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Apr 04, 2008


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that sucks


Friday flight from GSO to FLL was not completed. Lots of angry passengers...


We just picked up my father-in-law and his wife from the airport. They were on what now turns out to be Skybus' last flight from Wilmington, DE to Greensboro. I chided them that this was their fault because they didn't buy anything during the flight.

Looks like we'll be driving them up to Delaware at the end of their stay.


A bigger picture:

3rd one this week

Ruth in NC

I have two teens who flew to Ft Lauderdale for a convention Thursday and now need a way back.

Jim Rosenberg

I'm sorry for the people directly affected. I'd love to read some real reporting on this case. It's not clear to me what role, if any, access to capital had in their decision to shutter. It wasn't mentioned explicitly in the memo. The decision faced by Skybus is a real-world example of why Bernanke keeps cranking the rate down so low. Skybus is supposed to buy cheap money to get them through the night. Why didn't they? Were they dead already? Did the Board actually project an extended downturn in consumer spending and/or rising fuel costs? Is the recession caused by liquidity crisis a special animal more resistant to rate cuts? Did they shop financing, and what did they find? I'm guessing that the barriers to entry and operating costs for airlines are so high that they are the first to go in these cycles. Even so, it would be fascinating to learn the details. Again, sorry for the families affected.

Ed Cone

I wondered the same thing about access to capital, Jim.

This N&R article does a good job in general, but doesn't mention that aspect. It does say Columbus was a bad place to HQ the airline.

WSJ: "Smaller companies have less cash and more exposure to the overserved and keenly price-competitive domestic market. Private-equity investors who own controlling stakes in Aloha and ATA apparently declined to put more money in and those carriers' efforts to find buyers were unsuccessful. It couldn't be learned Saturday whether Skybus also tried to peddle itself. The spokesman said earlier this week that the company hadn't asked its investors for more funding."

RBM's link above, and my previous link to NPR, discuss industry-wide problems.

The early reporting, at least, doesn't seem to point directly to the credit crunch.

cara michele

I've been commiserating with friends who have family in Florida and tickets purchased for a series of future visits. I wasn't even thinking about those who were in the midst of their trips, like Anthony's in-laws and Ruth's children. I'm so sorry to both of you, and especially to Ruth -- I know how I'd feel if my kids were stranded! I'm praying for a good resolution for both of you. And now I'm thinking of all those other people who are similarly affected right now. Not a good thing...

Alan Cone Bulluck

All this proves is that Peter Pan Buslines is still the most reliable (and comfortable!) form of travel.


Shirky on
airline passenger rights:( from Ed's previous Shirky post)

Note: Ed's NPR post includes this:

"If you say, 'In three weeks we're ... going to be shutting down,' who's going to buy a ticket for next week?" Boyd said. "You don't trust them for tomorrow if they say they're going to be gone in three weeks."

I find this disingenuous. I consider it just a way for the corporation to stomp on the customer.


A post with several more links that align with Jim's
operating costs for airlines are so high that they are the first to go in these cycles.
with the global market included.

The author's final assessment:
I think this is called oil demand destruction.


How much of the $57M in incentives have already been spent?

Ed Cone

That's a great question, one I hope the N&R will pursue.

The short answer would seem to be: a relatively small fraction of that big number.

As the article you link makes clear, most of the money was to be spent only if the airline met specific targets, none of which it had come close to approaching: The second phase of the deal offers Skybus larger, long-term incentives if the airline can bring in new passengers and drastically increase traffic at PTI. It includes:

* A new ground-level Skybus concourse to be built north of the airport's north concourse at a cost of $7.2 million .

* A nearby parking deck with 3,000 new spaces at a cost of $33 million .

* $250,000 in marketing.

* Another $3 million or more from the airport's passenger incentive program.

The state already has offered Skybus up to $4 million in grants if the airline hires 375 workers. Regional groups have thrown in another $1.1 million.

Promised marketing and per-passenger expenditures, too, seem likely to have been limited by the airline's relatively short tenure here.

Also, at least some of the spending (on improvements to existing airport facilities) may be of future value even without Skybus.

It was a sizable bet that went bad, but it was not anything approaching a $57 million loss.


could there be a silver lining in all of this?

Maybe this might just wake up a lot of citizens to the fact that their hard earned tax dollars are going into this ecomomic tax payer funded incentive packages. Now when we talk about the incentive packages given out all over this state we can say I hope the incentives don't turn out like Skybus.

Where is tax hike mike? Nowhere to be found as usual.

Jim Rosenberg

How are things going further on up the supply chain, I wonder?


I have read by at least one source that the 'lear jet' will be next in line to step forward to serve the flying public.

My interest,energy issues, obviously is broader than the Skybus story. Skybus though is a signpost of changes coming to this industry.

Since my personal favorite author on this particular interest, Robert Rapier, has a post on the airline industry I thought I'd pass it along.

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