High fuel costs have claimed one more budget U.S. airline this week as Skybus airlines shut down today. A look at the reasons why and what your options are.

Last week, Hawaii’s Aloha Airlines went bankrupt. Then earlier this week, it was ATA. Now word comes that low cost airline Skybus is the latest to cease flying.

The Details on the Demise of Skybus

It was only ten months ago that Skybus first arrived on the scene, offering no-frills flights within the U.S. with seats as low as $10 on each flight. It seemed as though it was a great idea initially – after all, who doesn’t like cheap flights?

But as all flights had to route via the airline’s hub in Columbus, Ohio, and the airline charged a fee for everything from checked baggage to the normal complimentary in-flight beverages, passengers soon found the costs adding up.

Also not helping was the fact that Skybus rarely used main international airports, instead preferring to use nearby regional airports (such as St. Augustine, FL instead of Orlando). This tended to inconvenience passengers who then had to find a way to get that extra distance between the airport and their final destination city on their own. Add to that the fact that there was often only one flight a day, which meant if a connection couldn’t be made the same day in Columbus, the passenger then had to factor in the additional cost of an overnight hotel to their travel budget.

Suddenly it’s not about a cheap flight from point A to B, but a series of hoops to jump through, which in the end, sometimes cost the passenger more than a ticket on another airline. This combination of the nickel-and-dime fees, out of the way airports and inconvenient schedules quickly put the damper on repeat business by many customers.

The final straw, according to the airline, came with the recent rise in fuel costs, which simply could not be covered by the low ticket costs they were charging.

Early Warnings Skybus Was In Trouble

Even though the airline had been in the midst of expanding, adding new hub cities such as Greensboro, N.C., and new destinations, such as Milwaukee, Wisconsin, shortly before Christmas, they also had been quietly reducing or even eliminating service to other cities.

Another warning sign came two weeks ago when CEO Bill Diffenderffer resigned to pursue a book-writing career. It’s never a good thing when the CEO just up and leaves.

Then yesterday (April 4, 2008), a message appeared on the Skybus website stating, “Skybus Airlines will cease all operations effective Saturday, April 5…We deeply regret the impact this decision will have on our employees and their families, customers, vendors, suppliers, airport officials and others in the cities in which we have operated. Our financial condition is such that our Board of Directors felt it had no choice but to cease operations.”

What to Do If You Have a Ticket

Unfortunately, Skybus didn’t operate under codeshare terms with any other airline, so if you are holding a ticket, you are not going to be able to exchange it for a ticket elsewhere.

According to the press statement released by the airline, they plan to issue full refunds for all flights scheduled through September 2, which is the last date they sold tickets for. But since the airline plans to file for Chapter 11 on Monday (April 7, 2008), if you paid by credit card, immediately contact your card company for a refund. It will be up to them as to whether you’ll get your money back.

If you paid by cash, Skybus says there will be a refund, however you may have to file a claim for it against the airline’s Chapter 11 court proceedings, once they are initiated.

As for those that are stranded at a destination right now, don’t forget that in addition to other airlines, check your options with alternate forms of travel, such as Greyhound or Amtrak, or even pooling in with others to rent a car one way. You might find something cheaper to get you home than a last minute plane ticket with another carrier.