
This is the first of two commentaries for April 11th/13th 2008. The second can be found here.
"Skybus Leaves. So, Too Should PTI Executives"
Late last Friday, Skybus announced it was folding its tent, and most
everyone seemed surprised.
Let me say at the outset that I despise people who say, “I told you so”.
Normally that kind of proclamation is anything but constructive, and serves
only to boost the ego of the teller. So forgive me when I state the obvious.
I told you so about Skybus. I even told you why Skybus was a bad deal for
PTI. I even suggested other marketing strategies that PTI could have followed
that would have been more productive. Therefore, while I derive no pleasure
from the demise of Skybus (more job losses are nothing to be happy about),
I defend my right to gloat, because my criticisms were both accurate and
constructive.
Let’s review. Last Fall, the PTI Authority met in secret with Skybus and
offered the discount air carrier $ 57 million dollars worth of incentives to
locate a hub in Greensboro. The package included: $33 million for a covered
parking garage; $7.2 million to build a new Skybus concourse; $3 million to r
epair ticket counters for Skybus; $ 1 million for new gates; $5 million for
passenger development incentives; and $300,000 to market and advertise
Skybus services.
Skybus reportedly threatened PTI that it would locate the new hub in
Virginia if these incentives were not offered. I warned then that the Old
Dominion’s slogan had changed from “Virginia is for Lovers”, to “Virginia is for
Leverage”. That’s because Dell pulled the same flim-flam on us when it conned
North Carolina out of $300 million dollars, while Virginia had secretly only
offered the computer giant one tenth of the perks.
In my YESWeekly column of November 2, 2007, and on my Triad Today TV
commentary, I warned that the Skybus deal was seriously flawed for a number of
reasons. For one thing it was stupid for PTI to put all of its eggs into one
basket, let alone one small basket. Instead, the airport authority should have
developed a creative marketing package aimed at increasing passenger count
among the major airlines.
Second, if PTI was determined to get in bed with a $10 per seat hooker like
Skybus, it should have scaled down the financial arrangement. While we
pledged $57 million worth of incentives, Miami Dade airport authority spent a
mere $680,000 in landing fee waivers to six major carriers in order to generate
more passengers and increased revenues.
Third, PTI proclaimed that having Skybus here would lower air fares of the
majors. For some unknown reason, the mainstream media bought into that
ridiculous theory. In my earlier column I also cited a new study by
TravelCounsellors.com which reported that business passengers in Great Britain
refused to switch to a discount airline. Anyone knows that the majors make a fortune
off of business flyers and could care less about how many $10 seats Skybus
sells. And we knew that business travelers were not going to give up comfort for
cheap seats. Therefore, the big airlines had no reason to lower their fares
or quake at the sight of Skybus for fear of losing their cash cow customers.
And so now, five months later, Skybus is filing for bankruptcy, blaming
rising fuel costs for their undoing. Again, the media is buying into this bilge.
If Skybus had no idea fuel costs would affect future flights, than how is
it that my travel agent and the folks at United and U.S. Air advised me back
in December that I needed to lock-in my reservations then for May because fuel
costs were rising, and so would ticket prices.
And what about the Skybus executives that PTI put its faith in? Shouldn’t
they have been aware of the same trends that my agent predicted? Shouldn’t
they have allowed for such future developments in their business plan before
disrupting the lives of hundreds of people who are now jobless, and conning us
out of $57 million in perks?
PTI authority executives like Henry Isaacson and Ted Johnson knew that
Skybus Chairman Bill Diffenderffer was an author by trade and had no experience in
airline operations. Still, they trusted in his judgement. Had they asked
me, an author by trade, I could have told PTI folks that writers don’t
necessarily make good airline managers. Of course, in retrospect, I could have run
Skybus a lot better than did Dollar Bill.
Now, unbelievably, PTI executives are still hopeful that they can attract
another low cost carrier to save the day. But that hope will be dashed by two
factors. First, as alluded to earlier, attracting a discount carrier is not
the way to turn PTI around. And second, Skybus has left a bad taste in the
mouths of prospective passengers and employees, neither group who is likely
to be suckered again.
Isaacson, Johnson, and company should have heeded the old adage: “If
something sounds too good to be true, then it probably is”.
Skybus promised it would create 375 new jobs and invest $350 million here in
the Triad. But if Skybus had such a great business model, why did it say it
couldn’t locate here without first extorting $57 million dollars out of the
region? That scam is as old as the hills, and was played on numerous small,
economically strapped towns by sleazy developers back in the 1980’s. Yet
PTI fell for it.
Skybus is the eighth low cost carrier to fail at PTI, and that should tell
you what the problem is. Fool me once, shame on you, fool me eight times,
shame on me.
Sleazy discount airline executives aren’t to blame for PTI’s dilemma, PTI
is to blame. That’s why Isaacson and Johnson must be replaced. They are both
fine, ethical men, who take people at their word. But in today’s world of
unethical predators , we need new leadership at PTI that will be aggressive
and creative in their thinking, yet cautious in their business relationships.
Skybus has fallen from the sky as I predicted. Now it’s up to PTI
to stay in the air by keeping its head out of the clouds.
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