BY KEITH BENMAN, Times of Northwest Indiana
kbenman@nwitimes.com
SkyValue airlines soon will soar from Gary using someone else's planes, someone else's flight crews and someone else's reservations center.
With 10 people on its own payroll, the operations of the Fort Lauderdale-based start-up might have some asking the age-old question: Is this any way to run an airline?
"It allows us to go out and get the best in each area," Darrell Richardson, CEO of SkyValue USA, said Monday in talking about the new airline. "When you can fit each piece in the puzzle by picking and choosing, you can get the best."
SkyValue starts flying 11 round-trip flights per week from Gary/Chicago International Airport to five leisure destinations, including Las Vegas and Orlando, on Dec. 15.
Richardson compares the SkyValue business model to those of established U.S. leisure airlines such as Apple Vacations and Vacation Express.
In outsourcing to the max, SkyValue is following a well-established industry practice, according to Roger King, senior analyst for transportation with CreditSights, a provider of independent credit research.
"It's a pretty good business model," King said. "The more you can outsource, the better off you are."
That's because outsourcing helps make lower fares possible, which along with convenience, appear to be SkyValue's two main selling points, King said.
He cautions any company that outsources risks losing control of quality, something that is a "big issue" today with air travelers.
Richardson claims quality is a top priority for SkyValue, starting with the Xtra Airways Boeing 737-800 the airline will use to ferry passengers to leisure destinations such as Las Vegas and Orlando.
"When you look at what SkyValue flies, it matches Delta and American and those airlines," Richardson said.
A start-up airline could not afford the large capital outlays needed to acquire such aircraft. Going with an established provider like Xtra Airways puts everything on more of a pay-as-you-go basis.
Elko, Nev.-based Xtra Airways is first among the contractors SkyValue is relying on to deliver first-rate service. In addition to planes, it will supply mechanics and flight crews. Other contractors are the Vacation Express reservations center, in Atlanta, and the Gary Jet Center, which is providing ticket agents.
SkyValue itself is owned by C-FirstClass, a group of 30 investors who bought SkyValue Ltd., of the United Kingdom, and them formed SkyValue USA to fly out of Gary, according to Richardson.
SkyValue USA's 10 employees are the management, marketing and financial team for the airline, Richardson said. Once you add in all the partners, such as Xtra Airways, SkyValue is comparable to a typical U.S. airline.
SkyValue had booked 10,000 flight reservations at last count, enough to fill the Boeing jet 58 times.
Seats on Las Vegas flights are still available for as little as $84.92 throughout the holiday season, according to a check of SkyValue's online reservations center. A Christmas day flight to Phoenix currently costs $204.25.
In addition to Orlando, Las Vegas and Phoenix, SkyValue will also fly from Gary to Fort Lauderdale and St. Petersburg/Tampa.
Leisure airline players such as Allegiant Air have expanded the market for air travel by offering convenient flights from out-of-the-way markets such as South Bend and Fargo, N.D., King said.
"They have found you can run a flight from a third-tier market to a leisure destination, and there will be enough people that will want to go there that you can fill a plane every now and then," King said.
Travelers can avoid the long drive to airports such as Midway and O'Hare, as well as parking fees, by flying from those smaller airports. Those are advantages SkyValue has been pitching relentlessly since it started taking reservations in October.
"Price is what puts people in an airplane, and service is what brings them back," Richardson said.