A Pair of Flying Leaps
Friday, May 4, 2007
The airline industry is littered with the corpses of failed start-ups.
But that doesn't deter Bill Diffenderffer and his fellow executives at Skybus Airlines. They are launching a new airline just as the industry is recovering from a tough downturn that helped force United and Northwest airlines into bankruptcy and contributed to the demise of local low-cost carrier Independence Air.
Diffenderffer concedes that he wondered about the wisdom of starting a no-frills airline when so many carriers were losing money. A former lawyer for long-defunct Eastern Airlines and a vice president at IBM, Diffenderffer said he couldn't resist Skybus's business plan, which is based on the successful approach of low-cost European airline Ryanair. The new airline is expected to start service from its base in Columbus, Ohio, in coming weeks and fly to eight other cities, including Richmond.
Skybus will be joined by another new airline in the market this summer. Virgin America, also brushing aside the history of airline start-ups, plans to begin operations and proposes to eventually serve Washington Dulles International Airport.
Despite the skepticism of some analysts and airline executives, Diffenderffer said he sees opportunity in tapping what he describes as a horde of Midwest residents eager for cheap fares and a willingness to fly to secondary airports. The strategy has helped him raise $160 million in capital, the airline says.
But Diffenderffer says he isn't shaping his battle plan only like a business executive. He also thinks like a samurai.
"The airline industry keeps growing, and the dominant players are essentially weak," said Diffenderffer, 56, author of the book "The Samurai Leader: Winning Business Battles With the Wisdom, Honor and Courage of the Samurai Code."
"Put those things together," he added. "What if you are given $100 million and a blank piece of paper? What would you do differently? That's what we are doing."
Skybus will have a tiny payroll -- mostly pilots, flight attendants and some managers, executives said. It will contract out everything else. The carrier has no customer service agents or even a number for passengers to call with questions; passengers must book their tickets online.
The airline will sell advertising on the sides of its planes and inside the cabin to boost revenue. If you want to check a bag or get a soda, get out your wallet. Like Southwest, it will have no assigned seats. For an additional $10 you can board the plane before anyone else.
The planes will have no in-flight entertainment, which can be expensive to keep up. "Bring a book," Diffenderffer said.
To generate buzz, Skybus is offering 10 seats on each plane for $10 each. The rest of its fares will be about 50 percent lower than the competition, Diffenderffer said.