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Whither Skybus?

Skybus CEO Bill Diffenderffer was all smiles and unbridled optimism when we met for a video interview only a few months ago.

Now.he's gone.

The author of "the Sumarai CEO has stepped down amid turbulent times for the fledgling discount air carrier.

High oil prices are wreaking havoc for all air carriers. But for especially for Skybus they couldn't have come at a worse time.

I still think the Skybus formula is sound: no frills, no extras, bare-bones expectations for bare-bones prices. Second-tier airports that may have been off the beaten path but were less crowded and chaotic than the usual suspects.

Diffenderffer essentially said to us: We promise very basic but important deliverables:
A very good price. Friendly people. And a clean, well-maintained aircraft that gets you where you're going on time. You want extras, you get to pay for them. But you have a choice.

Of course, when we threw worst-case scenarios his way, oil prices did come up.

But the airline seemed to be a solid gamble for PTI Airport to stake a good deal of its competitive future on.

Now we'll have to see.

More ominous news for PTI as I type this entry: Another discount carrier, Allegiant Air, announced today that it will end its scheduled service from Greensboro to Orlando and Tampa Bay. The flights will end after May 31.


Comments (7)

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Andrew Brod said:

Allen, I too thought the Skybus/Allegiant formula was the right fit for PTI. People talk about the manufacturing jobs we've lost in this area, but we've also lost a lot of headquarters jobs, and one of the best predictors of a strong airport is a large pool of executives, sales people, etc. to fill those aircraft. Greensboro is much more of a middle-class town than those other N.C. cities to which we usually compare ourselves, and that's why I figured that the bargain-airline approach would work.

Why it's faltering is a bit of a puzzle. Sure, fuel prices are high, but those can be passed on to travelers (though that makes it hard to commit to a set fare, e.g. $10). Perhaps the recent news items are just blips, and the bargain approach will ultimately be quite successful at PTI. I hope so.

E.C. Huey [TypeKey Profile Page] said:

It's not just HQ jobs, professor. It's communication and PR jobs, it's telecom jobs, it's education jobs...a strong airport relates to a strong economy. A weak one, well...you fill in the blank. This area needs a jumpstart...badly! I've been out of work nine months, I'm starting to look at jobs in the Triangle and commuting.

brian444 [TypeKey Profile Page] said:

Andrew: an idea for a column. Has any city experimented with a "Start-up-boro" kind of model? Something like: "We're here for small businesses. For 100 businesses per year, we'll fund $10,000 plus loans for another 10K if you employ at least 2 people, pay them X, and show potential for expansion. Business taxes waived for 2 years" (numbers, criteria for illustrative purposes only). With Greensboro's good location, decent higher education, and good transportation, that seems to me a potentially viable idea, even if the success rate is low.

Andrew Brod said:

E.C. Huey: Yes, in fact it is basically HQ-type jobs. "Education jobs" (by which I assume you mean jobs in schools and colleges) are NOT the ones I'm talking about. We have plenty of those jobs and yet we're struggling to support a major-league airport. Not every job requires travel. Of course a strong economy overall is a necessary condition for a strong airport, but my point was that it's not sufficient. The types of jobs we have are also important in determining what kind of airport we have, which routes are served, which airlines fly out of here, etc.

brian444: Your idea isn't a bad one, though it wouldn't necessarily help the airport (perhaps we're off that topic now). As a more general business-development strategy, it couldn't help but attract some new small businesses. However... (and there's always a "however," isn't there?), because fewer and fewer of the Triad's employers are big companies, there's greater pressure on us to tax small businesses. The changes in our economy are making it harder for us to pay for our schools, prisons, etc., a point I made in this column:

https://web.uncg.edu/bae/documents/cber/article1bGX5JFx44.pdf

Business taxes have always taken some of the pressure off of the sales and property taxes paid by households, and we'd want to think long and hard before exempting so many businesses from taxation. But hey, it might work anyway.

brian444 said:

Andrew, thanks for your response. Just to clarify, I was suggesting tax waivers for new businesses only--a micro version of the perennial incentives argument that tax breaks produce more revenue than a company relocating to Texas. Rather than trying to lure a few big companies, a plan like one I describe would try to generate a more broadly diffused entrepreneurial base--something like microloans in Africa or the entrepreneurial social activism David Brooks wrote about last week.

Allen Johnson said:

Good idea, Brian. We broached a similar notion in a recent editorial on the importance of small business in job creation.

Fredrick Cote said:

Allen, I think the comments by Piedmont Triad Airport Authority executive chairman Ted Johnson in his article with the N-R on March 29 should alarm anyone who flies through PTI.

After Allegiant announced they would cease flights from PTI, Johnson said (quoting from that article): "The Skybus phenomenon is what is going to make or break this thing. I can't see that there will be any great breakdown in low-fare service as long as Skybus can continue to grow and become a healthy airline."

Mr. Johnson's comments came days before the collapse of Skybus, which had been predicted widely in nearly every business publication and national news outlet. The financial model for Skybus was unwieldy from the start. For Mr. Johnson to suggest that such a fragile company was a cornerstone for the airport's growth suggests that either the Authority has a gross misunderstanding of the airline business in general or are not paying attention to traffic patterns of passengers who bypass PTI for Raleigh or Charlotte flights.

Even the suggestion that Allegiant operated as a "charter outfit" as Mr. Johnson said is untrue. Allegiant had a fixed schedule of flights from PTI, just as any other carrier had. Flights were routinely full. However, getting luggage loaded on the flights at PTI took an unusually long time, and it appeared that PTI took little interest in helping Allegiant resolve delays at the airport. Allegiant Air flight attendants made remarks frequently that PTI was utterly disorganized and passengers flying from St Petersburg, Florida to Greensboro need not arrive at PIE on time for their return flight because the plane would be at least an hour late leaving PTI.

So, Greensboro continues to lose direct flights and low-cost carriers. The Authority's plan to build airline traffic by banking on an airline that was on the verge of collapse for months (and finally came to pass) is inexplicable. Meanwhile plans press ahead for turning the airport into a cargo destination, and passengers have no recourse in most cases but to travel 90+ miles away to take a nonstop filght to most major destinations. Gate fares stand as the most expensive for any major airport in the state. When will a review of the Authority's practices and performance happen?

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