Skybus Aims High on Low-Cost Airfare

Skybus, which began flying Tuesday, has some unusual ideas about air travel.

At least 10 seats on every flight are sold for $10. Passengers disembark from two doors, cutting turn times to 25 minutes. Every extra, from a soda to early boarding rights, is sold. Aircraft fly 15 hours a day. The seat backs have no magazine pouches, adding legroom. Nearly every flight serves a secondary airport.

And don't try to call Skybus: It lists no phone number. All passenger transactions are done on the Internet. Internet bookings cost just 35 cents to 40 cents a ticket, Skybus says.

It's unclear whether all this will create a profitable airline at a time when analysts are concerned about declining domestic yields due to a slowing economy and increased capacity. Skybus' home base, Columbus, Ohio, is perhaps too small for an airline with no connecting flights. Additionally, legacy carriers have reduced costs and become adept at competing with low-cost carriers.

The scenario has some experts, including industry consultant Mike Boyd, convinced that the Skybus concept lacks staying power. Boyd compares Skybus to ill-fated Independence Air, which charged below-cost fares until it shut down last year.

"Why don't they just file bankruptcy now and avoid the rush later?" he says, calling its executives "total amateurs."

Yet the company was attractive enough to raise about $160 million from 18 institutional investors, including Fidelity, Morgan Stanley, Tiger Management and various hedge funds.