After Skybus, there's JetAmerica

photo courtesy JetAmerica

No, this isn't the original JetAmerica Airlines, which operated a bunch of MD-80s out of Long Beach in the 1980s until it was bought by Alaska Airlines. This is a brand-new start up public charter carrier flying one wet-leased Boeing 737-800 from Miami Air International between cities like Lansing, Michigan and South Bend, Indiana from its base in Toledo, Ohio.

Sound familiar? Well, Toledo is just halfway across the state from Columbus, the home of the infamous Skybus, which went bust less than a year after it started flying. And Skybus' famous limited $10 fares are awfully similar to JetAmerica's $9 fares, although only a certain number of seats (9 to 19) on a flight will be at that price.

So, will JetAmerica (sometimes spelled Jet America) survive? The concept of the ultra-low-fare carrier (where pretty much everything carries its own fee) hasn't really taken off in the US. Sure, carriers like Spirit and Allegiant have managed to make the model work, but these airlines fly mostly vacation travelers to and from Florida and Las Vegas. JetAmerica might suffer because Toledo certainly doesn't have a lot of originating and departing traffic - something that helped contribute to Skybus' demise.

Yet JetAmerica is also being heavily subsidized by some of the airports that it flies to; Melbourne, Florida, Toledo, Lansing and South Bend airports are all giving JetAmerica $1.4 million in grants for a year, not to mention $1.1 million in marketing help and $867,000 in waived fees. These subsidies can help the airline weather any spikes in oil prices, but at the moment, oil prices are relatively low (sky-high oil prices helped to take down Skybus). And CEO John Weikle claims that JetAmerica's goal is to make money along the same lines as Allegiant, by "stay[ing] away from the competition."

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Skybust: Skybus ceases operations

photo by OZinOH

Skybus, the Columbus, Ohio-based no-frills carrier that famously started flying last May with $10 fares, announced on Friday that it will stop flying on Saturday, April 5. It becomes the fourth US carrier in less than a week to shut down (joining Aloha, Champion Air, and ATA). The news only broke late on Friday night, surprising both customers and employees.

"Skybus struggled to overcome the combination of rising jet fuel costs and a slowing economic environment," the airline said in a statement. "These two issues proved to be insurmountable for a new carrier. We deeply regret the impact this decision will have on our employees and their families, customers, vendors, suppliers, airport officials and others in the cities in which we have operated. Our financial condition is such that our Board of Directors felt it had no choice but to cease operations."

Why did Skybus fail? It's a question that will probably be debated for some time to come. Obviously, fuel costs and the state of the US economy are two major factors, but they've impacted every airline, not just Skybus. Here are a few Skybus-specific thoughts:

• Skybus did fly from secondary cities that, in many cases, were too far from the "major" cities that they were trying to market to. For example, what was listed as Hartford, CT on their website was really Chicopee, MA. In some cases, this was OK, but because there aren't many ground transportation options between these city pairs that Skybus chose, it was sometimes difficult and expensive to get to their destination city.
• Skybus also flew cross-country routes with a rather small fleet of Airbus A319s (it had only 12 planes at the time of shutdown), which meant that its airplanes weren't flying as many hours a day as they could have. Skybus' small fleet also left it vulnerable to losing money on under performing routes.
  
• Skybus didn't offer the option for connecting flights, meaning that they really limited themselves to those who were just flying between two cities that the airline served directly.
  
• Rapid growth. While this isn't necessarily a bad thing, Skybus did expand too quickly. It often would start out a new route and soon abandon it if it didn't make money, and while this can work, Skybus' small fleet meant that a significant proportion of its airplanes were on money-losing routes.
• Little customer service, in my opinion. Skybus didn't even have a toll-free number for passengers to call if something went wrong with their travel plans. And although the airline tried to get passengers to purchase food and drinks on board the plane (none were provided for free), its attempts to get passengers to dispose of the food and drink they already had always seemed unusual.
  

Regardless of the reasons, the failure of Skybus (and the other airlines that have closed in the past week) are indicative of the tough times that the US airline industry faces - we're likely to see more tough times ahead and, sadly, more airline shutdowns, in the coming months.

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Skybus VP: we're "best financed" US airline

According to Skybus vice president Dennis Carvill, Ryanair-imitator Skybus is "the best-financed airline in the history of the aviation industry in the United States... We are capitalized to $160 million of initial startup capital, and that has given us the ability to do what we are doing, that is to grow rather quickly." By comparison, jetBlue, which started out a few years ago with quite a lot of cash, had an initial capitalization of $128 million.

Although initial capital is indeed important (and it certainly helped out jetBlue), Skybus' lack of amenities (e.g. no in flight entertainment, no food or drink, no telephone number to call) might not sit well with some passengers, and Skybus will have to focus on keeping its flights prompt in order to make up for the often out-of-the-way airports that they service.

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Skybus takes off

Yesterday Columbus, OH-based Skybus Airlines operated its first flight from Columbus to Burbank, CA, and also operated flights to Kansas City and Portsmouth, NH. Although I haven't flown Skybus myself, an ABC News reporter did, and reported on his experience (he calls the airline 'The Greyhound Bus of the Skies'). He reports extensively about the 'add-ons' (e.g. snacks, drinks, pillows) that you can purchase onboard, and quotes the CEO of Skybus as saying, "Keep in mind that most of America shops at Wal-Mart. Most of America can do basic addition."

The article also points out that one way Skybus keeps fares low is by outsourcing everything - including the airline's spokesperson, who works for a PR firm in Columbus. Yet even though costs are low, Skybus' business model - while imitating the very successful Ryanair - might have some problems in the future. For example, it requires passengers to book their own connecting flights. If you lived in Burbank and wanted to travel to, say, Portsmouth, you would have to book a Skybus flight from Burbank to Columbus, retrieve your luggage, and go through the entire process again from Columbus to Portsmouth. Whether customers are willing to go along with this in order to get a cheap fare (even though most tickets aren't as low as $10) or not remains to be seen.

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Skybus gets FAA certification

Columbus, OH based startup Skybus Airlines recieved certification last week from the FAA so that it can start flying on May 22, as planned, with a few brand-new Airbus A319s. The first flight is scheduled to be a morning departure from Columbus to Bob Hope Airport in Burbank, CA. On the same day, Skybus will start service to Boston (really Portsmouth, NH) and Kansas City. Other destinations will include Richmond, VA, Fort Lauderdale, Seattle/Vancouver (through Bellingham, WA), Greensboro, NC, and San Francisco (through Oakland). Evidently Skybus is trying the Ryanair approach to airports: choosing ones that are relatively inexpensive to operate from. In some markets (e.g. Kansas City, Richmond) this can be done at the city's main airport, but in more expensive areas (e.g. Boston Logan, Sea-Tac) this is harder to do when the landing fees are pretty high. Or as the company's "Rules of Flying" says, "Big airports can be a big pain. We choose less crowded and more convenient secondary airports for better punctuality and, of course, lower prices."

Skybus also seems to be copying Ryanair in another key area: amenities (or lack thereof). Ryanair is famous for having virtually zero extras, whether it be removing window shades and reclining seats or snacks and drinks or charging for baggage. Skybus does the same here, except they say that you don't have to "pay for everyone else's baggage", and if you're "hungry? Thirsty? Bring cash." And a book, since there's no inflight entertainment.

Of course, a certain portion of the fares are low - really low - at only $10, you probably couldn't expect too much. However, only a small percentage of fares - at least 10 seats per flight - are offered at that low price. More commonly, fares are going in the range of over $100. But if you can get the $10 fare, it's certainly a good deal. Now we'll just have to see if Columbus is a sustainable market - the reason why the company chose it was because America West pulled out of it a few years ago.

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