Japan's third-largest air carrier Skymark Airlines Inc. is considering shutting down its operations at Narita airport near Tokyo to help turn its business around, industry sources said Wednesday.
The airline operates six daily domestic roundtrip flights linking Narita to Sapporo in Hokkaido, Yonago in Tottori and Naha in Okinawa and had planned to expand into international services based out of the airport.
Skymark is now planning to suspend these flights as early as late October and shut down its office at the airport, concentrating its business resources at Haneda airport for its business reconstruction, the sources said.
In an earnings report for the April-June quarter of 2014 released last Thursday, Skymark offered to streamline unprofitable services, doubting its ability to continue current business operations due to rising fuel costs and intensifying competition from rivals.
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 yen in penalty charges over a recent breakdown of its talks with European aircraft maker Airbus S.A.S. on aircraft order revisions.