SkyMall bankruptcy grounds flying yetis
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SkyMall, the catalogue company that brought a generation of airline passengers eclectic necessities such as $49.99 glow in the dark toilet seats and a $2,250 garden yeti statue, has been brought to earth by in-flight WiFi.
Little more than a year after US airspace regulators relaxed rules that forced passengers to stow smartphones and tablets before take-off, SkyMall’s publisher, Xhibit Corp, filed for Chapter 11 bankruptcy protection.
“With the increased use of electronic devices on planes, fewer people browsed the SkyMall in-flight catalogue,” chief executive Scott Wiley said in court papers filed with the US Bankruptcy Court in Arizona.
SkyMall’s business “faced increasing pressure”, he said, as carriers like Delta, American Airlines and US Airways fitted their jets with WiFi and passengers eschewed a print product that has filled seat back pockets since 1989.
The catalogue advertises “the coolest stuff on the planet”, with a product range stretching from a $24.95 mounted squirrel head to a $1,000 serenity cat pod. Yet as consumers gained the opportunity to search competitors such as Amazon in flight, SkyMall lost its dominance of commerce in the skies.
With “minimal” barriers to enter the market, rivals had “greater, or vastly greater, resources, longer histories, more customers, and higher brand recognition,” Mr Wiley said. Changing technology and the costs of putting brochures in seat pockets have also made the in-flight catalogue “increasingly unattractive to the airlines”, he conceded. Delta dropped SkyMall from its flights last November, and Southwest, the low-cost US carrier, notified the company in December that it too would drop the catalogue from April.
Executives are now looking to sell the company’s assets — valued in the filing at between $1m and $10m, against liabilities of $10m-$50m — and complete an orderly wind-down of its affairs. An auction of SkyMall’s assets will be held on March 24 with sales closing in April.
Delta, American and US Airways, which has merged with American, were listed as SkyMall’s largest creditors, owed a combined $3.1m.
Xhibit, which was valued at $742m after agreeing to merge with SkyMall in 2013, was dealt a blow following the Federal Aviation Administration’s move that October to allow passengers to use smartphones and tablets from “gate to gate” during flights.
In September of 2014, Xhibit terminated or sold all its other businesses to focus solely on the SkyMall commerce division. The company said the unit generated revenues of $15.8m in the nine months to the end of September, compared to $32.8m for all of 2013.
Financial duress forced the firm to lay off 47 employees in January, most of whom served in its call centres, and to suspend it retail catalogue business.
Twitter: @ericgplatt
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