How In-Flight Internet Brought SkyMall Into Bankruptcy

Woman working with tablet inside airplane.
The company that produces the SkyMall in-flight shopping catalogs carried on most U.S. airlines has filed for bankruptcy protection, citing a “funding crisis.”

SkyMall, which has long been found in the seat-back pockets of most airplanes, is known for entertaining bored air travelers with a vast array of niche, sometimes bizarre, products ranging from mini clap-on alarm clocks to garden zombies.

However, the catalog wasn’t able to keep up with the increased use of in-flight Internet and subsequent competition from online retailers like eBay and Amazon. As the Federal Aviation Administration has become more lenient with smartphone and laptop use during flights, travelers’ attention has diverted away from SkyMall, crippling its profits and sending it spiraling into debt.

According to a January 23 USA Today article, SkyMall’s parent company, Xhibit Corp., is seeking a court-supervised sale of its assets in order to repay its debtors, a form of bankruptcy help similar to the Chapter 7 bankruptcy timeline.

In 2012, SkyMall generated $33.7 million in revenue. In the nine months ending on September 28, the company brought in a mere $15.8 million, its bankruptcy filing says. By December, SkyMall was in the midst of a “severe liquidity crisis” that raised concerns over whether the company would be able to continue its operations or even pay its own employees.

SkyMall’s biggest creditors include Delta Air Lines, American Airlines and US Airways. Several of its creditors have either already stopped carrying SkyMall catalogs on its planes or intend to do so in the coming months. On November 30, Delta terminated its contact with Skymall, and Southwest Airlines will stop carrying SkyMall catalogs after April 1.

SkyMall’s creditors will meet to discuss the company’s bankruptcy protection filing on February 24, USA Todayreports.

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