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Skymark to offer Tokyo service to Saipan and Palau

Out of bankruptcy, budget airline targets gaps in competition

Saipan is a popular destination for Chinese and Korean tourists.

TOKYO -- Skymark Airlines will introduce service between Japan and the Pacific islands of Saipan and Palau as early as next May, offering scheduled flights outside of its home market for the first time.

Financial problems, partly stemming from ordering large aircraft intended for international flights, led Skymark to file for bankruptcy protection in 2015. This time, the carrier has chosen lightly serviced routes accessible with its existing fleet.

The Tokyo-based carrier will first operate charter flights to Saipan, part of the Northern Mariana Islands -- a U.S. commonwealth -- and Palau, an independent Pacific island country, this year. Scheduled service will begin in May or June 2019 after the fleet expands. The most likely plan is to fly the Boeing 737s between these destinations in Micronesia and Narita Airport outside of Tokyo.

Skymark, which currently operates scheduled service only domestically, resumed international charter flights in February for the first time since the bankruptcy filing. The new service is part of the company's growth strategy as it aims to go public in September 2020. Its medium-term plan calls for operating profit of more than 7 billion yen ($63.6 million) on sales exceeding 80 billion yen in fiscal 2018, but the airline's earnings are improving at a faster rate.

Skymark is starting with service to Saipan and Palau in part because the tropical islands approached the low-cost carrier to consider it. Non-stop flights from Japan to these destinations by Delta Air Lines were terminated last month. Some 52,000 Japanese tourists visited Saipan, just three and a half hours from Narita, last fiscal year, down from peak levels due in part to decreased flight service. But the Micronesian islands are attracting tourists from China and South Korea, and Skymark believes demand remains firm among Japanese vacationers.

Competition remains fierce in Southeast Asia, with other low-cost carriers such as Peach Aviation, owned by ANA Holdings, and a new budget airline Japan Airlines plans to start in 2020 eyeing medium- to long-haul destinations.

Skymark will focus on profitability when choosing international routes to avoid price wars, President Masahiko Ichie said.

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