Skymark Airlines Inc., Japan's third-largest air carrier, is considering shutting down its operations at Narita International Airport in a bid to turn its business around, industry sources said Wednesday.
The airline operates six daily domestic round-trip flights linking Narita with Sapporo, Yonago, Tottori Prefecture, and Naha, Okinawa Prefecture. It also had planned to expand into international services out of Narita.
Skymark is now planning to suspend these routes as early as late October and shut down its office at the airport, concentrating its business resources at Tokyo's Haneda airport as the company rebuilds, the sources said.
In an earnings report for the April-June quarter released last week, Skymark offered to streamline unprofitable services, doubting its ability to continue current business operations due to rising fuel costs and intensifying competition.
The seat occupancy rate in June was as low as 67.9 percent for Narita-Sapporo flights, 28.1 percent for Narita-Yonago flights and 64.5 percent for Narita-Naha flights.
Skymark is expected to plunge into financial difficulties if it is forced to pay some ¥70 billion in penalty charges over a recent breakdown of its talks with European aircraft maker Airbus S.A.S. on aircraft order revisions.
In a related development, the H.I.S. travel agency reduced its stake in Skymark from 7.68 percent to 6.49 percent by the end of last month, according to a report filed Tuesday with the Finance Ministry.
H.I.S. cuts its holding to 5.93 million shares between June 11 and July 29 .
"We hold shares (in Skymark) for pure investment, but since we could make capital gains, we sold them in consideration of share prices," an H.I.S. official said.