark Airlines, Japan’s third largest and fast growing airline, signed a contract for four A380s with Airbus, firming up a Memorandum of Understanding announced in November 2010.

The contract was signed on Thursday, 17th February, during a ceremony held at Airbus‘ headquarters in Toulouse, France, in the presence of Skymark President, Shinichi Nishikubo, Airbus President and CEO, Tom Enders, and Airbus Chief Operating Officer Customers, John Leahy, together with Airbus Japan CEO, Stephane Ginoux.

At the signing ceremony Shinichi Nishikubo said, “We believe that the A380, the world’s most cost-efficient, modern and environmentally friendly aircraft with cutting-edge technologies, will provide us with a strong competitive advantage and safe operation. We will become the very first Japanese airline to offer our passengers a unique and new experience of flying – more space, more comfort and a quieter cabin. With the four-engined A380, we are free from ETOPS constraints and can provide flexible operations.”

This is an awesome move.  Skymark is an LCC.  It has a fleet of 18 737-800s with another 7 on order.  We are talking a simple trunk operation in Japan as the map demonstrates.   Imagine a small airline like this going from 737s to A380s?

There are a few people who remember what happened to America West when it took delivery of four ex-KLM 747s in 1989.  A smallish domestic LCC decided it wanted to become an international carrier and it won service to Japan in a route case.  The success was short lived.  The 747 operation was much more complex than the airline realized and the costs were astronomical compared to what it was used to. The 747s were gone  in a trip into Chapter 11 in 1991.

As they say, beware of what you wish for.  Success as an LCC do not automatically qualify you for success on a bigger scale.  Even if Japan has seen a much weakened JAL, it is clear the state is not ready to let that company sink.  Like other nations, Japan’s airline business suffers political interference.

We would suggest that Skymark’s A380 is a huge bite – think eyes too big for stomach.

Current serving this market will not simply rollover.  EU airlines have been going through an aggressive learning curve dealing with Gulf-based airlines.  They will be ready to react to the Japanese upstart.  Alliances will circle to protect traffic.  EU airlines know all to well how disruptive an A380 can be in the hands of a competitor.

So the combination of massive increase in complexity by bringing on A380s and the reaction of competitors will ensure Skymark’s managers lose a of sleep when deliveries start.  That a Japanese owned A380 will be disruptive there is no doubt.  But the disruption might not be helpful to anyone.  Certainly one cannot expect ANA and JAL to sit idly by. Skymark will also be looking at markets in Australia, Canad and the US.  All are well established routes with entrenched competitors.  Whichever way Skymark looks it will face experienced and tough competitors.

The planned Skymark A38os will be two class, 114 business class and 280 coach seats.  An A380 with under 400 seats?  That is comfortable and most un-LCC like.  So this perhaps indicates a change of LCC-think, too.  There are numerous questions that emerge with this news.

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