Grounded
A week of failure for Skybus and other carriers indicates just how tough times are for airlines
Passengers are left scrambling for ultracheap transportation after Skybus Airlines Inc. filed for Chapter 11 bankruptcy protection yesterday.
Skybus's Chapter 11 filing comes 10 months after it began offering low-cost, bare-bones service from small airports such as Portsmouth International Airport in New Hampshire, about 50 miles from Boston. Skybus abruptly halted flights Saturday, becoming the fifth small airline last week to disclose it would cease operations.
Skybus follows bankrupt Aloha Airlines, ATA Airlines, and regional carrier Skyway Airlines, which all shut down last week. And small charter carrier Champion Air last week said it plans to pull the plug on passenger service by the summer.
The failures highlight turbulent times for an industry squeezed by rising fuel prices, increasing competition, and safety concerns - and leave fewer options for travelers already complaining about worsened performance.
Passenger gripes rose 60 percent last year compared to 2006, according to the annual Airline Quality Ratings study that was released yesterday by researchers at the Wichita State University and University of Nebraska at Omaha's Aviation Institute. The analysis of the 16 largest US airlines also showed they mishandled more bags, denied boarding to more passengers, and landed more flights late in 2007 - earning the industry its lowest score since the ratings started 18 years ago.
"I don't see any way this is going to get better," said researcher Dean Headley, citing airlines' high fuel costs, cutbacks on seat capacity, hiring freezes, and unprofitable operations. "Everything's working against it."
Skybus made a splash when it began flying last May by offering at least 10 seats per plane for $10 each and, on average, pricing seats at half as much as the competition. It helped keep fares low by forgoing customer call centers, turning its fuel-efficient Airbus A319 jets into flying billboards, flying out of small airports, and charging for extras such as beverages, blankets, pillows, and checked luggage.
Other airlines and some analysts initially scoffed at the business model, even though it was based on that of successful European discounter Ryanair.
But now some legacy carriers seem to be taking cues from Skybus. In the past two months, UAL Corp.'s United Airlines Inc., US Airways Group, Delta Air Lines Inc., and Continental Airlines Inc. have added a $25 fee for most customers who check in a second bag to offset fuel costs without raising fares after oil reached a record high of more than $100 a barrel.
"The industry is migrating more and more to a model where customers pay only for the services that they use," Scott Kirby, president of US Airways, said soon after the carrier changed its luggage policy.
But he predicted neither US Airways nor the other big carriers would "go to the extremes" that Skybus went to, such as "flying to airports that people don't want to go to."
Skybus's out-of-the-way airports - and low fares - were a boon to some travelers. From Portsmouth, Skybus offered six daily departures to four locations - Columbus, Ohio; Greensboro, N.C.; and Punta Gorda and St. Augustine in Florida - and was slated to start service to New Windsor, N.Y., on June 1. During the first three months of this year, Skybus flew 42,000 passengers out of Portsmouth - "the most success we've had at our airport" since it was converted from an Air Force base in 1992, said airport manager Bill Hopper.
Molly Willis of Newfields, N.H., snagged a $10 one-way ticket from Portsmouth to Columbus to visit her sister in Westerville, Ohio, in January. But the 42-year-old mother said once Skybus's ultralow fares were snapped up, the rest of the fares weren't such good deals.
"You could get better deals on other airlines," Willis said, a price-sensitive passenger. "I would have flown out of Logan or Manchester on a different flight," Willis said
Still, she said she will miss Skybus. So will her sister, Carla Simmons, who had Skybus tickets to New Hampshire for July. Now, 41-year-old Simmons will drive to spend the week there.
Skybus's failure also saddled about 50 employees with expensive trips home.
Skybus requested in its bankruptcy filing to set aside as much as $50,000 to reimburse employees - mainly flight crews - working "significant distances from their homes" when the carrier shut down.
Material from Bloomberg News was used in this report. Nicole C. Wong can be reached at nwong@globe.com.
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