Skybus Founder Will Not Launch West Virginia Airline, Thank God

Skybus founder John Weikle had threatened…er…let the world know that he was raising $3 million to launch a Skybus clone out of Charleston, West Virginia. Without getting into the reasons why that would be flushing $3 million down the ol’ toilet, you’ll be relieved to know that we will not see any stories about the airline shutting down: he has announced he’s returning the $1.9 million he’s raised and not launching at all.

The most amazing thing is that he was able to raise $1.9 million to launch a new airline.  Which goes to show ya, um, something.  I’m sure that goes to show you something.

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  1. I admit I’m not an expert in the industry, but I cannot fathom how one manages to start an airline with $3 million — even out of West Virginia.

  2. It was managment that killed Skybus. The business model is sound.

    John Weikle wants to save Skybus. It is like his baby. Weikle put his enire energy for more than three years to get Skybus off the ground. All the experts that have evaluated his business plan agreed, the low cost model is viable. Ryanair, the airline on which Skybus was modeled by Weikle, is still one of the most profitable airlines in the world. Its near clone Allegiant Air is also doing better than all of the legacy carriers in the US. Allegiant is making money in spite of the fact it pays the highest fuel prices in the industry.

    Weikle wants to save Skybus and 450 jobs. To do this, he had to abandon his efforts in West Virginia and turn his full focus on Skybus. No doubt the West Virginia project would have been a tough sell after SKybus folded and Skybus managment and the board blaming the economy and fuel prices. If that were the case Ryanair should be out of business. Its near clone Allegiant Airlines in the US is making more money than any other US carrier. No it is not the plan that killed Skybus. It was mismanagement.

    The problem for Weikle in starting Skybus was he had all of the passion in the world for his business plan, but did not have the pedigree to convince Wall Street Bankers to invest. That brings us to Bill Diffenderfer. He had the pedigree to bring in the investment, but no operational experience running an airline. His biggest claim to fame was that he had written a book “The Samurai Leader.” And, he was a media darling. He loved being in front of the camera.

    Weikle objected to his hiring because of his lack of experience. But, the Board hired him over Weikle’s objections. Neverthtless, Weikle still had hope it could work since he would still be on the Board and could direct the operations. But Diffenderfer would have none of that. He convinced the Board he needed to be the only one in control. He disliked Weikle’s direction and correction of his many ill conceived pre first flight decisions. The board backed Diffenderfer and pushed Weikle off the board.

    When the Skybus started to fly, the reception by the public was phenomenal. Advance bookings were at a record setting pace. Things looked very good for Skybus in the beginning. Weikle then resigned his position and went off to start another low cost carrier in West Virginia — his native state.

    The Skybus/Ryanair model works with the right management. Skybus directors backed the wrong horse when it pushed Weikle out in favor of Diffenderfer. Diffenderfer had no operational experience and was allowing his ego to overload the airline’s pocketbook. Weikle warned the board that Diffendefer was not person to run his model.

    Unfortunately, Weikle’s predictions came true. Diffenederfer began expanding routes to new cities that were not modeled by the Back Aviation Group. Soon the airline was flying to new cities without letting the original routes to mature. Then in December, the wheels started to come off.

    Poorly trained or overworked ground crews grounded two airplanes (each in a different city) after running into them with the ground equipment. This stranded hundreds of passengers on Christmas Day, and Skybus had no contingency plan to handle it. Next Skybus started dropping routes and announcing even more routes and selling tickets months in advance only to have the flights cancelled before they even started. One City lost two flights before the first flight even took off. Overly aggressive flight scheduling also led to continuing delays. Soon the flying public lost all confidence in Skybus to get them from point A to point B in time or at any time. Advance sales and load factors dropped from near 80% to less than 50% as a result. You could get your fuel for free and lose money with such a drastic decline in load factors.

    And, lets not forget about maintenance costs. Somehow the COO managed to get them into a maintenance agreement on brand new airplanes that exceeded the monthly cost of the brand new planes. It would be like buying a new car and having your monthy repair bill exceeding your monthly payment. This should never have happened, but this is what Diffenderfer and the COO Gile managed to do with Skybus.

    Milbourne says he was surprised to learn Skybus was out of cash. Surprised! He was on the board. It should not have been a surprise to anyone on the board. If it truly was a surprise, where was the Board when Diffenderfer was runnning the airlines into the ground. Now, Milbourne and the board are apparently unwilling to admit they blew it with Diffenderfer.

    Its no surpirse the board could not raise new money. If you have a losing company, you get new players before you ask for more money. Skybus became an operational nightmare under Diffenderfer and the COO Gile. And, they wanted investors to give them more money with the Pilots planning to unionize the next month. Give me a break.

    With a new team (the original team that left when they realized Diffenderfer was taking the company in the wrong direction), Weikle can make it work. At the very least, the Board owes Weikle their full cooperation in his efforts to save Skybus and the 450 people who are now out of work. Its not the model, it was managment that killed Skybus!

  3. onlinetravelreview

    Now THAT is how you write a comment :)

    I agree with you that post-launch management was somewhere between “not strong” and “complete and utter disaster.” It also falls under the category of so many, many failed airlines of poor route choice and unworkable fare structure.

    That said, as I’ve written here before, Skybus is not Ryanair. Putting aside Skybus’ non-Ryanair cost structure, the Columbus base was a non-starter — not large enough to generate point-to-point traffic to its odd amalgam of routes. Allegiant has it right – something like 15% of its revenues from ancillary sales and they only have competition on 8 of 109 routes. Read that again — they have no competition on 92% of their flights. Plus, they fly to tried-and-true leisure destinations.

    So you combine a too-high cost structure with a base in a city too small to handle a base, a route structure that made little sense, poor management and there ya go…a mess.

  4. It was managment that killed Skybus. The business model was sound…..
    I live in Columbus and I flew Skybus three times and had tickets to fly it three more times. And since Skybus came to Columbus Jet Blue left!! So now we have even higher prices for flights.
    I think the Skybus board should stop worrying about their ego’s and give John Weikle and chance to run the airline. I believe he cares about the people and is not one to make a mess of things and then walk away to write a book…..geezz……….what is that all about. And I for one would not read Diffenderfer beacues I don’t think he has any good advise.

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