"Only very low-fare airline in U.S. set to launch on May 22"

Thursday, April 26, 2007

Only very low-fare airline in U.S. set to launch on May 22
By Jeff Bailey 
The New York (NY) Times 
 
 
The extreme low-fare airline, already well established in Europe, will
attempt a comeback in the United States on May 22 with a well-financed
start-up, Skybus Airlines, beginning service that day and promising at least
10 seats on every flight priced at $10 one-way -- before taxes.

Skybus sold 97,000 seats in its first day, selling out its $10 one-way
tickets on flights from Fort Lauderdale to Columbus, Ohio, through August.
The airline is awaiting Federal Aviation Administration approval for its
plans to begin service between the two cities May 29. By 6 p.m. Wednesday,
the $10 seats on the Fort Lauderdale-Columbus route were sold out through
late November.

If it sounds like People Express and Laker Airways -- low-price carriers
that made a splash, expanded too fast and then collapsed -- there are
similarities.

But the organizers of Skybus are counting on the $160 million cushion that
they have raised and on a big change in consumer behavior to help the
carrier follow the success of Ryanair, the Irish airline. Ryanair brought
ultracheap fares to much of Europe, charging fees for many extras and
transforming the short-haul market there.

Like Ryanair, Skybus, based in Columbus, is charging extra for many items --
$5 to check a bag, $10 for a preferred seat, $2 for a soft drink -- and it
aims to sell a lot of the stuff. Carrying food on board is not allowed,
according to Skybus' Web site.

The airline will sell tickets only through its Web site, avoiding the
expense of maintaining a reservations call center or paying a sales
commission to travel agents. Skybus is also outsourcing its maintenance, the
staffing of ticket counters at airports and its baggage handling, all to
keep costs low.

"Don't call us," the Web site explains. "We don't have a phone number."

Low-fare airlines have failed in the past, but not necessarily because of
their fare structure. People Express expanded too fast, as did Laker.
Ryanair has been very successful.

As its planes age and its workers grow more senior, Skybus' costs will rise.
And low fares or not, it will need to increase revenue, a lesson JetBlue
recently learned.

The unbundling of the airline service may seem like crass nickel-and-diming,
but it is a reaction to consumer behavior in the Internet era. From the
beginning, travelers scoured the Web for the cheapest fares with a vigor
that has concerned airline executives, disregarding meals and other extras
that airlines tossed in.

Skybus' top walk-up fare will be $330 one way, before taxes. But it has many
very low fares -- $40, $50, $75 -- one-way, before taxes.

Besides Fort Lauderdale, initially Skybus will connect Columbus to Burbank,
Calif., near Los Angeles; Portsmouth, N.H., near Boston; Bellingham, Wash.,
near Seattle; Kansas City, Mo.; Richmond, Va.; and Greensboro, N.C. In June,
flights are planned to Oakland, Calif.

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