Farewell Aloha, ATA, Skybus; Welcome to Higher Airfares

In just one week, Aloha, ATA, and Skybus airlines all folded. Aloha’s and ATA’s demise may have been long in the works, but Skybus began operations less than a year ago. Yet similar Euro cheapo carriers easyJet and Ryanair are still flying and still (apparently) profitable. (Upon the launch of Skybus, Dan Garton, executive vice president of marketing at American Airlines, was quoted as saying: “Skybus is very Ryanair-esque.”) Why the difference between Ryanair’s success and the quick exit of Skybus?

Ryanair and easyJet set up shop in one of the most-densely populated parts of the world – the British Isles. The UK has a population of some 60 million, all wanting to get off their crowded island more than occasionally. The Brits are also known to be peripatetic travelers, seeking out one new destination after another (even if they can never speak the language once they get there). So Ryanair and easyJet deliver weekend holiday-makers to hot spots across the continent – planes always full, and passengers charged for everything. (For the record, we’ve flown easyJet and it was very cheap compared to the mainline Euro carriers – such as Air France or BA – and it was fairly convenient and not completely dreadful. We have not been on Ryanair.)

In the U.S., Southwest also tapped a vein at the right time, with reasonably low fares (yet in our experience nowadays, seldom significantly less expensive than the majors), a fun attitude, and minimal amenities (no assigned seating). Nonetheless, they carefully picked their markets, frequently alternative airports in metro areas (Love Field instead of DFW) or good-sized second-tier cities (Albuquerque, Las Vegas). In contrast, Skybus decided to fly to lower-tier markets (Chattanooga, Ft. Lauderdale), or cities that had good service (Boston) just maybe not from places like Greensboro (what were they thinking?). Maybe they were looking at the Euro model (Skybus even painted their planes orange, like easyJet) instead of the Southwest one. From the minute Skybus started less than a year ago, we were skeptical.

Most likely, it’s simply another example of the fact that it’s expensive to run an airline, and you really can’t make a lot of money by giving away your product for pennies. We think this only reinforces our opinion that higher airfares are inevitable (especially for domestic U.S. travel), and will be here to stay.