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Skybus and the Zen of airline development

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Feb 25, 2008

PORTSMOUTH — A Zen master sat by a lake with his student. The master asked the student what he saw. The student replied, "Nothing but a lake."

The master hits the student with his staff, as Zen masters are prone to do when a student gives an incorrect answer, and asked again, "What do you see?" Again, the student is at a loss for an answer and, again, he received a blow from the master's staff.

All of a sudden, a duck that had been submerged emerged to snatch a fish that was swimming just below the lake's surface. The master turns to the student and said, "The duck and the fish were always there."

The moral of this story, which is indicative of a particularly Eastern way of thinking about things, is that, as Skybus CEO Bill Diffenderffer told the standing-room-only crowd at a Greater Portsmouth Chamber of Commerce Breakfast Meeting on Thursday, "Unless you can see the full potential of things, you don't know what is there."

Potential journey

The story of Skybus Airlines, the low-cost air carrier that has rejuvenated Pease International Airport, is really a tale of Diffenderffer's journey toward seeing potential where others see none.

The tale began, the Skybus CEO told the crowd at the Sheraton Harborside Hotel, during a six-month assignment for IBM in Hong Kong in 2003. Diffenderffer said he found a book titled, "Zen and the Art of Perfect Insight," and his attempts to understand that book led him to a new way of thinking.

Skybus, and the unique approach it brings to the airline industry, is the outgrowth of that thought process, he said.

"In Western thinking, we try to define everything on the basis of what our experience has taught us," Diffenderffer said. "Zen thinking is the opposite; it's about learning how to see what's not there — learning to see the opportunities others don't see."

After his stay in Hong Kong and in response to discussion with friends about how those Zen principles could be related to business, Diffenderrfer wrote a book titled, "The Samurai Leader: Winning Business Battles with the Wisdom, Honor and Courage of the Samurai Code." The book sold well, and he said he was thinking that his career would revolve around promoting that book and the principles outlined in it.

That was until some people in Columbus, Ohio, called him about starting up an airline there. Initially, he said, he rejected the offer, but those people were persistent.

"I started seeing things that weren't there," he said of the potential for developing an airline with the goal of flying passengers at half the price charged by most air carriers. "I looked at resources and I looked at where efficiencies could be found."

Efficient economics

Diffenderrfer said he found that the standard airline model of having planes on the ground for hours at "hubs" didn't make economic sense and was, in fact, financially counterproductive.

"An airline only makes money when the airplanes are up in the air flying someone someplace," he said.

He set the goal for his airline of turning around flights in the shortest period of time possible. Here in Portsmouth, the turnaround time is 25 minutes.

That requirement brought the Skybus CEO to the conclusion that his company could not use large airports, like Logan in Boston, O'Hare in Chicago or LaGuardia in New York, because of built-in delays at those locations. The search was on for smaller airports where those quick turnarounds could be accomplished with ease.

That led to the development of a new definition of what constitutes a destination. To Diffenderrfer, he is not flying passengers from Columbus to Portsmouth, he told those a Thursday's forum, he is flying them from Ohio to New England, New England to North Carolina or Ohio, and New England and North Carolina to Florida.

It also led to the decision to fly larger and newer planes instead of older or smaller jets, such as those used by regional airlines.

"What the airlines have done to you is, where they once had 120-seat planes, they now had two 50-seat planes," Diffenderrfer said. "All that does is double the congestion at airports."

The newer planes were necessary because of Skybus' requirement that they be in the air 15 hours a day, versus the 10-12 hours other airlines fly their aircraft.

Diffenderrfer found more efficiencies in other places by seeing the reality of flying clearly, he said. He mentioned his baggage handling as one of those areas.

"To many, our baggage handling seems primitive; it's like we went back to the '50s," he said.

At Skybus' Stewart International Airport location outside New York City, for example, baggage carts pull up to what is essentially a tent outside the terminal where passengers walk up, grab their luggage and head off to a shuttle bus or their rented car. When you take a look at that system, you find that what normally goes on at other airlines' baggage claims is much more time consuming and, ultimately ends the same way, Diffenderrfer contended.

"How everyone else does it is, you get off the plane, go downstairs to the baggage area, find your carousel, wait around with a bunch of other people until you hear the sound you've been waiting for — that honking sound — stare into a small hole and watch the belt move until, hopefully, you see your bags," Diffenderrfer said. "Then you do what we do — you pick up your bag and go on your way.

"It's more primitive, but it's easier," he said.

Sky's the limit

The goal of everything Skybus does is to keep the cost of flying low for the consumer, the CEO said.

"It's as if other airlines don't want you to fly," he said. "If you raise prices and reduce (the number of seats available by limiting the number of flights), you get fewer fliers."

In contrast, Skybus, by keeping prices low, entices those who would not normally fly onto its aircraft.

"On a one-way basis, which is how we figure things, when fares get above $100, people don't fly," Diffenderrfer said. "When they're under $100, people begin to think about it, and when fares get under $50, it's a different ball game."

Skybus is not looking for those who fly regularly, he said. It is looking for those who want to fly.

"What you're seeing (with Skybus) is not like the other guys in a lot of important ways," the CEO said.

He put those present at the Sheraton Haborside Hotel through a little exercise to prove his point.

"How many of you who do things the same way as everyone else make money?" he asked. When no one raised their hands, he asked rhetorically, "Then why do you want me to?"

Diffenderrfer pointed to decisions about how his firm would make its money as another example. Skybus charges for on-board services — including drinks, baggage checking and early boarding — and also gets a kick-back from car rental agencies that set up counters at the small airports its planes fly into.

"People ask what business is Skybus in?" he said. "You look around and see that airlines are losing money, but everybody associated with those airlines make money.

"We want to make money on our Web site and on our on-board sales," he said. "We consider ourselves an e-businesses."

The Skybus CEO thanked everyone present for their support of his airline in the Portsmouth community.

"Truly, the reception Skybus has received in this part of New England has been terrific," he said. "As we do this, we're doing it with you.

"We want you to grow. If you boom, we do," he said.

He also challenged those present to think differently as they make the decisions about how to develop their communities and businesses.

"As you think about what you want to do, think more Zen-like," he urged. "It's not just about what we do in this area, it's about what we can do together."

seacoastonline.com

Skybus and the Zen of airline development
Rich Beauchesne photo



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