With the launch of Skybus, the new
all-coach airline starting service in Columbus, Ohio, on May 22,
the U.S. airline industry is about to find out how much U.S.
consumers are willing to give up in exchange for ultra-low fares.
Skybus unveiled its
first routes and began taking bookings on April 24 with a fare
structure that includes at least 10 seats available for $10 on each
flight.
CEO Bill
Diffenderffer said the airline sold 100,000 tickets in its first 24
hours. The real test, though, will be what happens in the coming
months as consumers experience the service and decide if the
trade-off is worth it.
The payoff is the
low fare. In addition to those $10 tickets, Diffenderffer said the
airline's average fare would be about half the industry average
before Skybus entered the market. The airline thinks its highest
fare for now will be about $330, but Diffenderffer said Skybus was
not setting a cap or holding that out as a guarantee.
Skybus' ultralow
fares will come at a cost to customers.
One is that the
fare will cover only the most basic service: transporting the
customer from point A to point B.
For example,
passengers will have to pay for every checked bag, for flight
status alerts and for all in-flight food, snacks and beverages,
including bottled water. Passengers will not be allowed to bring
their own food or beverages onboard, and they won't get much leg
room or any in-flight entertainment.
Skybus has no call
center or customer service phone number; all bookings and other
customer requests and inquiries are taken via the carrier's Web
site at www.skybus.com.
Also, some of its
airports might be a bit farther from the traveler's home or
destination. Some are more than 60 miles from primary airports.
Skybus is using secondary airports in many cases because they're
less congested and less costly. There are some reports that these
airports gave the carrier price breaks.
In addition, Skybus
will have passengers entering and exiting aircraft from stairs
rather than jet bridges, which it said not only would save money
but would help limit the aircraft's time on the ground between
flights to 25 minutes or less.
This fee-based
model has been tested to some extent in the U.S. market by Air
Canada and by niche players such as Spirit and Allegiant. On June
20, Spirit will start charging passengers $1 for juice, soda,
coffee and tea and up to $10 apiece for the first two checked bags.
Allegiant flies to Las Vegas, Orlando and Tampa from smaller cities
and charges for beverages, assigned seats and checked
bags.
Skybus, however,
will be the biggest test yet.
"
Customers will have to pay $5 apiece for their first two checked
bags (and $50 for a third). They'll be able to carry on one bag and
a personal item such as a purse or laptop.
" Passengers will not be permitted
to bring their own food and drink onboard, and will have to pay $2
for nonalcoholic beverages, $5 for most alcoholic beverages, $2 to
$4 for snacks and candy and $8 to $10 for meals.
" Customers will have to pay for
in-flight pillows and blankets, which they will get to keep. As of
April 25, the airline had not decided how much to charge for those
items.
" Skybus has no assigned seats, but
customers can pay $10 for priority boarding.
" Customers who want flight status
sent automatically to their cell phone, e-mail account or pager
will pay $2 per alert.
" Skybus, like many airlines, also
will charge a change fee. Customers will have to pay $40 per
segment, plus the fare difference, if any.
" Larger customers will have to pay
for an extra seat if they are unable to lower their seat's armrest,
cannot sit comfortably with the armrest down or "compromise any
portion of the seats next to them."
Even smaller
passengers won't be getting a lot of room. Skybus is putting 144
seats on its first A319 aircraft, more than any U.S. carrier except
Spirit, and 156 on the A319s it is buying, which will be more than
any other airline. Its seats will offer 30 inches of pitch, which
is at the low end of the industry's current range for leg
room.
In addition, Skybus
offers no in-flight entertainment, but will sell Sudoku puzzles
onboard.
Diffenderffer said
he was convinced that customers were willing to accept less leg
room and pay the extra charges as long as the fares were low
enough.
Anthony Tangorra,
CEO of the Latitude Transport Advisory consultancy in New York,
agreed. Tangorra has been talking for years about the potential for
ultralow-fare carriers in the U.S.
"There is no market
in the world that has higher fares than the U.S. for coach travel,"
he said. "There's enough of the U.S. population that would be
willing to [pay for extras] to save dollars on the fare to allow
Skybus to be successful."
But where
Diffenderffer and Tangorra part company is on the question of
whether Columbus is the right market in which to test it. It is a
sizeable market -- a population of 1.7 million people in its
metropolitan area, according to the latest Census Bureau figures --
but Tangorra argues there's too much existing competition, which is
keeping Skybus out of major markets such as New York and
Atlanta.
Skybus will begin
service May 22 on its new, leased A319 aircraft with nonstops from
Columbus to Los Angeles (Burbank Airport); Portsmouth, N.H.; and
Kansas City, Mo. Skybus is promoting the Portsmouth service for
travelers going to Boston, about 44 miles away.
Service will begin
May 23 to Richmond, Va. On May 29 Skybus will add service to Fort
Lauderdale; Greensboro/Winston-Salem, N.C.; and Bellingham, Wash.,
77 miles from Seattle and 31 miles from Vancouver.
Skybus said it
would begin flights on June 12 to Oakland (Calif.)
Airport.
Diffenderffer
acknowledged the competition but said he was not concerned because
he believed his airline's low fares would stimulate a lot more
travel. He admitted avoiding some big markets due to competition,
but said he believed there were plenty of other markets -- 25
identified by Skybus out of Columbus alone -- to keep the airline
busy as it builds to 70 aircraft within the next five
years.
To
contact reporter Andrew Compart, send e-mail to [email protected].
Get
More!
For more details on this article, see "In the Hot Seat: Bill Diffenderffer."