Low-Cost Skybus Readies Inaugural Flight
The success or failure of a new discount airline depends on whether some travelers are willing to fly to smaller, secondary airports and then drive 30 minutes or more to reach destinations such as Boston or Seattle, analysts say.
Skybus Airlines is scheduled to make its inaugural flight Tuesday, entering the often stormy industry of low-cost air travel. The company has plans to fly to 25 cities from its Columbus hub, using a model aimed at competing with Southwest and other no-frills airlines.
Every Skybus flight will offer at least 10 tickets for $10 each.
More than 200,000 tickets have already been sold. Tickets are booked solely through the company's Web site to save costs, part of a business strategy that also includes charging passengers for added services. Priority boarding will cost $10, and sandwiches and salads will cost up to $10.
Port Columbus International Airport is already served by low-cost carriers JetBlue and SouthWest, yet the Skybus business plan convinced local investors such as Nationwide Mutual Capital to come onboard. Skybus also received an incentive package valued at $57 million from city, county and state officials.
"Investors like that Skybus has done what they said they would do: create an extremely efficient operating model and a great value position for travelers," said Josh Connor, a managing director at Morgan Stanley.
Other analysts are skeptical, especially with Skybus planning to offer flights to mostly secondary airports, including Bellingham, about 80 miles north of Seattle; and others near Los Angeles; Boston; Greensboro, N.C.; Kansas City, Mo.; Richmond, Va.; and Fort Lauderdale, Fla.
"The biggest pitfall for them is, will U.S. customers accept this ultra-low cost to travel to remote airports?" said David Cahill, a visiting assistant professor at Ohio State University's Fisher College of Business. "If passengers are willing to do that, I think it's going to be an amazing business concept."
Mike Boyd, an aviation consultant in Colorado, said there's not enough public transit from remote airports to support new business. He also said it isn't realistic for Skybus to attract a groundswell of passengers from outside Columbus.
"You don't find anybody in the business who will say that (this plan) makes sense," Boyd said. "And there just aren't that many gaps anymore out there for low-fare service."
Skybus officials said they see an opportunity to draw would-be passengers from Cleveland, Cincinnati and as far as Fort Wayne, Ind., and Charleston, W.Va.
Cincinnati is a prime target for Skybus. The average fare for a ticket at Cincinnati/Northern Kentucky International Airport was $503 during the last quarter of 2006, trailing only Anchorage International in Alaska.
Ted Bushelman, a spokesman at the Cincinnati airport, said he's not overly concerned. "We fly to 122 cities direct, and the businessmen like that," he said.
Skybus CEO Bill Diffenderffer said he's pleased with the company's progress so fair. All of the company's routes are showing respectable bookings, though flights to Richmond and Kansas City are less popular than others.
"Unless they were doing pitifully slow, we wouldn't think about investing in a route for just a couple of months and then pulling out," Diffenderffer said.