Skybus Airlines
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Not to be confused with other uses of the name "Skybus". Skybus Airlines | | IATA
SX | ICAO
SKB | Callsign
SKYBUS | | Founded | 2004 | Commenced operations | May 22, 2007 | Ceased operations | April 5, 2008 | Hubs | Port Columbus International Airport | Secondary hubs | Piedmont Triad International Airport | Fleet size | 12 (63 firm orders at time of shutdown) | Destinations | 17 | Company slogan | Only birds fly cheaper | Headquarters | Columbus, Ohio | Key people | John Weikle
(Founder)
Mike Hodge
(CEO & CFO)
Kenneth L. Gile
(President & COO)
Charlie Clifton
(Board of Managers) | Website | skybus.com |
Skybus Airlines Inc. was a privately held airline based in Columbus, Ohio, United States.[1] It operated as an ultra low-cost carrier modeled after the European airline Ryanair, and aimed to be the least expensive airline in the United States. The business model was heavily reliant on flying routes where other airlines did not have direct flights, as Ryanair did in Europe, thus keeping competition to a minimum, and on flying into secondary airports, rather than heavily trafficked ones. The airline also sold advertising space on the interior and exterior of its aircraft, as well as selling merchandise on board. Skybus applied for operating approval on January 1, 2005,[2] received approval to operate on March 15, 2006,[3] and FAA certification on May 10, 2007.[4] It had been granted a waiver to begin ticket sales on April 24, 2007;[5] Skybus' first passenger flights out of Columbus began on May 22, 2007. Less than a year later, Skybus announced on April 4, 2008, that it would cease operations as of April 5, citing the lagging economy and rising fuel costs as causes.[6]
Contents
* 1 History * 2 Destinations * 3 Business model * 3.1 Fares * 3.2 Additional charges * 3.3 Cost reduction * 3.4 Employee wages * 3.5 Ancillary revenue * 4 Shutdown and bankruptcy * 5 Fleet * 6 Livery and advertising * 7 Criticisms * 8 Startup incentives * 9 Financing * 9.1 Investors * 9.2 Financial performance * 10 References * 11 External links
History

A Skybus Airlines jet at Port Columbus International Airport
Taking advantage of America West Airlines pulling down its Columbus, Ohio, hub, its founder, John Weikle, started raising capital to start the airline in that city. Two years later, the Skybus board hired Bill Diffenderffer as its CEO. Diffenderffer's prior airline experience was as in-house counsel for Eastern Airlines and CEO of Continental Airlines System One Reservations. At the time Skybus began operations it was the most heavily capitalized (funded) airline in US history. Its founder, John Weikle, resigned one day after Skybus began its first passenger flights.[citation needed]
On April 24, 2007, Skybus Airlines announced their initial set of eight destinations, all of which originated from their hub at Port Columbus International Airport in Columbus. At first, Skybus operated a strict point-to-point service, not booking flights between destination cities that were not Columbus, but the company later announced it would begin flying direct flights from its Portsmouth, NH, destination to two locations in Florida. In addition, prices of tickets and details on extra fees were announced the same day.
On May 22, 2007, Skybus Airlines began service to and from Port Columbus International Airport and its initial eight destinations. The airline also announced its intention to rapidly expand. The expansion plans were not envisioned in the original business plan, and, in some instances, it expanded to cities that management did not choose on the basis of computer models used with its initial destination cities (Chattanooga, TN, for example). As part of its business model, Skybus favored smaller, cheaper airports near major markets. To serve Boston, for example, Skybus chose Portsmouth (New Hampshire) International Airport.
Skybus marketed itself as an ultra-low-cost carrier, selling ten seats on each flight for $10. The low fares came with a reduction of frills. There were charges for virtually everything else (see Skybus business model), including checked baggage charges, which were later implemented by other carriers such as Delta, Northwest and United.
On July 24, 2007, the U.S. Department of Transportation granted Skybus the right to fly international flights to Cancún, Mexico and Nassau, Bahamas.[7]
Skybus announced on September 25, 2007, that it would begin daily service from Portsmouth to St. Augustine, as well as Fort Myers, served by the Charlotte County Airport in Punta Gorda in December 2007.[8]
As of October 25, 2007, all press releases and references to the international service were removed from the Skybus website.
The airline made news during the Christmas 2007 holiday travel season, when it encountered problems with two of its seven planes, resulting in the cancellation of about 25% of its scheduled service over a two-day period. As a result of not having de-icing contracts in place in advance of winter 2007–08, Skybus was forced to take significant delays and incurred thousands of dollars in additional de-icing costs.[9] On March 24, 2008, Skybus announced that chief executive Bill Diffenderffer had resigned to return to his previous occupation as an author.[10]
As of November 2008, Skybus's former website, www.skybus.com, was no longer active.

Many creditors of bankrupt Skybus Airlines have gotten the majority of their money back
Skybus Airlines: A short flight
• July 2003: Skybus is incorporated.
• April 20, 2004: John Weikle, who tried but failed to start an airline in Dayton, confirms that he's working to establish Skybus Airlines. Documents filed with the Ohio Division of Securities show the effort has secured $3.5million in initial funding from four unidentified Ohio investors.
• Sept. 21, 2006: Local and state officials offer fledgling Skybus $57 million in support and incentives. Officials say the investment could help create as many as 1,000 jobs within three years while producing an annual economic impact of $600million. The airline is to be based at Port Columbus.
• April 24, 2007: Skybus starts selling tickets and announces that on every flight, the first 10seats will be offered for $10 one-way.
• May 22, 2007: Skybus Airlines begins service. Its first paying passengers are bound for Burbank, Calif. More than 228,000 tickets have been sold as the airline launches service.
• Aug. 22, 2007: Skybus has become Port Columbus' fifth-biggest carrier.
• Nov. 13, 2007: Skybus and a Bank of China division complete a deal for the bank to finance 13 new Airbus jets for Skybus for delivery in 2009 and 2010. They join 65 planes ordered from Airbus in 2006.
• Dec. 25 and 26, 2007: Mechanical problems cancel several Skybus flights, angering passengers. Skybus doesn't have agreements that put passengers on other airlines, so alternative flight arrangements come out of passengers' pockets.
• Feb. 5, 2008: Skybus cancels service to the San Francisco area, leaving one flight to Burbank, Calif., as the only West Coast destination.
• March 24, 2008: Skybus CEO Bill Diffenderffer resigns, replaced by Mike Hodge, the company's chief operating officer. Industry experts say a shake-up might be the airline's best chance for survival in an era of high fuel and labor costs.
• April 4, 2008: Skybus announces it plans to stop flying that night. It files for bankruptcy in its incorporation state of Delaware the following day.
• Nov. 1, 2010: Skybus' bankruptcy is discharged; general unsecured creditors with accepted claims are paid back an average of 91.6 cents on the dollar.
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Even in bankruptcy, Skybus Airlines did things differently.
As the three-year anniversary of the airline's abrupt closing approaches, Skybus is still having an impact on the airline industry.
The deep-discount, no-frills airline made a splash because it charged passengers for almost everything. Look around, and most airlines have gone down a similar path as a way to survive bad economic times.
But the most astounding accomplishment is this: Unsecured creditors have gotten most of their money back, averaging a return of 91.6 cents on the dollar. Secured creditors, such as credit-card firms and fuel companies, were paid in full.
"Wow," said A.C. Strip, a Columbus bankruptcy attorney not connected to the Skybus case, when told how much creditors got back. "Unsecured creditors often get nothing in these cases. I would say the trustee in this case did a superior job."
Of course, it's impossible to argue that everything turned out OK. Hundreds of travelers were left stranded when the airline closed on April 4, 2008, more than 360 Skybus employees in Columbus suddenly found themselves unemployed, and investors such as Morgan Stanley, Huntington and Nationwide lost millions of dollars.
"The board's call to shut down turned out to be a painful but necessary decision," said Bill Diffenderffer, former CEO of Skybus. "People didn't really see it yet, but the recession had started at that point. We certainly saw it in our future bookings."
Skybus left a legacy that, while unpopular with travelers, has been a boon to airlines' financial health, said Barry Barnard, the former Skybus financial officer who served as liquidation trustee for the airline.
"We were really the first U.S. airline to charge for checked bags and food," Barnard said. "Almost everyone does that now."
The idea actually came from Ryanair, the Irish no-frills carrier Skybus was based on in part. U.S. low-cost carriers Spirit Airlines and Allegiant Air were charging some extra fees, but Skybus really got noticed for it, something that aided the concept's acceptance just as oil prices were sending airlines scrambling for new sources of revenue.
Barnard chuckled at how people complained loudly when Skybus started out charging $5 per checked bag. Today, a checked bag on one of the major airlines can easily cost five times that amount.
Skybus was able to satisfy its creditors to a greater degree because of timing, former officials said. In hindsight, they think the board's decision to halt operations when it did was the best business decision that could have been made in the situation.
In court filings in early 2009, airline representatives originally estimated they would pay 76 cents on the dollar to unsecured creditors. Mike Hodge, who moved from being chief operating officer to CEO of Skybus in the final weeks of its life after Diffenderffer stepped down under pressure, said that Skybus' aircraft turned out to be an asset that they were able to capitalize on and would have dropped steeply in value just a few months later.
"They were able to place the aircraft with other airlines fairly easily," Hodge said. Hodge said eleventh-hour attempts were made to raise more money. But Skybus couldn't get the funding to help it ride out all-time-high oil prices and some early misfortunes and mistakes.
The $160 million in startup capital that Skybus bragged about raising in April 2007 turned out to be too small a cushion against the economic climate it would quickly face. That's been a woefully common story in an industry where dozens of startups have come and gone in the years since U.S. airline deregulation. Three other airlines went out of business in the same week Skybus did.
Port Columbus officials were among those jolted by the news that Columbus-based Skybus Airlines was closing. Last year, airport officials received a more pleasant Skybus-related surprise: checks for $400,000 more than they had expected from the carrier's bankruptcy proceedings.
In all, the Columbus Regional Airport Authority says it recovered nearly 92percent of its $4.6million claim against the short-lived airline in bankruptcy court. The Ohio Department of Development got back about 92percent, or $1.05million, of the $1.15million in grant money it gave Skybus during its 10-month lifespan as an operating carrier.
The Ohio Department of Taxation received the entire $105,000 it said it was owed by Skybus; department spokesman Gary Gudmundson said that in Chapter11 proceedings, tax and interest claims take priority over general unsecured claims.
The bankruptcy case was formally discharged in November, after 21/2 years. Payments to attorneys on the case totaled more than $2million. Unsecured creditors across the board that were judged to have valid claims received 91.6percent of what they were owed, Bernard said.

Port Columbus made $10million in additional revenue, including parking fees, concession sales and Skybus lease payments during the carrier's 10months of operation at the airport, said David Whitaker, vice president of business development for the airport authority. So even factoring in the $7.8million the airport authority paid for Skybus-related construction costs at the Port Columbus terminal, the airport came out slightly ahead.
"That's not to say we're happy with what happened, the loss of jobs and the investor dollars," Whitaker said. "But the market responded well, and we saw a surge in traffic."
The majority of the Columbus employees of Skybus ended up getting a payment of roughly $1,500 from the 2009 settlement of a class-action suit alleging Skybus violated Ohio's Workers Adjustment and Retraining Notification act by not giving them sufficient notice of the mass layoff that came with the airline's shutdown.

Diffenderffer and Barnard, who both still live in Columbus, say they still get comments all the time from people who say they miss Skybus.
"I do get negative comments sometimes," Diffenderffer said, acknowledging that there were instances of long delays, cancellations and lack of customer service that angered passengers. "But mostly, people say, 'That was a great airline.'"

Description
The following information was posted on April 4, 2008, on the company's website: "Skybus Airlines will cease all operations effective Saturday, April 5. 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. We deeply regret the impact this decision will have on our employees and their families, customers, vendors, suppliers, airport officials and others in the cities in which we have operated. Our financial condition is such that our Board of Directors felt it had no choice but to cease operations. Passengers holding reservations for Skybus flights scheduled to depart on or after Saturday, April 5, 2008 should contact their credit card companies to arrange to apply for a refund. More information for customers and others will be made available on the Skybus web site (www.skybus.com) as it becomes available. All flights for Friday, April 4 will be completed. Passengers holding reservations on flights for Friday, April 4 should check in for their flight at a Skybus kiosk at the airport instead of the Skybus website."