Independence Air prepares for shutdown
By Sandra Arnoult, ATW Online | Jan. 04, 2006
While some analysts are forecasting a spike in airfares out of Washington Dulles as a result of the shutdown of Independence Air tomorrow, others believe the departure of the carrier formerly known as Atlantic Coast Airlines will cause barely a ripple."There is no vacuum created by the elimination of this airline," analyst Mike Boyd told ATWOnline. "This was clearly excess capacity in terms of need." Boyd said FLYi routes with fares as low as $29 to destinations like Portland, Me., or Charleston, W.Va., will not be missed; "You won't have another carrier rushing in to fill that Charleston route."
Indeed, even other low-fare airlines like AirTran and JetBlue have been highly critical of Independence Air's fare management, which was seen as destroying the growing pricing power of the industry throughout 2005.
Parent company FLYi entered Chapter 11 bankruptcy Nov. 7 (ATWOnline, Nov. 8) with few unmortgaged assets with which to raise financing. Unable to find a buyer or a white knight, it announced Monday that it would be forced to shut down. Thursday will be the last day of work for more than 2,600 employees.
"We continued to hope there would be an offer put forth that would warrant the continued operation of the airline, but none ever materialized," spokesperson Rick DeLisi told this website.
Approximately 180 people will remain to tie up loose ends. DeLisi said the company has appealed to the bankruptcy court to create a package of benefits for workers losing their jobs. It will park 30 CRJ200s and a dozen A319s, all of which are leased, upon completion of the Thursday schedule.
It is a bitter end for Independence Air, which operated successfully as a feeder to United Airlines and Delta Air Lines until 2004, when it rebelled against UA's plans to cut its fee-per-departure rate and decided to rebrand itself as a low-fare carrier. Most analysts doubted it could find a market overnight and few had confidence in an LCC model built on 50-seat regional jets. They were right--FLYi began losing money the day it started operating. "It was a misfire from the beginning and they kept pulling the trigger," Boyd quipped.