If you are short on time, my absolute favorite way to get to the big apple from Phoenix is JetBlue. You can red eye a 7:30 am arrival and have a cheap, comfortable (For cattle class) ride into the city. Recently I was stuck on the tarmac at JFK. That is not the airport you want to be at in the rain, major delays. In 2002 JetBlue crashed the airline price fixing party and was awarded 75 slots at JFK and turned a sleepy airport into a money maker. Was JFK the right size airport to pull off the impossible? Do yourself a big favor, put down the remote, get a copy of Blue Streak inside Jetblue and prepare for a fantastic crash course in startup reality, vision and guts. Depending on which version you read, JetBlue raised 128-175 Million (The largest raise ever) to launch the airline. Who could ever slow down the brash upstart? The rain, sleet and snow that’s who.
The winter of 2006-07 was not kind to Jetblue or David Neelman (Former CEO and Founder) JFK is a rough place to hub when the weather turns.
In steps Skybus. In May of 2007 Bill Diffenderffer launched a new airline with the largest raise ever, 160 million. Again, depends what article you read. Skybus has everything I like, great name, $10 airfares, catchy marketing, kiosks only, no agents or 800 numbers, all simple self service and a major underscore major, strategic difference that capitalizes on all the missteps of canceled flights last winter for JetBlue. They seem to have taken a few sheets out of the JetBlue play book but added an old school double wing formation in common sense that I believe will score big. Quote from a recent Popular Science interview with the CEO.
“Q: You fly into obscure little airports, such as Pease International in New Hampshire. What's the advantage?
A: Efficiency. If an airplane is not in the air flying in a straight line to its destination, it is costing money. The average taxi time of an airplane at JFK is 30 minutes. The average taxi time at our airports is 10 minutes. If a rainstorm hits JFK for a half hour, you've got a two-hour backup—at ours, you wait out the half hour and then you take off. It's much easier to recover from a bad-weather event when there are never more than five airplanes on the ground.”
Starting an airline in 2007 using 10 year old cost modeling for delay impact pricing would be like using 1935 population and life expectancy models to fund our 2007 retirement plans, who would be dumb enough to do that! Can we actually learn something from the social security bust to pick future winners in aviation? The modeling fork in the road that leads to either the penthouse or the outhouse is only a mouse click away. Imagine all the old airlines that are built on old time delay costing models. Opportunity?
The FAA made a rough calculation of the annual costs of delays can be made by multiplying the number of passengers affected by the additional wait by the value of their time. In 1995, travelers took approximately 390 million trips on U.S. airlines. The Federal Aviation Administration (FAA) and the airlines recommended arriving at the airport thirty minutes earlier than normal because of the security measures implemented in July. The FAA, in its calculations, uses a value-of-time estimate of $48 an hour for business travelers and $42 an hour for non-business travelers in 1995 dollars. This yields an estimate of $9 billion per year in delay costs.
And that is just the opportunity costs for the passengers; imagine the fixed and variable cost for the airlines!
Skybus, just a catchy name or an entirely new way to build an airline? Time makes fools of us all, but I suspect a missed opportunity is waiting to accost the entrepreneur caught sleeping as a huge shift is about to occur. Leave the 160 Million dollar crap shoots to someone else willing to bet the pass line. Big returns with lower risk will reward those in the future who make moves in and around the airports that the Skybus builders will embrace to save time.
One more for the road. The money men at Morgan Stanley held out a 20 million dollar carrot and forced the management of JetBlue to ditch its original name which was “Taxi” just before the IPO. Skybus, must just be another coincidence right?
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