Skybus, a four year old “you’ll pay extra for anything remotely close to a frill” airline, shut down unexpectedly (at least to ticket holders) last week.

Their business model was fairly straight forward:
1) Fill the Seats With Really Low Fares
They offered the first 10 seats on every flight for only $5 (I think; I’m shooting from memory because their site has been taken down), and very low prices from there.
2) Keep Costs Down
They used the cheapest airports they could find. “Chicago”, for example, was actually a third tier airport in Indiana (which, for the geographically challenged - is the next state over). Boarding was done from the runway, and I believe the only way you could book a trip was though their website.
3) Exploit Extra Revenue Sources
Nothing but the seat was included with the ticket price. They sold food & drinks, the ability to bring baggage, and rumor has it - seatbelts (unconfirmed). Additionally, both the interior and exterior of planes were sold as billboards to advertisers.
So why did they fold? Here’s the official statement from their website:
Skybus struggled to overcome the combination of rising jet fuel costs and a slowing economic environment. These two issues proved to be insurmountable for a new carrier.
Why this makes sense on the surface:
As any gas consuming American can attest, prices are up. Skybus’s policy of using some of their tickets as a loss leader had to be hurting them. They couldn’t very well jack up the price for peanuts to make up the difference.
The “slow economic environment” (SEE from here on out) means that leisure travelers would probably be taking less flights. And, since they didn’t have much of a following for business travel, this did directly effect their core customer base.
Why, when you think about it, it’s kind of a cop-out:
Jet fuel is up…but it’s up for everyone. The other carriers have raised prices, so Skybus should have been able to do the same while maintaining it’s lowest fare position. If a commodity issue affects a whole industry, it’s not a good excuse as to why others are winning the competitive struggle.
The SEE means people have less money to spend on travel. Fair enough, but as the discount carrier - shouldn’t have this worked to their advantage? Meaning, even though less people may be flying, the ones that are will be more likely to shop for the lowest price. You’d think that they would actually be worse off in an FEE (the F is for fast…or fantastic - take your pick).
The Real Reason:
I considered flying Skybus in February and was pretty unimpressed. The fact is, once I considered all the extra costs and inconveniences - it just wasn’t worth it. And that, I believe, is why they ended up in the big terminal in the sky. SEE’s had little to do with it. I think other discount carriers offer low enough prices that Skybus couldn’t undercut them enough to make flying them worth the inconvenience.
Agree? Disagree?
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