Upstart Airline Reaches for the Sky

Skybus Unveils Branded Planes

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COLUMBUS, Ohio (AdAge.com) -- Can turning an airplane into a flying billboard at a price tag of $500,000 make tenable the increasingly untenable economics of the airline industry?
Nationwide's deal offers a peek into what could be the next target of ad creep and a salvo to the bleeding balance sheets of many of the nation's struggling airlines, who might one day follow Skybus' lead.
Nationwide's deal offers a peek into what could be the next target of ad creep and a salvo to the bleeding balance sheets of many of the nation's struggling airlines, who might one day follow Skybus' lead.

Nationwide on its side
Upstart airline Skybus, based in Columbus, Ohio, aiming to do just that, has just unveiled its first "branded plane," an Airbus A319 with a Nationwide logo, along with the insurance company's tagline, "Nationwide Is on Your Side," plastered on the exterior. The marketer plans to take its message inside the plane too, on everything from beverage carts to overhead bins.

"We see this as another way to reach our audience in an innovative fashion and in an unexpected environment to make it pop a little more than it might otherwise," said Jim Lyski, the chief marketing officer at Columbus-based Nationwide.

Nationwide's deal offers a peek into what could be the next target of ad creep and a salvo to the bleeding balance sheets of many of the nation's struggling airlines, who might one day follow Skybus' lead.

Half a billion for exclusivity
In Europe, where Dublin's RyanAir and London's EasyJet have sold everything from the outside of planes to tray tables, ad-cluttered airplanes aren't new. But it remains to be seen whether Skybus can persuade major U.S. brands to commit $500,000 for exclusive branding rights on its planes -- especially as an upstart that does not even put its first plane in the air until late May.

Selling the planes as an entire package to a single marketer appears to be a reversal of earlier plans, which included selling individual ads on overhead bins at $40,000 per plane annually and $24,000 for tray tables, according to a business plan and revenue projections filed with the city of Columbus when Skybus successfully sought tax incentives in 2006. The fee buys exclusive rights to a single plane for a year, so different planes with different advertisers may be flying at the same time.

In addition to being the first advertiser on board, Nationwide also is an investor in the airline and "because of that relationship we got a good deal," Mr. Lyski said.

Rock-bottom prices
Skybus' top executives hail from both RyanAir and Southwest, and their plan is to make money on practically everything but the ticket price and be "the lowest price in all markets." The airline recently moved its creative and media-buying duties from Columbus-based Ten United to the Richards Group, Dallas.

With a brand name aimed at equating air flight with the price of a bus ticket -- and the requisite images of Greyhound bus stations -- will consumers balk at an airline selling off its space to the highest bid from the nation's marketer? Or will cheap ticket prices (Skybus plans to offer fares more than 50% lower than the lowest price in all markets) make the ad nuisance bearable?

"The whole framework of Skybus' business plan is to keep costs as low as possible and maximize ancillary revenue as much as possible," said spokesman Bob Tenenbaum, adding: "Selling advertising on the inside and outside increase revenues, which is how you keep fares low."

But when asked whether consumers will reject an environment where they are bombarded with advertising, Mr. Tenebaum noted: "People, when they see Skybus fares will say, 'OK, I get it.'"

Those fares and routes will not be announced until later this month. Skybus plans to have eight planes operating by the end of 2007.

A different audience
Financially speaking, Skybus is off to a good start and has garnered more than $160 million in financing to fund its launch, far more than JetBlue, which launched with $130 million in funding. In interviews with local media, CEO Bill Diffenderffer said investors with big pocketbooks are drawn to Skybus' plan to reach people who don't normally fly because of cost.

Julius Maldutisis, a veteran industry analyst and president of Aviation Dynamics, an aviation consulting firm, based in New York, said despite the seemingly endless turmoil in the industry, there remains a place in the industry for upstarts like Skybus. "The key it to be able to seriously differentiate your product," she said.

Yet Mr. Maldutisis also remains skeptical, pointing to the era following the deregulation of the airline industry as an example of the daunting challenge of creating a brand in the tumultuous industry. More than 200 airlines were launched post deregulation in 1978 yet today fewer than 90 remain in operation.
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