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A Pair of Flying Leaps
Nationwide chief executive W.G. Jurgensen, left, and Skybus's Bill Diffenderffer walk past a plane that displays how the airline hopes to meet expenses.
(By Tim Revell -- Associated Press)
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To simplify operations, the carrier won't even allow customers departing from its eight other cities to book tickets to anywhere other than Columbus, although executives have said that some passengers have figured out ways to get from, say, Richmond to Boston through Columbus -- if they are willing to spend the night in Ohio. Diffenderffer and other executives defend that plan, saying that the Columbus market is actually massive, with more than 6 million people living within 100 miles of the city.
"People will drive 100 miles to save $100," Diffenderffer said, adding that there are thousands of college students in the Columbus area, home to Ohio State University.
Academics, former executives and analysts point out that the airline is relying heavily on a mid-size market's population. Although Skybus said it selected destinations that have little nonstop service from Columbus, it will be battling two established low-cost rivals -- Southwest and JetBlue -- that serve more destinations with connections.
"I wonder if they can sustain and maintain a cost structure that enables them to compete and make money, particularly if they get Southwest's attention," said Dan Petree, dean of the college of business at Embry-Riddle Aeronautical University in Florida. "It is an extraordinarily difficult and challenging business."
On the opposite end of the low-cost scale is Virgin America, which will be piggybacking on the hip brand of Virgin Atlantic. The airline, seen as an extension of Richard Branson's global business empire, has gotten millions in loan and investment dollars from the billionaire's Virgin Group. It is based in San Francisco and will link to five other cities, including Washington.
It applied to the Department of Transportation in late 2005 to begin service. In December, the department agreed with critics who said the airline was controlled by Branson, a Briton, and other foreigners in violation of U.S. law.
After the lawyers reworked contracts and loan agreements, the department reversed course in March, giving the airline preliminary approval to offer service under certain conditions. Among the remaining issues is whether Virgin America must get rid of its chief executive, whom regulators worried was too close to Branson.
Gareth Edmondson-Jones, an airline spokesman, would not comment on potential routes or the airline's fare structure, saying he must wait to talk until the final approval is granted.
On its Web site, the airline describes planes offering first-class leather seats that provide automated massages. Its coach seats will also be leather. All will have sophisticated in-flight entertainment systems. The cabins will have mood lighting and offer free refreshments in refrigerators stored in the galleys.
Analysts say that Virgin America may have a better chance of surviving than Skybus, if only because Branson wants to expand his brand and has the cash to back up his investment.
"He is in it for the long haul," said Doug Abbey, an analyst with the Velocity Group. "This is a long-term investment for the Virgin brand."
