Skybus Airlines

This article contains information about a planned or expected new airline. It may contain information of a speculative nature and the content may change dramatically as development continues, the launch date approaches, and as more information becomes available.

Skybus Airlines
IATA -	ICAO SKB	Callsign SKYBUS
Founded		2006
Hubs		Port Columbus International Airport
Fleet size		8 (65 on order)
Destinations		9
Parent company		Skybus Airlines LLC.
Headquarters		Columbus, Ohio
Key people		Bill Diffenderffer (CEO) Kenneth L. Gile (President & COO) Charlie Clifton (Board of Managers)
Website: http://www.skybus.com

Skybus Airlines is a privately held airline based in Columbus, Ohio, USA. It is an ultra-low-cost carrier, modeled after the European airline Ryanair. Skybus plans to be the cheapest airline in the United States, with fares up to 25% cheaper than Southwest. Its business model includes advertising on the interior and exterior of its aircraft as well as selling merchandise onboard to increase revenue.

In January 2005, Skybus filed a proposal to the United States Department of Transportation to start operations from Port Columbus International Airport^[1], and received approval on March 15, 2006.^[2] Airline certification is still pending from the Federal Aviation Administration, which is required before any aircraft can carry passengers.^[3] In an attempt to get a head start on marketing flights, however, Skybus has been granted a waiver from the DOT to begin ticket sales before the application is approved.^[4][5] The first flights out of Columbus begin on May 22, 2007.

Contents 1 History 2 Destinations and prices 2.1 Destinations 2.1.1 California 2.1.2 Florida 2.1.3 Missouri 2.1.4 New Hampshire 2.1.5 North Carolina 2.1.6 Ohio 2.1.7 Virginia 2.1.8 Washington 2.2 Fares 2.3 Extra Fees 3 Costs and revenue 3.1 Cost Reduction 3.2 Employee Wages 3.3 Increasing Revenue 4 Fleet 4.1 Livery 5 Startup Incentives 6 Financing 6.1 Investors 7 External links 8 References

History

What was to become Skybus was initially founded in the late 1990s by John Weikle and Ken Gile. This early venture went by the name of Heartland Airlines and planned to operate Boeing 717s out of Dayton, Ohio. Working with JP Morgan, the airline almost reached startup, but failed to raise the necessary capital and was eventually abandoned.^[6] Years later, the concept was resurrected, this time under the name of "Skybus Airlines". Taking advantage of America West Airlines pulling out as a hub of Columbus, they started gathering capital to start the airline in that city.^[7]

Destinations and prices

On April 24, 2007, Skybus Airlines announced their initial set of eight destinations, all of which originate from their hub at Port Columbus International Airport in Columbus. They will initially be operating a strict hub and spoke network, denying the ability to book round-trip flights between destination cities that are not Columbus. It is unclear whether this will change as more flights are offered, however. In addition, prices of tickets and details on extra fees were annouced the same day.

Destinations

Currently, Skybus does not fly to any destinations in the United States. Beginning May 22, 2007, Skybus will begin flights from Port Columbus to its first three destinations, Burbank, California, Kansas City, Missouri, and Portsmouth, New Hampshire. On May 23, Skybus will add its fourth destination when it begins flying to Richmond, Virginia. The airline will add three more destinations on May 29 when they begin flying to Bellingham, Washington, Fort Lauderdale, Florida, and Greensboro, North Carolina. Service to Oakland, California will begin on June 12 and will bring Skybus' operations to nine total cities and eight destinations from Columbus.^[8]

California

• Burbank (Bob Hope Airport) Service begins May 22, 2007, two flights daily June 12

advertised destination: Los Angeles, California (15 miles away)

• Oakland (Oakland International Airport) Service begins June 12, 2007

advertised destination: San Francisco, California (21 miles away)

Florida

• Fort Lauderdale (Fort Lauderdale-Hollywood International Airport) Service begins May 29, 2007

Missouri

• Kansas City (Kansas City International Airport) Service begins May 22, 2007

New Hampshire

• Portsmouth (Pease International Airport) Service begins May 22, 2007, two flights daily May 23

advertised destination: Boston, Massachusetts (44 miles away)

North Carolina

• Greensboro (Piedmont Triad International Airport) Service begins May 29, 2007

Ohio

• Columbus (Port Columbus International Airport) Hub Service begins May 22, 2007

Virginia

• Richmond (Richmond International Airport) Service begins May 23, 2007

Washington

• Bellingham (Bellingham International Airport) Service begins May 29, 2007

advertised destination: Seattle, Washington (94 miles away) / Vancouver, British Columbia, Canada (49 miles away)

Fares

Advertised fares to all current target cities will begin at $10 one-way, although the price increases as more tickets are sold for that flight. Though the exact number of $10 tickets are not advertised, Skybus guarantees that a minimum of ten such tickets will be offered for each flight. Ticket prices for the remaining fares is expected to be around half the price of other airlines. These fares do not include taxes and other airport fees, however, which add around $10 to a one-way ticket. All fees included, the cheapest round-trip ticket for one adult will cost approximately $40.^[9]

Extra Fees

In order to keep fares low, Skybus will charge extra for almost everything other than the ticket itself. Carry-on baggage (one bag plus one personal item) will be free, but checked bags will cost extra. The first two bags under fifty pounds will cost $5 each, with each additional bag after two costing $50. Overweight baggage, those weighing over fifty but under seventy-five pounds, will be charged an extra $25, and all bags over seventy-five pounds will not be accepted.^[10]

Though seating will be 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.^[11] On-board, everything from food and drinks to pillows will cost extra, though once purchased, all items do not need to be returned. In order to maximize revenue from these fees, Skybus plans to strictly enforce their no food and drink policy.^[12]

Costs and revenue

Attempting to emulate Ryanair's business model and Southwest's people-friendly attitude, Skybus has committed itself to be the least expensive airline in the industry with a projected CASM 28% lower than Southwest. To achieve this, Skybus plans to utilize multiple measures designed to keep revenue high and costs low.

Cost Reduction

In an effort to keep maintenance and operating costs to a minimum, most equipment purchased will be uniform. This covers the full range of equipment, from engines, to electrical components, to personnel gear. Because of this, Skybus plans on paying significantly less on employee training and for equipment service.

Another major method of cost reduction will be to utilize secondary airports, which are generally less congested and charge less to lease space though they may be further from the advertised destination. To save even more money at the airport, passengers will board directly from the apron instead of using the jetway, saving both loading/unloading time as well as operating costs. Finally, ticket sales will be 98% online. This not only saves on employee costs, but will completely eliminate the need for a reservations call center.

Employee Wages

In order to keep wages in line with their projected low fares, flight attendants will only be paid $9 per flight hour, and will not be paid a per diem. While this is considerably lower than competing airlines' wages, flight attendants will also receive 10% of all sales made during the flight, splitting all commissions evenly among all flight attendants on-board. Starting pilot wages will also be well below average, starting at $65,000 annually. The average commercial airline pilot wage is approximately $135,000.^[13]

Increasing Revenue

While cutting costs is a high priority for Skybus, revenue is their primary focus. Skybus aircraft will be outfitted as flying gift shops, selling everything from soda and food to perfumes, watches, clothing, and toiletries. According to comments on the website, passengers are seemingly prohibited from bringing food onboard the aircraft - everything consumed onboard must be bought from the airline. ^[14]

Advertisements will also be seen throughout the cabin and exterior. This will include overhead bins, carpet, tray tables, and full-body exterior advertisements (see below). The price for interior advertisements has not been released, though a company who purchases a full-body advertisement can also buy all interior advertisements for a small increase in price. A complete list of where advertisements will be placed has not been released, however, and what the interior will look like is also unknown.^[15]

Fleet

On October 26, 2006, Skybus announced a deal with the European aircraft manufacturer Airbus to buy 65 of their Airbus A319 aircraft. The order carries an estimated retail price of $3 billion, though the actual price Skybus will pay has not been announced. Skybus plans to lease aircraft of the same type until the new aircraft begin delivery in late 2008.^[16][17] On February 14, 2007, Skybus announced they had chosen the CFM56-5B engine built by CFM International to power the 65 A319 aircraft on order from Airbus. The actual price Skybus will pay for the engines was not disclosed, but the list price for the order is estimated at over $750 million.^[18]

According to the company's website, the A319 will be configured with 156 seats, which would require a seat-pitch of 28 inches

Livery

Recently Skybus flew their first test flight, showing off their planned aircraft livery. Earlier, photographs of a design described by some as "psychedelic" emerged on the internet, but since then the all-orange design displaying the butterfly logo on the tail made its appearance on the Columbus tarmac. This design will not be the standard livery for all Skybus aircraft, however, as their airplanes will be for sale as "branded airplanes" to any company that can afford the $500,000 per year price tag. A branded airplane will feature a full-body advertisement along the fuselage, with the tail and engines of the plane remaining the Skybus paint scheme. The first sponsored aircraft, aircraft N522VA, was recently repainted in a theme promoting Nationwide Mutual Insurance Company.^[19]

The first leased aircraft for SkyBus are coming from Virgin America and will have only 144 seats on board and will fly with 3 Flight Attendants.

Startup Incentives

In an effort to attract the airline to the city, as well as support its growth early on, the city of Columbus, along with the Columbus Regional Airport Authority, has offered incentives totaling over $57 million. These incentives include a twelve-year tax credit, promised airport improvements, business loans, and marketing support. Most of the incentives are performance-based, which requires Skybus to create 1000 jobs and complete other milestones to receive the incentives.^[20] Incentives such as airport improvements, however, have already begun. When Skybus begins operations, they will take advantage of $8 million of improvements to their gates in Concourse B at Port Columbus.

Financing

Skybus is financed by numerous high-profile companies nationwide and locally. As of April 2, 2007, Skybus has raised an estimated $160 million in startup capital, and $72.7 million in their second round of fund raising. This puts Skybus in a positive light with many investors, having raised one of the largest amounts of funds in the history of startup airlines. In comparison, JetBlue Airways, which began operations in 1999, raised $130 million prior to starting.

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.^[21]

External links

• Skybus Airlines
• Emerging Airline Summary

References