US inflight catalogue brand Skymall – which offered home delivery on items as varied as cat litter boxes to bedroom furniture – has gone into bankruptcy.

 

On Thursday last week, listed parent Xhibit Corp made a filing under Chapter 11 of the US Bankruptcy Code in order to seek the necessary relief to allow the Phoenix, Arizona-based business to continue functioning in order to pay employees and other claimants. The SkyMall business, excluding SkyMall Ventures, generated revenue of $33.7m in 2013 and $15.8m for the nine months ended September 2014.

Xhibit Corp says that it is seeking approval from the bankruptcy court to sell the SkyMall online retail business “and substantially all other assets”. The company has engaged CohnReznick Capital Market Securities as advisor to the sale, subject to approval from the courts.

A LONG-TIME INFLIGHT PLAYER

Despite the numerous products in its seat-back catalogue, SkyMall does not maintain substantial amounts of product inventory but, instead, principally serves as a distribution channel for manufacturers and distributors wanting to reach its large audience.

SkyMall – which claimed to be seen by 650m travellers annually – had been in the inflight market for over 25 years. While its footprint was large – reaching approximately 87% of all US domestic air passengers according to itself – its appeal was flagging against the onslaught of e-commerce and domestic players such as Amazon and eBay.

In the US, the multi-channel direct marketer had tried to enhance loyalty with the addition of a rewards programme last April year, and continued to bring unusual gadgets to the marketplace [even having a special section on its site to entice product inventors], but with little effect.

TECHNOLOGY CASUALTY

Historically, the SkyMall catalogue was the sole in-flight option for potential purchasers of products to review while traveling on some airlines. However, with the increased use of electronic devices on planes, fewer people were browsing the SkyMall catalogue.

Xhibit Corp says: “The substantial increase in the number of air carriers which provide internet access, and the US Federal Aviation Administration’s recent decision to allow the use of electronic devices during take-off and landing, resulted in additional competition from e-commerce retailers and additional competition for the attention of passengers, all of which further negatively impacted SkyMall’s catalogue sales.”

These technology changes, and the costs incurred by airlines in carrying a printed SkyMall catalogue, have also made the traditional SkyMall catalogue increasingly unattractive to airlines. At the end of November, Delta Air Lines stopped carrying the SkyMall product, and on 10 December Southwest also notified SkyMall it would do the same from this April.