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Thursday, October 25, 2007

Flying on the cheap

Skybus has promised to double passenger traffic at the Greensboro, N.C., airport.

Tickets are going fast for Greensboro, N.C.'s, newest discount carrier, Skybus, which is offering one-way airfare for $10 on a limited number of seats.

The airline began taking reservations early Tuesday for flights starting in early 2008 to seven cities from Greensboro's Piedmont-Triad International Airport.

Skybus, which is based in Columbus, Ohio, and began Greensboro operations in May, doesn't serve Roanoke Regional Airport. The Greensboro airport is about a 90-minute drive from the Roanoke Valley.

Within 12 hours of the sale's start, customers snapped up all its $10 tickets for flights to Burbank, Calif., from February to May, said spokesman Bob Tenenbaum. The $10 fares are disappearing on some routes. Although the fares are offered on each flight, only 10 such seats are available at that price. Skybus' aircraft average about 150 seats on each flight, Tenenbaum said.

"It is important to recognize there are only 10 seats at $10," he said. "It's not like we're selling the entire airplane at $10 [a seat]."

Like Allegiant Air, a Las Vegas-based carrier that flies between Roanoke and two Florida destinations, Skybus bases its business model on smaller regional airports outside major destinations. By doing so, it can avoid the congestion found at metropolitan airports and turn around its planes faster once they land. It also charges for add-ons such as baggage and food and beverages on board.

Skybus, however, doesn't market mainly to vacationing passengers. Its daily nonstop service includes airports near such major markets as Los Angeles, Boston and New Orleans. And to keep costs low, Skybus doesn't operate a call center.

The $10 tickets aren't a temporary promotion, either, said the airline. Rather, they are a way to raise eyebrows and direct people to its Web site. "It is a permanent part of our business model," Tenenbaum said. "And frankly, it has attracted a lot of attention."

The $10 rate comes in stark contrast to a holiday season that will see little in the way of discount tickets for major carriers. That's because while demand is up, there are fewer seats to go around and airlines are cutting capacity, said Roanoke Regional spokeswoman Sherry Wallace.

Meanwhile, Greensboro airport officials are hoping that Skybus will stoke more than attention from prospective passengers.

The Greensboro airport has offered up an array of incentives, including covering $300,000 in marketing costs and paying the airline $2.15 for every new passenger it attracts by its new service offerings, said Executive Director Ted Johnson.

The state of North Carolina also pitched in a job-creation grant that could earn the airline $3.98 million over nine years.

In return, the airline has promised to double the passenger traffic at Greensboro from about 1 million a year to 2 million, Johnson said.

At the same time, Skybus' arrival in Greensboro is expected to have minimal effect on pricing in Roanoke because airlines typically view the airports as two different markets, Wallace said.

If the other airlines do feel the need to make competitive adjustments, that could benefit Roanoke in the way of lower fares, Wallace said. But those airlines will likely target the North Carolina airports first, rather than Virginia, she said.

It is also unlikely to affect Allegiant Air's service in Roanoke because the two airlines don't have any overlapping flights out of Roanoke, said Allegiant spokeswoman Tyri Squyres.

The two airlines do overlap in the Greensboro market, where by early 2008 they will both fly nonstop to Fort Lauderdale, Fla. That may cause Allegiant to consider pulling out of the airport, she said. "We don't want to get into the $10 fare business," Squyres said. "If it came down to it, we're going to avoid a fare war."

Even so, the $10 fare is certainly a marketing weapon, say travel agents. Mel Ludovici of Martin Travel in Roanoke said it's common for airlines to apply some discounts to boost interest in certain routes -- then raise those fares after a wave of sales. In fact, it's done with such frequency that the industry's reservation system can have at least 2,000 fare changes in a single day, he said.

But $10 a ticket, Ludovici said, is rather drastic price-cutting.

"It's a giveaway seat to cause activity and all airlines do some form of that," he said. But he said: usually "nothing this radical."

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