Skybus Airlines, the Columbus, Ohio-based, low-cost carrier, abruptly canceled its daily service to 15 U.S. cities on April 4, leaving ticketholders to fend for themselves after its final flights concluded that day.
The carrier, best known for its bare-bones business model and online-only customer service, replaced its Web site content with a simple announcement of the impending closure. It blamed "the combination of rising jet fuel costs and a slowing economic environment" and suggested that ticketholders contact their credit card companies for refunds. It also promised to post more information as it becomes available.
Skybus began service May 22, 2007, "with $160 million in equity and a blank slate," as former CEO William Diffenderffer told the Raleigh (N.C.) News & Observer in November. "People want to go to great destinations at low fares. They want service that is reliably safe. They want to arrive on time with their bags, and they want a smile."
Aboard Skybus, that's exactly what they got. Skybus advertised 10 tickets for $10 each on every flight and average one-way fares of less than $50. Beverage and meal service cost extra, as did checked bags and souvenir T-shirts. Flight attendants were paid a commission for everything they sold and were allowed to take tips. "It's an incentive to smile," Diffenderffer said.
The airline eventually employed 450 people and operated 80 flights a day from hubs in Columbus and Greensboro, N.C. It provided service to cities such as Oakland, Calif.; Fort Lauderdale; Burbank, Calif.; and Richmond, Va.
Most flights, however, served smaller airports within driving range of large cities, such as Gary, Ind.; Newburgh, N.Y.; Portsmouth, N.H.; and Punta Gorda, Fla.
In at least two cases -- Westover Metropolitan Airport in Chicopee, Mass., and New Castle County Airport near Wilmington, Del. -- Skybus was the only commercial carrier providing service.
Skybus filed for bankruptcy in Delaware on April 5, listing liabilities of $50 million to $100 million, assets of $100 million to $500 million and more than 200 creditors. The largest creditors are its fuel supplier, World Fuel Services ($8.5 million), and Airbus ($1.9 million).
Oakland Airport welcomed Skybus in June 2007, offering the airline a standard incentive package to bring nonstop daily service to Columbus, said Oakland Airport spokeswoman Rosemary Barnes. Skybus operated one flight a day to and from Oakland, serving roughly 225 passengers a day.
The closing comes just weeks after Aloha Airlines and ATA Airlines filed for bankruptcy protection. Both provided service to Hawaii from Oakland.
"We've lost over 5% of our business, and that hurts the bottom line," Barnes said. "We're all reeling from this ... trickle-down effect of the national economy."
Oakland Airport employees were stationed curbside on Saturday to catch Skybus passengers before they were dropped off, "so they could make a decision to go home and not be stranded," Barnes said. About 100 had purchased tickets for the Saturday flight to Columbus.
JetBlue offered $50 standby fares to all Skybus ticket holders and $10 standby fares for Skybus crewmembers and employees.
Skybus founder John Weikle told the Raleigh News & Observer that the carrier's business model was sound and that he was seeking investors willing to help him resurrect it. Industry analysts were skeptical.
Consultant and commentator Michael Boyd of Boyd Aviation called Skybus' closure an inevitability. "High fuel prices have eliminated any margin for success of 'alternative' air transportation schemes," he said in a report to clients on his Web site.
"The Skybus business model doomed it from the start. If oil was at $75 instead of $110, the result would have been the same, only a few more months down the line. Plan on more shut-downs and bankruptcies on the Outer Rim of the air transportation business. Probably sooner than later."
Likewise last week, JPMorgan analyst Jamie Baker described Skybus' swift demise as "the rule rather than the exception" for small U.S. discount carriers.
But he said the elimination of such small airlines would not contribute greatly to the need cited by many analysts for the industry to reduce excess capacity.
"Collectively, these airlines account for roughly 1% of system capacity, well short of the aggregate 15% cut we consider necessary to recalibrate the model for profitability at current fuel prices," he wrote.