Skybus(t)

http://www.chron.com/disp/story.mpl/business/5677117.html

Skybus announced last night that they were ceasing all operations as of Saturday April 5th. The Columbus based carrier was less than a year old and touted a limited amount of $10 fairs on every flight. They join Aloha Airlines and ATA in the low cost carrier graveyard. Skybus blames decreased consumer spending along with skyrocketing fuel costs for the decision.

I blame poor business decisions on the part of the airline management as well as the City of Columbus for the failure. When Skybus first approached the City of Columbus with it's business plan, I was worried that the whole thing could end up a disaster. The airline wanted to offer flights throughout the country on a first-come, first-serve tier level. That is, the first 10 seats of every flight went for $10 ($20 after taxes) one way. This included flights to the west coast. Then the prices went up to $25 for the next 20 or so, $50...ect. The airline would fly only to regional airports and board passengers old-school style via the tarmac instead of using a jetway. Skybus would sell advertising on the outside of the airplanes and snacks and food on the inside. You would have to buy your lunch from the airline - no outside food was allowed. There were no connections with Skybus. If you had to connect to another flight, it meant waiting on your bags at retrieval and physically moving them and rechecking them at another gate.

The airline also paid sub-standard wages to it's pilots, crew and airport agents. Consequently, there was always an ad in the Dispatch for new employees. I imagine the turnover was pretty high.

The biggest loser, along with ticket holders and the 450 employees that are going to lose their jobs, is the City of Columbus and Mayor Coleman. The City and Airport Authority sunk an unprecedented amount of money and tax breaks into luring Skybus to hub here.

In an effort to attract the airline to the city, as well as support its growth early on, the city of Columbus, along with the Columbus Regional Airport Authority, had offered incentives totaling over $57 million. These incentives included a twelve-year tax credit, promised airport improvements, business loans, and marketing support. Most of the incentives were performance-based, which required Skybus to create 1000 jobs and complete other milestones to receive the incentives.^[30] Incentives such as airport improvements, however, were already completed. When Skybus began operations, they took advantage of $11 million of improvements to their gates in Concourse B at Port Columbus. (Wikipedia)

So in an effort to lure business here, Mayor Coleman and the City took a gamble on an airline start-up with a shaky business plan that relied on misleading advertising and the public's willingness to be inconvenienced in exchange for cheap travel. As I understand, Skybus did not even have a customer service line. All transactions and correspondence was internet based.

Step back and the bigger picture for the airline industry looks bleak. The Delta/Northwest merger went south, and now Delta is upping ticket prices and cutting jobs and salaries in an effort to remain solvent. Fuel prices continue to increase as oil reaches $110 a barrel. Along with fuel costs, ticket prices will continue to increase yet airlines will be forced to compete for the public's money. The resulting price war is going to be a lose-lose for the public and the airline industry. We will have less airlines to choose from and they will either consolidate and raise prices or simply go out of business all together.

On a personal note, Lily, who is coming to visit me here in May, was booked on Skybus flying out of Portsmouth. Now she has to fight with her credit card company and Skybus to get a refund. Luckily, she's already found another flight with Southwest. At twice the price. Her inconvenience was minor compared to those ticket holders who have flown out on flights but not used their return tickets yet. Those people are really getting screwed.