Less than six months after state and local officials announced up to $57 million in aid for Skybus, the new airline with an unusual business model went out of business.
Skybus had been planning to make Greensboro’s Piedmont Triad International Airport its second “focus city.” Though the airline never lasted long enough, boarded anywhere near enough passengers, or added enough jobs to qualify for all the government incentives, the airport still spent $1.3 million on the behalf of the airline.
Skybus’ business model was based upon Europe’s most successful low-cost airline, Ryanair, and is unlike anything that had been tried in the United States. Skybus offered rock-bottom fares between, if at all possible, obscure airports on the outer fringes of major metropolitan areas that had little if any existing scheduled airline service.
Skybus’ idea of “Boston” wasn’t Logan Airport in Boston proper. It wasn’t even such cities as Providence, R.I., or Manchester, N.H., the traditional alternatives to Logan. Instead, Skybus claimed to serve Boston through Portsmouth, N.H., a city on the border with Maine. Likewise, Skybus’ definition of Ft. Myers, Fla., was an airfield in Punta Gorda, which is 29 miles from Ft. Myers.
Skybus’ Web site also touted the proximity of its destinations to other major metropolitan areas. The idea was for people to drive some distance to catch a Skybus flight. That included presenting PTI as an alternative to both Charlotte-Douglas International Airport and Raleigh-Durham International Airport.
Other aspects of Skybus’ business model included not offering connections, not having a customer service phone number (all communication with the airline was via e-mail), and having flight attendants earn a commission by selling products to travelers.
“This innovative airline’s decision to locate in the Piedmont Triad should bring significant economic benefits to the region and the state,” said Gov. Mike Easley on Oct. 22 in announcing the airline’s new focus city would be in Greensboro. “North Carolina was First in Flight more than a century ago and we continue to lead the nation in pioneering approaches in the aerospace sector.”
At the time of the announcement, Skybus had been operating for only five months and had only five airplanes. The Columbus, Ohio-based airline had operated a single daily flight to PTI since it began operations.
Despite its limited track record, a variety of incentives were offered to the company to help lure it to PTI. These included up to $4 million from the state in a Job Development Investment Grant, regional and airport funds for marketing, and alterations at the airport to meet airline’s requirements. PTI also offered to pay airlines $2.15 per passenger boarded to new destinations. While any airline could qualify, the offer was clearly aimed at Skybus.
PTI agreed to build Skybus a separate terminal and parking deck at a cost of $40 million if boardings were to exceed one million passengers per year.
PTI has traditionally done a steady business, with about 1.3 million passengers a year boarding flights at the airport. Things changed for the worse in 2006, however, when boardings fell 17 percent to 1,083,570. Boardings were only slightly higher in 2007.
Skybus began building up its operations in January with flights peaking at 18 flights a day from PTI to a total of 11 destinations. It shut down on April 4, long before it qualified for most of the incentives, including the JDIG grant or per-passenger boarded incentives. Despite operating a focus city in Greensboro for less than three months, the airport and regional groups still spent $820,000 marketing the airline, plus $500,000 too modify facilities for its use.
Though the airline blamed rising fuel costs and a slow economy for its failure, at least one airline analyst saw the situation differently. Writing on his company’s Web site April 7, Mike Boyd, head of a respected aviation consulting group, The Boyd Group, said he thought the venture was doomed from the start.
“High fuel prices have eliminated any margin for success of ‘alternative’ air transportation schemes,” Boyd wrote. “Skybus literally defined the term ‘alternative.’ Soaring fuel costs only accelerated what was inevitable from the day they started flying. The Skybus business model doomed it from the start.”
Michael Lowrey is associate editor of Carolina Journal.