SkyMall Inc. files for bankruptcy protection, grounded by stiff online competition

January 23, 2015 11:34 AM

In-flight catalog and online retailer SkyMall Inc. filed for Chapter 11 bankruptcy protection with the U.S. Securities and Exchange Commission on Thursday.

SkyMall parent company Xhibit Corp. cites increased competition from online retailers as one of the reasons for its declining fortunes. SkyMall sells everything from electronics, clothing and accessories, and other gifts through its web site, SkyMall is No. 247 in the Internet Retailer Top 500 Guide.

“Many of SkyMall’s competitors have greater, or vastly greater, resources, longer histories, more customers, and higher brand recognition,” Xhibit CFO and acting CEO Scott Wiley says in the filing. “These competitors have often secured better terms from vendors, adopted more aggressive pricing, and devoted more resources to technology, infrastructure, fulfillment, and marketing.”

Parent company Xhibit Corp. says in the filing that it plans to put SkyMall’s online retail business up for sale. SkyMall told executives told reporters in April they were planning on investing $2.5 million in the company’s e-commerce business.

In addition to increased competition from retail sites like Inc. (No. 1 in the Internet Retailer Top 500) and eBay Inc., the proliferation of in-flight Wi-Fi helped lead to SkyMall’s financial demise.

“The substantial increase in the number of air carriers which provide Internet access resulted in additional competition from e-commerce retailers and additional competition for the attention of passengers, all of which further negatively impacted SkyMall’s catalog sales,” Wiley says.  

Also hurting SkyMall’s sales and future earnings potential is the fact that two major airlines, Delta and Southwest, will no longer be carrying its catalog in their planes.

In the SEC filing, Xhibit Corp says that SkyMall has 14 employees dedicated to e-commerce full-time, with another 20 splitting their time between e-commerce and TSA Support Operations. Xhibit Corp. will continue running SkyMall’s web site until it can find a buyer.

Internet Retailer’s data shows that SkyMall had seen a slight uptick in online sales over the past three years, going from $76.62 million in 2011 to an estimated $80 million in 2013. 




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