PTI Execs Should Follow Skybus
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 about Skybus. I 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 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 repair 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, while Virginia had secretly only offered the computer giant one tenth of the perks.
In my YES! Weekly column of Nov. 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 airfares 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 that 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 US 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 in whom PTI put its faith? Shouldn’t they have been aware of the same trends that my travel 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 big-shots 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 the 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, and neither group 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 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 1980s. 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.
Jim Longworth is the host of “Triad Today,” airing on Fridays at 6:30 a.m. on ABC 45 (cable channel 7) and Sundays at 10 p.m. on WMYV (cable channel 15).