Saturday, May 26, 2007

Skybus and the race to the bottom

This past week, Columbus-based airline Skybus began operation. Skybus, a no-frills, ultra-low-fare airline modeled after highly-successful - and oftentimes controversial - European carrier RyanAir, hopes to become the lowest-cost air carrier in the United States. The airline has received much media coverage; USA Today's airline blogger Ben Mutzabaugh has been diligently following the airline's first days of service, and his colleague David Grossman has written a column about the airline as well. ABC is calling the airline "the Greyhound of the skies," and has also covered the airline's start-up.

Skybus, which leases a fleet of Airbus A-319 aircraft, plans to offer rock-bottom fares: at least ten seats on every flight will be offered for $10. Skybus offers a highly-simplified fare structure, with no advance-purchase, overnight-stay or round-trip-purchase requirements.

In order to offer such low fares, Skybus is reducing its operating costs as much as possible. All of Skybus's ticket sales will be done online; there will be no call center for reservations or ticketing. Flight attendants will be paid a base salary of $9 per hour; they will have the opportunity to augment their incomes through sales commissions from the in-flight sale of food, perfumes, toiletries, pens, watches and jewelry to passengers, a concept Skybus calls a "flying gift shop." The airline, unique among American carriers, is also keeping landing fees at a minimum by eschewing the use of jetways; passenger boarding will take place using ground-level boarding to the tarmac and stairs built into the aircraft. In order to maximize revenues, much of the interior of the aircraft space will be devoted to on-board advertising: companies will have the opportunity to place advertisements on overhead bins, carpets, and tray tables. This concept isn't limited to the interior of the aircraft; Skybus will lease the exteriors of their planes to companies wishing to pay for "flying billboards." Currently, at least one of Skybus's jets features a full-body advertisement for Nationwide Insurance.

But will the concept work?

One of the obstacles Skybus faces is its use of Columbus, Ohio as its hub. According to conventional airline wisdom, hub cities only work at locations where there are enough local passengers to supplement connecting pass-through passengers. Previous attempts at creating a hub at Columbus have been unsuccessful; America West (now part of US Airways) tried it and failed. Unlike other hub carriers, Skybus hopes that people in cities like Cleveland and Cincinnati - high-fare fortress hubs for Continental and Delta, respectively - will be so enticed by its low fares that they will make the drive from these cities to Columbus to fly their airline. Given the current situation regarding gas prices, however, I'm not sure that this will work; Cincinnati, according to Skybus's own website, is a 110-mile journey to Columbus; Cleveland is a 143-mile trek. Skybus does not offer single-ticket transfers through Columbus, either; if you fly Skybus through Columbus, you have to buy two tickets and re-check your baggage.

Skybus also appears to be following a trend of serving major metropolitan areas by flying into smaller, less expensive and less congested airports on those areas' periphery. That's perfectly sensible, since there are several airlines, Southwest among them, that employ this tactic: Oakland instead of SFO, Sanford instead of MCO, Burbank instead of LAX, Ft. Lauderdale instead of MIA. And that's fine, provided that the secondary airport is within a reasonable distance of the metropolitan area being served. Oakland is right across the bay from San Francisco, Sanford (as an example; Skybus does not [yet] fly there) is only a handful of miles further from Disney World than Orlando International, Burbank isn't much further from downtown Los Angeles than L. A. International, and Fort Lauderdale is only about 20 miles north of downtown Miami. A problem arises, however, when the secondary airport being serviced is nowhere near the primary city an airline is claiming to serve. This might be a problem for Skybus: Bellingham, Washington, is not "Seattle." Downtown Seattle is over 90 miles way from the Bellingham airport and the airport is actually closer to Vancouver, British Columbia (to their credit, Skybus advertises Bellingham as serving both cities). Making the claim that you're serving "Boston" by flying into Portsmouth, New Hampshire isn't much better.

SkyBus also employs a so-called "cafeteria" policy for added services. You want to check a bag? Fine. The first two bags are $5 each. Each additional bag, however, is $50. You want a pillow? Okay. That will be $8 (but you get to keep the pillow). Seating is prescribed on a first-come, first-served basis, much like Southwest's so-called "cattle call" boarding system; however, priority seating is available for anyone who wishes to pay a $10 fee.

In order to maximize in-flight food and beverage sales, Skybus prohibits passengers from bringing outside food or drink onto their aircraft. It remains to be seen just how carefully they will enforce this rule. Aside from the legal problems this might cause - I'd be interested to see what happens if Skybus tries to prevent somebody with diabetes or celiac disease from bringing their own food onto an aircraft - I think this is a rather cynical and greedy manner of customer service. "You want to buy a sandwich at a restaurant in the terminal and eat it during that long flight from Burbank to Columbus? Too bad! Pay to eat our food, or go hungry!" No other airline I've ever flown has ever tried to enforce this rule, and I can just imagine the discord that will ensue if a Skybus staffer tries to take a kid's candy bar away from them or tells a thirsty passenger to throw their bottle of water away before boarding.

The fact that Skybus does not have a call center means that, should you have a problem with your ticket and want to speak to a living, breathing human being about it, you're SOL. If you want e-mail or text message updates about your flight's status, that's also available - for a charge. There's no in-flight entertainment, but they'll sell you a Sudoko puzzle to keep you occupied.

Skybus's bare-bones labor policies, in fact, are a bit disconcerting. The duty of the flight attendant has traditionally been to ensure the safety and comfort of passengers; Skybus's concept of flight attendants, however, appears to cast them as in-flight salespeople. I'm not sure I'd be comfortable with a flight attendant, looking to get sales commissions, continually hawking merchandise to me throughout a flight. Skybus has outsourced the maintenance and cleaning of its aircraft to other entities. And the low wages that Skybus pays its crews - not only are flight attendants making a paltry $9 per hour (or $16,000 per year), but its pilots will be paid a starting salary of $65,000, which is considerably lower than the industry average - could have adverse implications for passenger comfort and safety. Experienced pilots and flight attendants, naturally, might gravitate away from this airline in favor of other arlines with higher wage structures, leaving Skybus with only the most inexperienced crews.

Skybus CEO Bill Diffenderffer compares his airline to another well-known discounter: "Keep in mind that most of America shops at Wal-Mart," he says. But whether air travelers will flock to "the Wal-Mart of the skies" remains to be seen. As's travel writer Ben Lovitt writes:
Personally, I hope they succeed, just as I hope their passengers accept the fact that ultra-low fares can entail hidden costs and unforeseen consequences. Most of all, though, I hope those passengers remember that they’re the ones who decided to go the no-frills route in the first place, which means no whining when the service isn’t up to snuff.

Sometimes you get what you pay for; sometimes you get more than you bargained for.

Time will tell if Skybus's no-frills, ultra-low-cost business model will work. But I personally do not see myself flying this airline. Skybus, in my mind, represents a disturbing "race to the bottom" for the nation's commercial aviation industry, and I find that to be an uncomfortable trend.

If I want to fly a low-fare airline, I'll stick with Southwest or JetBlue. (The "Target" of the skies, as opposed to Wal-Mart?) Those airlines have always treated me with dignity and respect as a passenger, and their flight attendants haven't hawked jewelry or pens or watches or perfumes to me in-flight, either.

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