Saturday, April 5, 2008

SkyBus Tanks

Late last night, I saw the sad news that SkyBus was ceasing all operations. Today's Columbus Dispatch has a longer story on the end of SkyBus. There is also an article in the Wall Street Journal that puts SkyBus' failure in context with other low-cost airline failures of late. (Namely, MAXjet in December, Aloha going back into Chapter 11 a few weeks ago, and of course ATA ceasing flights on the same day as SkyBus.)

It seems to me that this is not just a Columbus business story but also a Columbus technology story. SkyBus pursued a different model for an airline, not just no-frills a la Southwest, but one that actively and aggressively used technology to reduce operating costs. Famously, there was no call center to handle requests for you; everything was done through its “innovative and user-friendly” Web site. Last October, SkyBus CEO Bill Diffenderffer told attendees of the TechColumbus Tech Leaders Luncheon about the importance of being “transformative.” And what better way to be transformative than to use technology to enable business functions that otherwise wouldn't be possible?

Something seems strange to me, for there to be so much talk about not accepting the status quo and changing the way that business is done and then to hear that the rising cost of jet fuel is to blame for the airline's demise. I simply cannot imagine that the cost of fuel was not something given serious consideration in risk analysis such that there wasn't a plan in place for being able to operate with higher fuel costs. It's not like SkyBus was the only carrier that had to pay for expensive fuel. It also seems to me that if your objective is to be the cheapest and most easy-to-use airline, you need to worry more about relative pricing than absolute pricing unless your model is predicated on people taking flights tha they otherwise would not simply because you're below some absolute threshold where you're down into the disposable cash of your target market.

Was the model really that weak? Is the industry already in a position where cost savings from using technology better and replacing expensive manual processes with automatic ones aren't enough to matter?

Update: At the Cup o Joe at Port Columbus on Sunday morning, they're running a new special, pictured nearby.


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