Photo: Wade DeNero.
If you remember this ultra-low-cost carrier from the late-2000s, message me on the side so I can Venmo your coffee money. The only reason I particularly remember Skybus is that they launched service to Westover Air Force Base, located just outside Springfield, M.A. That was the first time I asked, “Who will be on this flight?”
Thankfully, there is actually much information available on the failed carrier. There was a lot to like and equally as much to dislike about what management was trying to do, with hubs out of Port Columbus International Airport in Columbus, O.H., and Piedmont Triad International Airport in Greensboro, N.C. - unique choices, to say the least, for a carrier that demonized transfer travelers.
History
This will be a pretty short timeline as the airline only operated for a little under a year.
Skybus's concept originated when America West drew down its hub in Columbus, O.H., leaving a local void. Setting out to finance his vision, founder John Weikle began one of the most successful fundraising campaigns for a new airline. Targeting large conglomerates such as Fidelity Investments, Morgan Stanley, and Nationwide Mutual Capital, Weikle raised approximately $160 million in startup capital. To give you an idea, JetBlue Airways raised $130 million in its startup campaign several years earlier.
Additionally, incentives are another significant part of the puzzle before launching operations. As a result, the Columbus Regional Airport Authority granted a record-setting incentive package totaling over $57 million. These incentives included twelve years of tax credits, plans for future infrastructure improvements, and marketing support for Skybus’ new service.
Skybus’ first flight out of their Port Columbus hub operated on May 22, 2007, to much fanfare in the aviation community. However, as early as December of that year, the airline began to discontinue service, often with little notice. Also, Skybus was known for terminating routes before they even started. For example, Skybus ended service between Columbus and Niagara Falls before ever operating a flight.
On October 22, 2007, Skybus opened its second hub at Piedmont Triad International Airport. Later, in December 2007, the first point-to-point flights outside their established hubs launched between Portsmouth International Airport to St. Augustine and Punta Gorda, F.L.
In early 2008, Skybus further expanded to markets such as Wilmington-New Castle Airport, an alternative to Philadelphia, and New York Stewart International Airport, a New York City reliever airport approximately 60 miles north of Manhattan. As it turned out, these routes opened too little too late.
Unfortunately, for Skybus, they seemed to pick the exact wrong time to start an airline. Sure, every airline needs time before becoming profitable. However, during its brief run, oil prices rose over 50 percent in the United States. This surge stacked the odds against the airline.
Seeing the losses add up, investors began to drop one by one. Internally and externally, there was little to look at that showed promise. Skybus' cumulative load factor was 71% - thanks to its pricing, this came in well below breakeven. However, the best-performing routes, such as Columbus to Burbank, were also the costliest. Eventually, many top managers began to follow suit and departed the airline before it collapsed.
On April 4, 2008, Skybus announced the cessation of all operations, including the immediate layoff of over 450 employees. While financial performance was lacking, the decision surprised many as several routes would begin in the coming months. Just like that, Skybus’ short tenure as a carrier in the United States came to an end.
Business Affairs
Skybus sought to replicate the success of European carrier Ryanair and was one of the first in recent memory to apply the ultra-low-cost model to their fare structuring. For example, Skybus would offer a discount of $10 for ten seats on a single flight. However, as a result, there were surcharges for virtually everything else.
For an empty aircraft, the ticket price would start at $10. However, surge pricing would apply as the plane began to fill up. While this puts customers who book early at an advantage, this resulted in many half-full aircraft. With surcharges included, customers were only willing to pay so much.
At the time, this price structuring was uncommon in the United States. Skybus customers were allowed one carry-on plus one personal item. All ensuing transactions required additional fees. Seating was assigned first-come, first-serve - however, customers were allowed to pay an additional fee for priority seating. The airline's performance might have been more favorable had the airline launched in today's climate, where this price structuring is more common.
Additionally, Skybus always prioritized smaller and less-expensive airports than the primary ones, sometimes even choosing the “alternate to the alternate.” For example, service to Portsmouth International Airport was to tap into the Boston market - approximately one hour to the south. Also, Westover Air Force Base in Chicopee, M.A. intended to be a convenient alternative to Bradley International Airport - an airport hardly associated with congestion.
Skybus maximized its value in every business deal to offer such discounted fares. C.E.O. Mike Hodge was quoted:
The goal of Skybus was to do something that nobody was doing in the United States. The goal was to fly an airline profitably at half the price of everybody else. That means that your costs have to be less than half of everyone else.
It was clear what the objective was. However, the direction was hard to pinpoint. Constantly adding and subtracting from its network, similar to present-day Breeze Airways, made it hard to gain traction. Some markets take longer to build than others - a critical time that Skybus felt they did not have.
Employees also were left with interesting value propositions. Flight attendants were paid a flat $9 per hour, well below the industry average. However, as an incentive, flight attendants could take home a commission on any sales made during the flight. Flight crews paid well below industry standards but included stock options and profit sharing. A significant draw for employees was quality of life since routes were established with a return-to-base structure, thus eliminating overnights in outstations.
A confusing business decision was to discourage transfer customers at their hub airports. Columbus and Greensboro would be good places to establish transfer hubs; Columbus is a central location on the map, and Greensboro could facilitate many transfers heading south. However, the airline continued to demonize transfer customers. Passengers looking to connect between aircraft were required to carry their bags from flight to flight.
The airline used a standard fleet of Airbus A319s. Skybus wet-leased its initial aircraft from Virgin America, Air Canada, and SkyService to launch flight operations. However, a deal with Airbus was reached for 65 Airbus A319 aircraft straight from the factory. The order included state-of-the-art components, such as the latest Heads Up Displays (HUDs) and Electronic Flight Bags (EFBs), and also was the first manufacturer deal where maintenance costs were included. Airbus never disclosed the total amount, but the retail value of the order was $3.7 billion.
Marketing
Of course, we have to talk about Skybus’ livery. Described by many to be “psychedelic,” the paint comprised of a bright orange coating featuring billboard Skybus titles on the side - a livery component derived from Ryanair but was hardly duplicated elsewhere at the time. Currently, billboard titles are the standard for airline branding. Indeed part of their financing terms, Skybus also painted additional special liveries to support Nationwide and Capital One.
There was not much to look at regarding practical marketing for Skybus. Its tenure needed to be longer for them to have launched any effective campaigns to draw from. Skybus pushed much of the marketing responsibility onto the local airport authorities by serving airports with little or no prior commercial air service.
The airline's business model, similar to current-day Breeze and Avelo, was enough to provide intrinsic marketing. Especially in industries that approximate aviation, many were eager to try the ten-dollar carrier to airports that had only marginal air service to date. For example, airports like Westover Air Force Base have not seen air service since Skybus folded.
Skybus Today
Unfortunately, Skybus came and went with very little impact on aviation. By departing Columbus, this allowed many current-day mainline carriers room to expand their presence. Further, AirTran began service to Columbus following Skybus' failure. The leased Airbuses were returned to their lessors, and since the few they owned were low-time, it was not hard to find buyers. A319s still fly today for airlines such as Volotea, Rossiya, and Ural Airlines.
The closest approximation of Skybus today is certainly Avelo Airlines. The two share the primary principle of serving underserved and often neglected airports. The business model is similar, with return-to-base point-to-point flying from smaller hubs to key destinations. The big difference is that frequency for Skybus was, at a minimum, daily, while Avelo focuses on less-than-daily service. Who is to say that, if Skybus was around today, they would not have adjusted to the times?
For myself, I miss Skybus. They were ahead of their times and only a few breaks away from a more acceptable run. Skybus might have even had enough time to save itself from its eventual fate if the investors were not so quick to pull out, but this is all hindsight. At the end of the day, we can only hope for more success and support similar airlines in the future.