The nation's newest carrier is trying to emulate the no-frills model of
Skybus Extras
On Skybus, “other than using the restroom, everything comes with a fee,” said Brandy King, a spokeswoman for Southwest.
The airline sells soft drinks, juice and water for $2, alcoholic beverages for $5 and, if you really want to splurge, a small bottle of champagne for $10. Candy bars and potato chips go for $2. If you are looking for a little more to eat, a sandwich will run you $10. The airline bills you for checked baggage. The first two bags are $5 each. Each additional bag is $50. The airline does offer pillows — for a whopping $8 — but you get to keep the pillow! Though seating is first-come, first-served, passengers can also pay an extra $10 each way for priority seating which will allow them to board right after passengers with disabilities.
Skybus Wages
In order to keep wages in line with their projected low fares, flight attendants are only paid $9 per flight hour, and will not be paid a per diem. While this is considerably lower than competing airlines' wages, flight attendants also receive 10% of all sales made during the flight, splitting all commissions evenly among all flight attendants on-board. Starting pilot wages are also below average, starting at $65,000 annually. The average commercial airline pilot wage is approximately $135,000.
Skybus Investors
Skybus Airlines' startup finances is currently provided by a number of large investors. These include: Fidelity Investments (12.6% ownership), Morgan Stanley (6.4%), Nationwide Mutual Capital (5%), and Tiger Management (4.1%). Smaller investors include: Huntington Capital Investment Co., Wolfe Enterprises (owner of The Columbus Dispatch), and Battelle Services Co. Inc.
(travel.nytimes.com, www.dispatch.com, www.nb12.com)
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THE MIDDLE SEAT
By SCOTT MCCARTNEY
(www.wsj.com)
Flying the Ultra No-Frills Airline
Skybus Passengers
Pay to Check Bags;
Some Seats for $10
November 13, 2007; Page D4
Passengers departing on Skybus Airlines from Columbus, Ohio, walk out of a brand new terminal and traipse across the tarmac to board their planes. In some cities, travelers fetch their own luggage off luggage carts. The airline has no telephone number that customers can call.
With fares starting at $10 one-way, do you expect more?
Skybus Airlines Inc., now six months old, brings a new level of bare-bones service -- and very affordable prices -- to the U.S. skies. The carrier also raises the question of just how cheap U.S. travelers will go to travel. So far, many seem to be willing to go very cheap. At a time when bus companies and Amtrak struggle to attract customers, and many travelers still gripe about the loss of in-flight meals and the addition of so many airline fees, Skybus filled more than 80% of its seats all summer.
"It's great for families," said Carolyn Lindell, on her fourth Skybus trip in just a few months. Mrs. Lindell and her husband Mike flew to Fort Lauderdale, Fla., for a total of $220 round-trip for a weekend in Key West last month -- he had a business trip, and it was cheap enough on Skybus to take along his wife and make a weekend out of it. And instead of long car rides, the Columbus couple has taken the kids to see relatives in Richmond, Va., several times on Skybus, sometimes on $10 one-way tickets ($21 after taxes).
"You don't care about a lot of things if the fare is $10," she said.
To strip as many costs out as it can, Skybus mimics many of the cheapskate travel tactics that Ryanair Holdings PLC pioneered in Europe. Dublin-based Ryanair is famous for its frugality, down to ordering planes without window shades to save money and charging customers to check-in at the airport (online check-in is free). Complaints are often numerous, and yet Ryanair has grown rapidly, doubling its passenger count in the past four years to about 50 million people this year.
Like Ryanair, which sometimes gives away tickets (customers pay the taxes and fees), Skybus offers eye-catching promotions. Every Skybus flight has 10 seats for sale for $10 each, and captains often ask customers to raise their hands if they got the $10 seats to show other customers the promotion is real. The carrier's average one-way ticket is less than $100.
Skybus Chief Executive Bill Diffenderffer, a former Continental Airlines Inc. executive, says demand for air travel jumps sharply if ticket prices are under $100 one-way. And it increases sharply again if prices are under $50.
The key to offering the cheap prices is low costs, so Skybus tried to rethink airline operations and customer service to be as spartan as possible. The carrier doesn't book connecting flights. It doesn't even put pockets in the seatbacks of its seats -- It takes too long to clean them.
"There are hidden costs throughout an airline. Take out one, and it's not that big. Take out all, then you're looking at a big difference in terms of pricing tickets," he said.
Once hooked on cheap fares, Skybus travelers do often end up paying more. If they want priority boarding, it's $10 per flight. Check a bag? That costs $5 for each of the first two bags under 50 pounds, then $50 for the third bag. About 80% of passengers end up paying to check bags.
And like Ryanair, Skybus looks at passengers as captive shoppers sitting on credit cards, willing to buy because they are on vacation, or don't have time to go to the mall.
Skybus flight attendants, often hired from retail stores and restaurants for their sales skills, hawk everything from coffee and pillows to perfume, watches and jewelry. Travelers aren't allowed to carry food on board -- that might hurt sandwich sales. (Employees announce the policy, but don't check bags for edible contraband.) Passengers receive a glossy catalog of items for sale, and flight attendants, who get a 10% commission, push a cart down the aisle at least twice during a flight.
Along with $5 cinnamon rolls and $10 grilled Caesar lunches, Skybus offers items such as $98 cubic zirconium tennis bracelets, $44 bottles of Vera Wang Princess perfume and $86 Tommy Hilfiger men's watches. The catalog says the watch sells for $95 in stores, and indeed, an Internet search finds it priced at $95 or higher. And Skybus collects no sales tax in the air -- a point flight attendants push hard, along with sales tactics like: "We only have two of these on board, and I've already sold the first in the back."
"I was not a believer in the beginning -- I didn't think people would buy. But they do," said Skybus Chief Financial Officer Michael Hodge.
Skybus started with strong financial backing -- $160 million, including $55 million in state and local support in Ohio. Columbus business leaders backed the start-up because they wanted better air service. America West Airlines closed its Columbus hub in 2003.
But the new airline has a long way to go to prove it can be profitable at these prices and service-levels. And it has plenty of skeptics. Aviation consultant Michael Boyd says several low-cost airlines are making inroads by offering better service than competitors, not lower quality. "Skybus eliminating frills is going the wrong way, and is a recipe for failure. This ain't Europe," he said.
Mr. Diffenderffer thinks many in the airline industry don't understand Skybus's model. The carrier has 65 Airbus A319 jets on order and nine more lined up to lease. While that would seem like overload for a city the size of Columbus, he plans to copy Ryanair's model of basing a dozen or so jets in various cities around the country, just as Ryanair does all over Europe. Skybus recently announced that Greensboro, N.C., will be its next base, hoping to draw customers from as far as Raleigh-Durham and Charlotte.
Skybus believes U.S. consumers are willing to drive a long way to distant airports just to get cheap fares -- as far as 200 miles to save $200, Mr. Diffenderffer figures. To keep costs low, Skybus flies to remote fields like Stewart Airport in Newburgh, N.Y., about 60 miles north of Manhattan, and Pease International Airport in Portsmouth, N.H., an hour from Boston. In Florida, it has shunned several traditional airports and opted for fields not served by any airline, like St. Augustine, south of Jacksonville, and Punta Gorda, near Fort Myers.
St. Augustine, for example, paved over a grassy area and erected a small terminal for Skybus, with a self-service baggage area under a tent. Mr. Diffenderffer says it costs Skybus about $4 a passenger to use St. Augustine, compared with about $10 a passenger at Jacksonville's airport. Another advantage: Rental-car firms are growing rapidly since there's not much other transportation at the airport, and Skybus gets a cut of what its passengers spend on rentals.
"We get a little bite of that apple, too," Mr. Diffenderffer said.
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