billreid
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Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 2:51 am

Skybus recently adjusted its capacity out of the west coast and increased capacity into Florida. This indicates an overcapacity situation and a misjudgement of several markets.

The planning was schizophrenic with them serving cities such as SAN, FLL and MCI while also serving tertiary cities as well. Now monopoly markets are dying like SAN, and others can't be maintained.

Boyd at the forecasting conference stated that although failure is probable, they will have a short term positive impact on CMH, unfortunately at the investors cost who are losing their shirts.

Boyd group stated that the opportunity for Ryanair and EasyJet in Europe was driven by national borders falling in Europe and creating an environment for success. America is different where these borders fell long before the airplanes were invented and lowcost airlines have been estalished for years.

So how long before they turn to standard airports like RSW. The risk into airports such as PGT is huge with capacity exceeding last years demand into SRQ and RSW combined. Is assuming a 170% regional stimulation reasonable especially given that off season flights to SRQ and RSW and TPA are far from full leaving limited spill into the tertiary airport. And Florida isn't the yield rich market airlines would like it to be.

Please comment on how long they will last. What they will do with 65 birds when the first markets chosen aren't sustainable with just five to seven birds. Are these people idiots or justing having losts of fun lowin the investors money?
Some people don't get it. Business is about making MONEY!
 
Boston92
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 2:53 am

Quoting BillReid (Thread starter):
Will Skybus Adjust It's Model Before Failure?

Who are you (or anyone else) to say that they ever will fail?
"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
 
billreid
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 2:58 am

Quoting Boston92 (Reply 1):
Who are you (or anyone else) to say that they ever will fail?

Someone who understands CASM and RASM and knows when you cancel your launch destinations you are in real deep do-do.
Some people don't get it. Business is about making MONEY!
 
AirframeAS
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 3:09 am

Quoting BillReid (Thread starter):
BillReid

You must be Fred Reid's evil twin!  rotfl 
A Safe Flight Begins With Quality Maintenance On The Ground.
 
Boston92
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 3:13 am

Quoting BillReid (Reply 2):
Someone who understands CASM and RASM and knows when you cancel your launch destinations you are in real deep do-do.

Skybus does not get there profit (if any) from the seats they sell. A lot of their flights make more money by selling stuff on board and checked baggage than the actual price for the ticket.
"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
 
7e72004
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 3:22 am

Just because they pull out of a couple of markets, does not mean they are going to fail. THey pulled out of markets that were way over on the west coast that used too much fuel (which is at new highs at this point). They can make money and will probably stay more "confined" as in the eastern 2/3 of the country. Airlines pull out of markets all of the time. I don't think they will fail.
The next generation of aircraft is just around the corner!
 
Ward86IND
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:03 am

Man do NOT tell me they are about to fail. I just booked round trips in both January and March.
Live your dream.
 
MAH4546
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:10 am

At least if they do fail, people are out only twenty bucks.  Smile
a.
 
FreequentFlier
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:17 am

I think the biggest concern is what Skybus does with the 60! Airbuses they have coming their way. I've been on record as saying both Skybus and VX were stupid ideas and destined to fail (even more so with oil at $88 a barrel). So far I've seen nothing to suggest otherwise. Skybus is already canceling multiple destinations despite a large number of aircraft coming on line and VX is already pulling flights from their schedule because they can't seem to coordinate aircraft deliveries and interior furnishings. For whatever reason, investors become completely irrational when it comes to investments in new airlines. They seem to think you can just put nice pretty airplanes up in the sky and (poof!) print money left and right. As the legacies and LCCs have shown us, its not easy to make money in this industry and it won't be going forward either.
 
crj200faguy
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:21 am

Quoting MAH4546 (Reply 7):
At least if they do fail, people are out only twenty bucks.

lol


Where's Itsnotfinals? They seem to drink the Skybus Kool Aid and I am sure can give us a long winded reason Skybus will do well.

Skybus always provides a good laugh around the crew lounge at my airline.
 
Boston92
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:25 am

Quoting CRJ200FAGuy (Reply 9):
Skybus always provides a good laugh

Why...based on your username, the Skybus employees are getting paid much better than the people at "your" airline. I really do not get what is to laugh about...because they are trying to make money a different way than having a OAK-LAX flight be $500, but a OAK-LAX-SAN flight be $70?
"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
 
crj200faguy
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:30 am

Quoting Boston92 (Reply 10):
Why...based on your username, the Skybus employees are getting paid much better than the people at "your" airline.

Actually, they aren't. I make over double the pay of a Skybus FA and don't tell me they make commission. I make commission too on what I sell. I know of at least 2 pilots that Skybus has contacted and it would be a paycut. We laugh, because it's a concept that won't work in the long run. Plus, they look like UPS drivers.
 
44k
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 6:10 am

Quoting Boston92 (Reply 10):
Why...based on your username, the Skybus employees are getting paid much better than the people at "your" airline.

That is incorrect. Sx has some of the lowest paid airline employees: Quote Wiki:

Quote:
In order to keep wages in line with their projected low fares, flight attendants are only paid $9 per flight hour, and will not be paid a per diem. While this is considerably lower than competing airlines' wages, flight attendants also receive 10% of all sales made during the flight, splitting all commissions evenly among all flight attendants on-board. Starting pilot wages are also below average, starting at $65,000 annually for Captains, and $30,000 for First Officers.The average commercial airline pilot wage is approximately $135,000.


[Edited 2007-10-16 23:13:35]
 
qantas787
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 6:25 am

Quoting MAH4546 (Reply 7):
At least if they do fail, people are out only twenty bucks.

Actually I don't know why everybody says they are so cheap, whenever I check their web site I can't find that much to get excited about. When you take into consideration the lack of frequency and the crappy timings, I think they should be even cheaper. On the upside they might be doing better then we all think. Mind you I am just a long distance bystander.
G'day
 
baw716
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:07 am

The problem with SkyBus is twofold:

1. They attempted to introduce a European product in the USA. I don't think this is a bad idea, per se, it was just done badly. Ryanair and Easyjet make money because they have a low cost base, stage lengths that are for the most part less than two hours with a market segment that is accustom to being crammed into airplanes and having little to no service (the European charter market is a good example). In addition, for the most part they operate from smaller airports not close to their large city destinations. The key reason why it works is that the rail system in Europe allows for carriers such as Ryanair to fly to these airports far from their city destinations and passengers can take trains from nearby into the city center. In the USA, where the stage lengths tend to be longer and schedule and reliability are the two biggest product factors AND absent a ground transport system that works as in Europe, the Ryanair model can't work here...especially given the strength of the network carriers coming out of bankruptcy and low fare carriers like Southwest and jetBlue.

2. They started out with too many aircraft. This was their biggest mistake. If I heard correctly, they have 60 some aircraft? If the idea was to create bargain basement carrier, flying between secondary markets would have been fine if they had stuck with short stage lengths operated with fewer aircraft. Depending upon their success, they would have been able to grow into markets in which that type of product might have had a chance to succeed. Having that many aircraft in their fleet or on order, they would have had to achieve something like 800+ hours of aircraft utilization per day in order to make their aircraft unit cost even fall into the ball park of reality. That would be something on the order of 500+ flights per day?

I personally believe that Skybus is beyond the point of no return. The reason I believe this? At what point can you take a flawed business plan and the losses they have sustained and continue to operate? Short answer: NOT. I hate to be blunt, but Skybus was history even before the first aircraft got off the ground. It's just a shame that a lot of people will suffer as a result of it.

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
Indy
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:15 am

I am probably going to take heat for this but oh well. I think Skybus is bad for U.S. aviation. The standards for domestic service have been lowered far enough as it is. The last thing we need is for someone new to come along and prove the standards can be lowered even more. Joe Cheapskate is going to go for someone like Skybus and then turn around and expect the same level of pricing from others. Unfortunately other airlines aren't smart enough to ignore the wants of Joe Cheapskate and will adjust their product down to his level. I hope the legacies ignore Joe Cheapskate and focus on the traveler that wants the extra service and doesn't mind paying a bit more for it. If you are going to provide Greyhound level service then we might as well take Greyhound.

At least with Greyhound we aren't required to show up a couple hours early and take our shoes off to go through security and aren't kicked off for the shirts we wear.  Smile
Indy = Indianapolis and not Independence Air
 
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LTU932
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:16 am

Quoting BAW716 (Reply 14):
If I heard correctly, they have 60 some aircraft?

Hardly 60. Airfleets shows that SX has currently 5 aircraft, some of those being aircraft that were originally destined for VX, examples being N521VA and N522VA (N522VA has recently been re-registered as N522SX).

http://airfleets.net/flottecie/Skybus.htm
 
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scbriml
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:24 am

Quoting LTU932 (Reply 16):
Hardly 60. Airfleets shows that SX has currently 5 aircraft

I believe they are currently operating 5 leased aircraft. They do, however, have 65 A320 on order directly from Airbus.
Time flies like an arrow. Fruit flies like a banana!
 
baw716
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:26 am

Well, so much for what I read.

I will do a better job of sourcing my material before commenting on it...my apologies to the a.net community.

That said, I still believe their business plan is flawed and on that point, I stand firm.

baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
 
BrianDromey
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 10:14 am

Quoting BillReid (Thread starter):
Please comment on how long they will last. What they will do with 65 birds when the first markets chosen aren't sustainable with just five to seven birds. Are these people idiots or justing having losts of fun lowin the investors money?

I dont see why you guys dont see the SkyBus model working. Its all about the costs. SkyBus should have very low costs. It also gives the impression that it is ALWAYS the cheapest, even this is almost certainly the case. FR in europe also have this perception, and can often be more expensive than the flag carriers, yet people still book with FR and fly to Airports which are not quite their destination.

Quoting CRJ200FAGuy (Reply 11):
We laugh, because it's a concept that won't work in the long run

You might want to tell that to Ryanair and Air Asia, and to a lesser extent the psuedo LCCs like EasyJet, Air Berlin, Frontier, Jet Blue, etc. They seem to be doing exceptionally well on a "concet that wont work". I'll let you in on a little secret. When FR were ordering their first 738s in 1997/8 Boeing took their business model. The worst Boeing could do: Break Even. Now SX has many FR people. I would be betting the model is similar, if not identical.

Quoting BAW716 (Reply 14):
The key reason why it works is that the rail system in Europe allows for carriers such as Ryanair to fly to these airports far from their city destinations and passengers can take trains from nearby into the city center. In the USA, where the stage lengths tend to be longer and schedule and reliability are the two biggest product factors AND absent a ground transport system that works as in Europe,

Maybe you should visit these airorts? While there might be a rial system to some of these airports, the vast majority have no rail connection. FR sells "Terravision" bus tickets on board its flights for connections into the city....

Quoting Indy (Reply 15):
I hope the legacies ignore Joe Cheapskate and focus on the traveler that wants the extra service and doesn't mind paying a bit more for it. If you are going to provide Greyhound level service then we might as well take Greyhound.

And yet, when the likes of VX provide a sort of service aimed at the top end of the sectrum people flame that too. The reality is people DO NOT WANT NEW CARRIERS TO SUCCEED. Because it uts pressure on them and their jobs. Dont pretend otherwise, its OK to be looking ot for your self and your families. Just dont pretend it wont work because they fly to secondary airports (a la WN) or because they fly Airbusses.

Brian.
Next flights: MAN-ORK-LHR(EI)-MAN(BD); MAN-LHR(BD)-ORK (EI); DUB-ZRH-LAX (LX) LAX-YYZ (AC) YYZ-YHZ-LHR(AC)-DUB(BD)
 
Indy
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 10:15 am

I personally think Virgin American is great for aviation. It moves to set the bar higher instead of lower. I'm all for better service.
Indy = Indianapolis and not Independence Air
 
B4REAL
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 11:06 am

Quoting BAW716 (Reply 14):
. They started out with too many aircraft. This was their biggest mistake. If I heard correctly, they have 60 some aircraft?

Yes, they made a large order with Airbus, their initial a/c were leased, but now some of them are arriving that are their own aircraft. But to the point, yes, too big too soon IMHO.
B4REAL, spelled like it sounds
 
BlueElephant
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 11:49 am

I'm Sorry Bill...I've gotta disagree with a number of your statements...If I come off a little harsh, my apologies.

Quoting BillReid (Thread starter):
The planning was schizophrenic with them serving cities such as SAN, FLL and MCI while also serving tertiary cities as well. Now monopoly markets are dying like SAN, and others can't be maintained.

I'm sorry, a quick check on FLL and MCI on Skybus.com shows that they are getting pretty good money on these flights. People are paying up to 300 bucks one way for Flights to FLL and thats the same thing being charged for an ERJ flight nonstop on DL...MCI on the other hand also doing quite well from the prices I can see on Skybus.com $250 dollars one way for today to MCI. And these are relatively Short Haul flights, which make their revenue a lot higher.

SAN I can agree with you, I don't think it's that they can't maintain it. I think it's that with the amount of planes they have right now, their money would be better well spent on shorter haul flights.

Quoting BillReid (Thread starter):
So how long before they turn to standard airports like RSW. The risk into airports such as PGT is huge with capacity exceeding last years demand into SRQ and RSW combined. Is assuming a 170% regional stimulation reasonable especially given that off season flights to SRQ and RSW and TPA are far from full leaving limited spill into the tertiary airport. And Florida isn't the yield rich market airlines would like it to be.

I'm Sorry here again. I'm sure that the Skybus Execs aren't stupid. They must have bargained with PGD like crazy..there has to be a reason...And if you look at Skybus.com, you'll notice that flights for May 2008 are already selling at $45 a ticket. and thats with 3 flights a day. Flights from PSM are also selling at about 100 dollars one way.

And you're saying Florida isn't the yield rich market would like it to be, yah...I can understand that...But is it producing money?...Obviously...otherwise why would airlines want to fly there. There is already a huge presence of other airlines to FL from CMH...WN and DL fly a ton of flights all over FL...and yet Skybus continues to thrive there. Do you really think they would continue to add flights and destinations to FL if they weren't making money?

Quoting BillReid (Thread starter):
Boyd at the forecasting conference stated that although failure is probable, they will have a short term positive impact on CMH,

Well Duh...even a 13 year old boy can go to the CMH website and do simple math and tell you that more people are traveling to and from CMH...

But I don't think he can say the impact is only short term, Even in the long run as long as they continue to offer cheaper fares than their competitors, then prices will slowly come down out of CMH and people will travel more.

Quoting BillReid (Reply 2):
Someone who understands CASM and RASM and knows when you cancel your launch destinations you are in real deep do-do.

Yes and even I understand CASM and RASM but who are you to say what their RASM and CASM is?...Skybus does not release figures, and they're not a public company. Like someone said above....SX makes money from their on board sales as well, not to mention advertising and lower operating costs, and higher utilisation. So i'm sorry, unless you are an Investor in the airline...You can't completely be confident over your knowledge of CASM and RASM and SX.

As far as their Launch Destinations being cancelled?...I think its a good Idea...I think that they realized that it is possible to use their aircrafts better...Hell even I thought that CMH-GSO was the stupidest idea in the world....but obviously it is the most profitable route the airline flies and because it is such a short flight, they can increase their revenue more by getting more out of their airplane.

And who is to say they are cancelling them completely?...I doubt that for sure..I definately remember reading in the dispatch that they will go back to these destinations when they have more aircraft.

Quoting BillReid (Thread starter):
What they will do with 65 birds when the first markets chosen aren't sustainable with just five to seven birds.

Plus...Think about it this way...There's got to be other operational reasons they decided to keep these aircraft on the east coast. Hmmm...Another Focus city perhaps?...Now they can get even more use from newer markets out of their aircraft until more come online.

65 Birds they will have...but that is projected out over years. You make it seem that they are getting 65 planes in a matter of months...and throwing them on Flights Strictly out of CMH.

What ever happened to other focus cities?...Have you thought about that?...international destinations?...Please don't make it sound like they're stupid..because I don't think they are.

I am not saying however that I believe in all their choices for Destinations....CHO...what the hell were they thinking..
I think they could use their aircraft better...

But is their Model failing?...I don't think so....I think they're gearing up to do something interesting....Thats probably why they knocked of BLI and SAN...and a BUR flight...those trips take 3 planes total, and about say...10 block hours a day....each...Imagine what you can do with 27 additional block hours among 3 planes....
 
caspritz78
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 11:59 am

Quoting BrianDromey (Reply 19):
Maybe you should visit these airorts? While there might be a rial system to some of these airports, the vast majority have no rail connection. FR sells "Terravision" bus tickets on board its flights for connections into the city....

That's true most of these airports have no rail connection but Europe is smaller then the US. I think no airport that FR serves is more than 60 minutes away from the targeted city/region. In the US some of the large airports are already 60 minutes away from the city. FR has also the advantage of the first player in the European LCC market and Southwest in US LCC market. Skybus is a typical late follower that tries to get a small share of the LCC market by relying on offering a "me-too" product.
 
MSYtristar
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 12:25 pm

Quoting Indy (Reply 15):
I think Skybus is bad for U.S. aviation

I agree. While consumers in the markets they serve benefit from cheap prices, I for one am not a fan of continuing to bring service down to the lowest common denominator. What's next? Budget Rent-A-Plane flights like the one that appeared in Police Academy 5? The U.S has enough carriers out there who provide the bare minimum of service. No need to bring it down even further. All that being said, if they can make it work, more power to them. But an airline which pays its Flight Attendants a petty $9/hour doesn't get a lot of respect from me.
 
racercoup
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 12:39 pm

I thought there was a global pilot shortage? Where will crews willing to work for such short money come from to man these 60+ aircraft?
 
crj200faguy
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 2:10 pm

Quoting Racercoup (Reply 25):
I thought there was a global pilot shortage? Where will crews willing to work for such short money come from to man these 60+ aircraft?

They've called a friend of mine 5 times to get him to work there. He's politely declined.
 
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knope2001
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 2:18 pm

Be careful about assuming *too* much from the prices listed on the Skybus website.

(a) Prices seem to almost invariably jump up in the couple of days before departure. Could it be a flurry of close-in bookings? Yes, but leisure, off-season travelers are not known to late-book. And Skybus schedules and delivery channels are not designed to attract business travelers...the type which tends to largely book late. Rather, I believe they tighten up their fare buckets in the days prior to departure. Nearly all airlines do this as a part of fundemental yield management, and it is not necessarily a bad thing on Skybus' part. But I do think it may give an incorrect impression that flights are fuller than they are.

(b) The ten-for-$10 on every flight is pretty clearly a thing of the past. Skybus rolled out inventory at 6am yesterday for March/April/May, and early yesterday morning I checked several markets and found no $10 seats at all, or clear patterns on with no $10 seats. Even today...about 28 hours after the inventory was released for sale, the lowest fare on any day in March, April or May from CMH to FLL is $45. Certainly Skybus sold some CMH-FLL tickets on the past 28 hours that these flights have been for sale. But at least 10 on *every* one of these flights? No, there were never any $10 seats on those flights. Also on CMH-FLL, from early April up to Memorial weekend, every Monday/Tuesday/Wednesday is $45 and every Thursday/Friday/Saturday/Sunday is $70 without exception. It seems impossible to think that every single Thr/Fri/Sat/Sun sold enough tickets to be up in the $70 fare bucket, and exactly zero Mon/Tue/Wed flights did and thus are still at $45. Not when these flights have been on sale for less than 30 hours and we're talking dates 6-7 months out after the spring break peak but before school is out.

I think it's pretty clear that Skybus is moving toward a *somewhat* more traditional pricing scheme. Definitely nowhere near traditional major airlines' complicated system, but more sophisticated than what they promoted in their intial startup phase.

I'm not saying this is a bad thing, and it may well benefit their financial performance. But I think it makes it a few notches harder to guess how well flights are filling up.
 
MaverickM11
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:52 pm

Quoting Indy (Reply 20):
I personally think Virgin American is great for aviation. It

My bets are on VX folding before SX, absent any drastic changes to the business model and further cash infusions.
E pur si muove -Galileo
 
EXAAUADL
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 4:56 pm

you mean a business model based on $10 fares and charging for everything else doesnt work??????
 
luv2fly
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 5:41 pm

Quoting EXAAUADL (Reply 29):
you mean a business model based on $10 fares and charging for everything else doesnt work??????

You can not expect people to buy other items and you can not think that it will always happen.
You can cut the irony with a knife
 
typhaerion
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 6:03 pm

I want to comment real quick on some of the above comments about Skybus being bad for the industry. People will pay for what they want. IMO, Southwest hurts the industry more than Skybus ever will, and in all reality it isn't Southwest hurting the industry, it is the industry hurting itself in comparison to WN. If you look at the coach service levels on most of the majors (CO being the obvious exception though I am sure their are others), they are no better than what you get on a WN flight (a supposed low cost carrier). Meaning that although that major is charging more (in some cases, I recognize that this is not universally true but play along with me for a second), they are not giving more. Thus they do not look any more appealing for the extra money.

Now compare that level to Skybus. They offer a unique product, something that you don't normally see, that is decidedly "cheaper" than that of their competitors. They also charge cheaper prices. So you get what you pay for in the difference. Now, I am not saying they are going to fail, in fact their are pulling a certain class of traveler that only cares about what his ticket costs and not what he gets on that plane. And that is not a bad thing. But the product is not as good as what you would pay more for elsewhere. It separates them from the rest of the pack. The same for VX only the inverse as far as the service level.

Now, I work for a competitor, but Gordon Bethune's book on CO's turnaround in the late nineties called From Worst to First makes a great point about this sort of business work. You can, as he says, "make a pizza so cheap no one will eat it." As long as Skybus offers a product people are willing to buy, they will do OK. But if people feel that they can get more values elsewhere, that is where they will spend their money. A 'cost' driven model in this industry doesn't tend to be too effective, as it tends to alienate the most important part of what we do, the passengers. We have to offer a product they are willing to buy.

We shall see in the long run whether they can continue to do this with the uncontrollable costs like fuel and labor increasing like they are.

Just my  twocents , this is an interesting discussion though.
For some, the sky is the limit. For us, it is only the beginning... -- Jack Hunt
 
Boston92
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:12 pm

Quoting 44k (Reply 12):
That is incorrect. Sx has some of the lowest paid airline employees: Quote Wiki:

No. I am correct. SX employees are paid better than the regional airlines I was talking about.
"Why does a slight tax increase cost you $200 and a substantial tax cut save you 30 cents?"
 
757drvr
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:17 pm

Quoting MaverickM11 (Reply 28):

Please explain??????
 
MaverickM11
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:30 pm

Quoting 757drvr (Reply 33):
Please explain??????

Ceteris paribus....
SX=low fares, low cost, little competition
VX=low faers, high cost, 100% competition
E pur si muove -Galileo
 
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ER757
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:48 pm

There's one thing that doesn't make a lot of sense to me, if someone could enlighten me, I'd feel more educated. Skybus says they dropped some west coast cities becuse fuel was too high (they had to burn more fuel to get to/from CMH than on shorter legs). So what I can't figure out is:
1. Since fuel wasn't exactly cheap when they started operating, why the big change now? How could they not have anticipated fuel prices might actually go up over the coming months?
2. Instead of abandoning these cities, why not just charge higher fares? Seems to be like a logical solution.
 
luv2fly
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 7:50 pm

Quoting Typhaerion (Reply 31):
I want to comment real quick on some of the above comments about Skybus being bad for the industry. People will pay for what they want. IMO, Southwest hurts the industry more than Skybus ever will, and in all reality it isn't Southwest hurting the industry, it is the industry hurting itself in comparison to WN. If you look at the coach service levels on most of the majors (CO being the obvious exception though I am sure their are others), they are no better than what you get on a WN flight (a supposed low cost carrier).

For the most part WN delivers a better product than the so called full service major carriers. WN does not charge for its snack pack like the others do.
You can cut the irony with a knife
 
Boeing7E7
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:06 pm

Quoting BillReid (Thread starter):
Skybus recently adjusted its capacity out of the west coast and increased capacity into Florida. This indicates an overcapacity situation and a misjudgement of several markets.

It suggests nothing of the sort other than a flawed business model. One airport they are pulling out of shows 114 pax/flight in August on an A-319 designed to make money with 130 seats and a 70% LF????

Pages 6 and 8:

http://www.san.org/documents/statistics/2007/0807.pdf

Overcapacity? No.

Dumb business plan?

Uh... Yeah.
 
MAH4546
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:08 pm

Quoting MaverickM11 (Reply 34):
Ceteris paribus....
SX=low fares, low cost, little competition
VX=low faers, high cost, 100% competition

Virgin America has some low intro fares, but they really aren't a low-fare airline. Their first class domestic product is arguably the best first class domestic product aside from United's "ps" service. They are more akin to the traditional service model, but with lower costs. I think Virgin America will do very well.
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brilondon
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:16 pm

Quoting Scbriml (Reply 17):
I believe they are currently operating 5 leased aircraft. They do, however, have 65 A320 on order directly from Airbus.

This is what is going to sink them as they are not in the black by any stretch of the imagination and have already ordered 65 aircraft. They are in markets that are not proven, i.e. Columbus and fly to low yield (in terms of $$'s generated for profit) and have tried to expand long before they have the financial reserves to back such expansion. This is what we investors call a bad investment and i would not put any money in any venture that has such large plans without a proven business plan.  banghead  In Canada we have had a parade of airline failures who have gone down this very road (Jetsgo, Nationair, etc.) and I cannot for the life of me think that the airline industry will ever learn from its past failures.  laughing  I just laugh at such situations.
Rush for ever; Yankees all the way!!
 
RSWA330
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:20 pm

Quoting BillReid (Thread starter):
So how long before they turn to standard airports like RSW. The risk into airports such as PGT is huge with capacity exceeding last years demand into SRQ and RSW combined. Is assuming a 170% regional stimulation reasonable especially given that off season flights to SRQ and RSW and TPA are far from full leaving limited spill into the tertiary airport. And Florida isn't the yield rich market airlines would like it to be.

Again, how do you know the capacity that SX is offering to PGD exceeds the demand? The online O&D stats? Thats funny, those stats also say that FNT-RSW has less than 50 daily pax and both FL and NW operate that route daily in season. CMH-RSW has way more demand than FNT. Seriously, SX has a month to go before they begin the PGD routes. Considering they've already added more flights before the first ones even began, I'd have to say that the bookings must be pretty solid. Everybody is so quick to jump the gun when it comes to SX. Let them run their airline. I wonder why people who aren't even affiliated with SX are so eager to watch them fail. I think people see them as a threat. If they were truely convinced that SX would fail, they wouldn't be posting on here. They post on here because they want SX to fail and hearing others agree with them reassures them of this "fact."

Also, you have obviosuly never checked the loads into RSW during the summer. The flights go out very full. Of course the capacity is greatly trimmed but they have great loads nonetheless.

I have an idea, how about we hold off on these "When wil SX fail?" threads and just let the airline do business like they want to. Seriously, I've seen so many of these threads lately that I'm starting to lose track of which one is which.
 
MaverickM11
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:24 pm

Quoting MAH4546 (Reply 38):
but they really aren't a low-fare airline

Not by choice, but by virtue of who they are competing against--I don't think WN, B6, or UA will cede an inch to VX.
E pur si muove -Galileo
 
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ER757
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:30 pm

Quoting RSWA330 (Reply 40):
Everybody is so quick to jump the gun when it comes to SX. Let them run their airline

I don't want to see people hoping for failure of any airline - that just isn't right. The employees all have families to feed, bills to pay etc, so to wish for their downfall is cruel. That having been said, I don't see anything wrong with people asking legitimate questions about a particular business model or airline. Just because one thinks that perhaps Skybis' business model is flawed doesn't necessarily mean they hope it fails.
 
44k
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:31 pm

Quoting Boston92 (Reply 32):
No. I am correct. SX employees are paid better than the regional airlines I was talking about.

I could be wrong, I didn't do extensive research on this matter. Just curious, what airlines are you referring to and could you provide some numerical data? Also, are we talking about the flight deck crew, the FA's or both?
 
UnknownUser
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 8:37 pm

Quoting Boston92 (Reply 32):
SX employees are paid better than the regional airlines I was talking about

No, FAs are paiid better at the regionals. Pilots are paid better than regionals, but WAYYYY less than major carriers flying A320s.
Die Skybus!!! You need to die for the good of the industry!
 
SANFan
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 9:18 pm

I expect we will be seeing a thread like this about every week from now until the Bus is out of business (1Q or 2Q of next year, IMHO.)

In addition to all the "old" problems identified on A.net as to why SX is destined to fail (e.g., unworkable -- in the US -- business model, poor choice and timing of base/hub and destinations, lack of advertising -- except maybe on the campus of OSU? -- etc.) I think we need to remember that there still has been little, if any, reaction by the other cx since SX has done nothing to really threaten any of them yet. IF SX should somehow survive the winter, and next summer, and start some smart expansion (staying away from such "unworkable and unpopular" destinations as most of the west coast!), as soon as they start to be noticeable to other carriers, the competition will start. Allegiant, thru careful station-selection, has so far almost completely avoid head-to-head with the Big Boys. If SX can somehow do the same, well, we'll see. But, If they are around long enough and have the opportunity to finally open up more focus cities, as soon as they step on anyones' toes, watch out!

I also feel that once the really cheap fares aren't offered, as apparently is already happening, the LFs will drop quickly as people realize they can book a real airline for only a bit more so why put up with all the nonsense involved with a flight on the Bus. (It will also be more likely that others might start matching the more reasonable fares.)

I really doubt that SX will make any huge changes to their business plan (the only possible way to keep the airline going) and it may be too late anyway.

bb
 
757drvr
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 9:20 pm

Quoting MaverickM11 (Reply 41):



Quoting MaverickM11 (Reply 41):
Not by choice, but by virtue of who they are competing against--I don't think WN, B6, or UA will cede an inch to VX.

I have to agree with MAH. VX is trying to fill a gap that exists between the "no frills" carriers and the "legacy" carriers. Don't forget all the opposition to VX by WN, UA, AA, CO and DL. Obviously VX is a concern to those at the top of these airlines. VX has been getting excellent reviews and the loads are much better than originally anticipated. Many people, including myself, blew off EOS and MAXjet. But both those carriers seem to be on to something. People will pay for better service and amenities when the price is right. Give VX a chance. Many people thought WN would fail too!
 
RSWA330
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 9:34 pm

Quoting ER757 (Reply 42):
I don't want to see people hoping for failure of any airline - that just isn't right. The employees all have families to feed, bills to pay etc, so to wish for their downfall is cruel. That having been said, I don't see anything wrong with people asking legitimate questions about a particular business model or airline. Just because one thinks that perhaps Skybis' business model is flawed doesn't necessarily mean they hope it fails.

Yes but there are plenty of threads already started about SX where these individuals can ask these questions. Besides, many of these "questions" have been asked before. I think that most peoples' "questions" are simply round-about ways of bashing Skybus. I am by no means a Skybus fan. In fact, I probably will never fly them as I have no need to go to Ohio or New Hampshire. Like you said though, I would like to see SX succeed because I hate to see people lose their jobs. Also, I have no problem with genuine questions being asked but it seems that when it comes to SX, the same questions get asked over and over.

On a totally different note, I have a question that I don't think has been asked yet. Does anyone know why SX didn't choose FMY? The only thing I could think of is the noise. I assume the runway is long enough seeing as how the airport used to see 727's land there on a regular basis. They are already in the process of building new taxiways and constructing a brand new terminal. Not to mention that FMY is closer to the beaches than RSW even.
 
Boston92
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 9:36 pm

Quoting 44k (Reply 43):



Quoting UnknownUser (Reply 44):

FA's get paid $10 per hour plus 10% of the sales, rounding out to be between $14,000 and $20,000 a year. Starting salary for OO is $15,750.

Skywest pays their FO's $19 per hour. Skybus pays their FO's $32 per hour. Skywest's first year captains get paid about $55 per hour while Skybus pays their first year's $68 per hour.

Skywest pays the average captain $70 per hour while Skybus pays $117 per hour.

www.airlinepilotcentral.com

[Edited 2007-10-17 14:37:54]
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MAH4546
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RE: Will Skybus Adjust It's Model Before Failure?

Wed Oct 17, 2007 9:37 pm

Quoting MaverickM11 (Reply 41):
Not by choice, but by virtue of who they are competing against--I don't think WN, B6, or UA will cede an inch to VX.

They don't have to. Customers will make the switch. I know that once Virgin America is on the MIA-LAX route, my allegiance to AA on the route is gone. I can't tell you how many frequent fliers I know here in LA and back in NYC that have switched to Virgin America after their first flight. I have yet to hear a bad review. The reviews are more glowing than those I remember when jetBlue first came in 2000. I'll be trying them out in two weeks on a trip to NYC. I can't wait.
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