Low-fare carrier cites financial restraints
Airline passengers are now left with one less low-fare option.
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Independence Air, the year-and-a-half-old reduced-fare airline based at Dulles International Airport in Washington, D.C., ceased operations Jan. 5, citing financial restraints, pressure from competitors and rising fuel costs.
The airline originally sought Chapter 11 bankruptcy protection in November.
Independence Air operated one gate at T.F. Green Airport in Warwick since August 2004, when it offered eight daily flights. The number of flights decreased throughout 2005, finally settling at three flights daily before the service ended, according to Patti Goldstein, vice president of public affairs and air service marketing for the Rhode Island Airport Corporation.
Valerie Wunder, manager of media for Independence Air, said the airline attempted to contact people on trips that had a return date set after the end of operations to either arrange a flight back before Jan. 5 or begin the refund process through their credit card company.
The bankruptcy protection that Independence Air is seeking would reimburse passengers with tickets for flights after Jan. 5, said Wunder.
According to RIAC, Independence Air passenger numbers at T.F. Green showed a nearly 38-percent decrease in November compared with last year – the third consecutive month of nearly 30-percent decreases in year-over-year total passengers.
A mid-December report from Bloomberg News said that Independence Air was considering cutting service to 170 daily flights from between 210 and 220 and would cut 50 percent of its 2,700 employees Jan. 5. The airline peaked at 600 daily flights, and served more than 8 million customers.
That plan was contingent on obtaining sufficient financial backing to continue the operation, which was never secured, said Wunder.
Independence Air employed 10 workers at T.F. Green, said Wunder.
Bob Mann, president of R.W. Mann & Company Inc., an airline industry analysis and consulting firm in New York, said losing a low-fare option could ultimately drive the average price of airline tickets up, but the possibility does exist that low-fare carriers like Trans Air, JetBlue or Frontier could look to add capacity at Dulles Airport. Passengers with tickets after Jan. 5 will probably have to pay more on a different carrier, he predicted.
Originally operating as Atlantic Coast Airlines, the carrier was a provider for United and Delta airlines in a partnership that was “immune from risk,” said Mann.
In 2004, Atlantic Coast Airlines ended its agreement with United Airlines, citing the risk of impending bankruptcy reorganization at United, and renamed the company Independence Air.
Independence Air continued its partnership with Delta until the end of 2004, when Independence started flying larger planes – about three times as large as the jets that Delta pilots were allowed to fly in the bounds of the contractual relationship, said Mann.
The original business model of flying 50-seat jets was not conducive to a low-fare carrier, because of the high cost per seat that in the end was not profitable, he said.
“Independence Air was ill-prepared for the competitive ramifications of being an at-risk company,” said Mann.
Toward the end of 2005, flight capacity was cut by about 30 percent, he said.
Independence Air’s 2004 annual report cited competition – specifically a 37-percent increase in capacity by United Airlines in markets served by Independence Air – as a principal concern of the company.
