LN-MOW
25-03-2008, 10:47
Har lyst til aa dele med dere denne analysen av Skybus som jeg fikk i et nyhetsbrev:
Guest Column: Skybus Flails
This week a PlaneBusiness Banter subscriber, who is a planner/analyst for an airline that is not in competition with Skybus, took the time to write us his thoughts on the future of the start-up airline. As Skybus is not publicly traded, we at PBB don't pay as much attention to the airline as we do others. But we have talked about what limited financial information the airline has released to the DOT so far -- and we have also talked about the airline's basic model of operations and how we simply are not that enthusiastic about it.
Given the increase in the price of fuel -- is this a model that is sustainable? Our subscriber thinks not. But not just because of the rising price of jet fuel.
Skybus is basically an attempt to build a US version of Ryanair, the Irish ultra-low- cost carrier that dominates the low-cost airline sector of Europe.
It’s not an awful idea. Southwest Airlines now pays many of its employees (especially pilots) more than any other US passenger airline, and as great as Southwest is, its business model is showing its age. Further, Ryanair’s costs are significantly better than Southwest's, and its fares certainly are. So fine, a US copy of Ryanair is a reasonable thing to try, since Ryanair has certainly been an epochal success in Europe.
One question, of course, is whether Southwest would ever permit a US Ryanair clone to thrive. Certainly, Southwest potentially has a great deal to lose from an airline with significantly lower costs than itself, and if Skybus ever showed traction it’s not unreasonable Southwest would attempt to kill it.
As matters stand, however, it seems doubtful Southwest need bother, because Skybus seems to be doing a good job by itself.
Incompetent network planning
In particular, Skybus’s network planning strategy seems plain incompetent. The big issue is the major difference between Skybus and Ryanair: the failure of Skybus to place its bases near the largest population centers.
A key part of Ryanair’s eventual success in the mid-1990s came when it made London Stansted airport a base. London is, by far, the biggest and richest metro area in Europe. If you want to fly to alternative airports (as both Ryanair and Skybus do) it’s best to initially do so from a major metro area, because it stands to reason this maximizes the chance of finding enough people who’re willing to go off the beaten path in exchange for a cheap ticket.
This lesson appears to have escaped Skybus. Sure, Skybus took money from Columbus, Ohio interests, which probably means it was bound to make Columbus its first base. Columbus has a metro area of about 1.7 million people, whereas London has a metro area of about 13 million. Apparently, Skybus argues that Columbus is some number of hours drive from some large number of people. So what? London Stansted is within a few hours drive of a gigantic number of people. Any way you slice it, Columbus is puny next to London, so Skybus simply can’t source as many potential customers, a key weakness.
Even so, Skybus’s route selections from Columbus have been bizarre. Given that Columbus is so much smaller than London, the places Skybus flies to from Columbus need to be fairly large and well-known in order to compensate. Unfortunately, even destinations as large as Oakland, CA have not worked from Columbus, and most Skybus routes from Columbus have been significantly more obscure than that.
Well, OK, perhaps Columbus was and is a necessary evil for Skybus, an unavoidable payback for the involvement of Columbus, Ohio investors in the company.
That doesn’t explain why Skybus chose Greensboro, NC as its second base, with a metro population (including Winston-Salem) of about 1.5 million – or double that if you want to include the Raleigh-Durham metro area, which is just down the road (though that has very good low cost service already from Southwest…)
Basically, Greensboro is just a southern version of Columbus, and just as inadequate in size relative to the rock (London) on which Ryanair founded its franchise.
US versions of London
What’s strange is that there are clearly US versions of London. They’re cities like New York, Chicago and Los Angeles, with metro area populations of about 19 million, 9 million and 13 million respectively. We’re talking people in London quantities.
And each of these cities has cheap alternative airports suitable for a Ryanair clone to use, such as Newburgh, Chicago-Gary, Chicago-Rockford, San Bernardino and Riverside (Stansted was a relatively obscure alternative airport for London back in the mid 1990s when Ryanair got serious about its current business model. The success of Ryanair at Stansted was really the making of that airport).
When you think of how critical London was and is as a Ryanair base, Skybus’s focus on relatively obscure cities for its bases seems like a serious error.
Flitting in-and-out of markets
The proof of the pudding is in the eating, and Skybus is suffering from indigestion. As Skybus’s network announcements earlier this week demonstrate, flying from relatively small bases to alternative airports isn’t working. Columbus to Niagara Falls was cancelled before it started, as was a second daily flight from Columbus to Milwaukee (which, it must be said, is a much more reasonable route to try than Columbus to Niagara Falls).
Columbus to Chattanooga was cancelled. Columbus to Newburgh, NY and to Springfield, MA were halved to daily. Greensboro to Gulfport, MS was cancelled. Service from Greensboro to Chicago-Gary, Wilmington, DE, Punta Gorda, FL (near Ft Myers) and Newburgh, NY was halved to daily.
All these cancelled routes/frequencies were only in place for a short while. None of them is a route that any network planner with even a rudimentary understanding of the Ryanair model would choose.
Flitting in-and-out of routes is generally a sign that an airline’s business model isn’t cutting it. (Think Midwest.) Skybus needs to correct its network planning strategy and do it soon. There’s little room for error when oil is $105/barrel and the economy is thought to be heading into a recession. Skybus needs to study Ryanair more closely and understand the importance of having its bases near the biggest population centers in the land.
Otherwise, Southwest has nothing to worry about. At least on this front.
Og naa har ogsaa CEO'en takket foor seg ....
http://www.dispatch.com/live/content/business/stories/2008/03/24/skybus_ceo.html?sid=101
In a statement, C. Robert Kidder, chairman of the Skybus board of directors, acknowledged Diffenderffer’s work in “the creating of Skybus’ unique business model, raising the capital that funded the startup, and the planning leading to Skybus’ first flights in May 2007 and its first year of operation.”
Now that the airline has been launched, “he feels that now is the time for others in the organization to take the lead in moving Skybus forward,” Kidder said in the statement. jadda ...
Guest Column: Skybus Flails
This week a PlaneBusiness Banter subscriber, who is a planner/analyst for an airline that is not in competition with Skybus, took the time to write us his thoughts on the future of the start-up airline. As Skybus is not publicly traded, we at PBB don't pay as much attention to the airline as we do others. But we have talked about what limited financial information the airline has released to the DOT so far -- and we have also talked about the airline's basic model of operations and how we simply are not that enthusiastic about it.
Given the increase in the price of fuel -- is this a model that is sustainable? Our subscriber thinks not. But not just because of the rising price of jet fuel.
Skybus is basically an attempt to build a US version of Ryanair, the Irish ultra-low- cost carrier that dominates the low-cost airline sector of Europe.
It’s not an awful idea. Southwest Airlines now pays many of its employees (especially pilots) more than any other US passenger airline, and as great as Southwest is, its business model is showing its age. Further, Ryanair’s costs are significantly better than Southwest's, and its fares certainly are. So fine, a US copy of Ryanair is a reasonable thing to try, since Ryanair has certainly been an epochal success in Europe.
One question, of course, is whether Southwest would ever permit a US Ryanair clone to thrive. Certainly, Southwest potentially has a great deal to lose from an airline with significantly lower costs than itself, and if Skybus ever showed traction it’s not unreasonable Southwest would attempt to kill it.
As matters stand, however, it seems doubtful Southwest need bother, because Skybus seems to be doing a good job by itself.
Incompetent network planning
In particular, Skybus’s network planning strategy seems plain incompetent. The big issue is the major difference between Skybus and Ryanair: the failure of Skybus to place its bases near the largest population centers.
A key part of Ryanair’s eventual success in the mid-1990s came when it made London Stansted airport a base. London is, by far, the biggest and richest metro area in Europe. If you want to fly to alternative airports (as both Ryanair and Skybus do) it’s best to initially do so from a major metro area, because it stands to reason this maximizes the chance of finding enough people who’re willing to go off the beaten path in exchange for a cheap ticket.
This lesson appears to have escaped Skybus. Sure, Skybus took money from Columbus, Ohio interests, which probably means it was bound to make Columbus its first base. Columbus has a metro area of about 1.7 million people, whereas London has a metro area of about 13 million. Apparently, Skybus argues that Columbus is some number of hours drive from some large number of people. So what? London Stansted is within a few hours drive of a gigantic number of people. Any way you slice it, Columbus is puny next to London, so Skybus simply can’t source as many potential customers, a key weakness.
Even so, Skybus’s route selections from Columbus have been bizarre. Given that Columbus is so much smaller than London, the places Skybus flies to from Columbus need to be fairly large and well-known in order to compensate. Unfortunately, even destinations as large as Oakland, CA have not worked from Columbus, and most Skybus routes from Columbus have been significantly more obscure than that.
Well, OK, perhaps Columbus was and is a necessary evil for Skybus, an unavoidable payback for the involvement of Columbus, Ohio investors in the company.
That doesn’t explain why Skybus chose Greensboro, NC as its second base, with a metro population (including Winston-Salem) of about 1.5 million – or double that if you want to include the Raleigh-Durham metro area, which is just down the road (though that has very good low cost service already from Southwest…)
Basically, Greensboro is just a southern version of Columbus, and just as inadequate in size relative to the rock (London) on which Ryanair founded its franchise.
US versions of London
What’s strange is that there are clearly US versions of London. They’re cities like New York, Chicago and Los Angeles, with metro area populations of about 19 million, 9 million and 13 million respectively. We’re talking people in London quantities.
And each of these cities has cheap alternative airports suitable for a Ryanair clone to use, such as Newburgh, Chicago-Gary, Chicago-Rockford, San Bernardino and Riverside (Stansted was a relatively obscure alternative airport for London back in the mid 1990s when Ryanair got serious about its current business model. The success of Ryanair at Stansted was really the making of that airport).
When you think of how critical London was and is as a Ryanair base, Skybus’s focus on relatively obscure cities for its bases seems like a serious error.
Flitting in-and-out of markets
The proof of the pudding is in the eating, and Skybus is suffering from indigestion. As Skybus’s network announcements earlier this week demonstrate, flying from relatively small bases to alternative airports isn’t working. Columbus to Niagara Falls was cancelled before it started, as was a second daily flight from Columbus to Milwaukee (which, it must be said, is a much more reasonable route to try than Columbus to Niagara Falls).
Columbus to Chattanooga was cancelled. Columbus to Newburgh, NY and to Springfield, MA were halved to daily. Greensboro to Gulfport, MS was cancelled. Service from Greensboro to Chicago-Gary, Wilmington, DE, Punta Gorda, FL (near Ft Myers) and Newburgh, NY was halved to daily.
All these cancelled routes/frequencies were only in place for a short while. None of them is a route that any network planner with even a rudimentary understanding of the Ryanair model would choose.
Flitting in-and-out of routes is generally a sign that an airline’s business model isn’t cutting it. (Think Midwest.) Skybus needs to correct its network planning strategy and do it soon. There’s little room for error when oil is $105/barrel and the economy is thought to be heading into a recession. Skybus needs to study Ryanair more closely and understand the importance of having its bases near the biggest population centers in the land.
Otherwise, Southwest has nothing to worry about. At least on this front.
Og naa har ogsaa CEO'en takket foor seg ....
http://www.dispatch.com/live/content/business/stories/2008/03/24/skybus_ceo.html?sid=101
In a statement, C. Robert Kidder, chairman of the Skybus board of directors, acknowledged Diffenderffer’s work in “the creating of Skybus’ unique business model, raising the capital that funded the startup, and the planning leading to Skybus’ first flights in May 2007 and its first year of operation.”
Now that the airline has been launched, “he feels that now is the time for others in the organization to take the lead in moving Skybus forward,” Kidder said in the statement. jadda ...