Money Problems Force Independence Air to Halt Flights

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Independence Air will stop flying on Thursday because of continued financial challenges. The company filed for bankruptcy in November. Renee Montagne talks with David Field, Americas Editor for Airline Business magazine.

RENEE MONTAGNE, host:

Independence Air will stop flying on Thursday because of continued financial challenges. That airline also filed for bankruptcy last November. We return now to analyst David Field you just heard commenting on Northwest Airlines.

Hello.

Mr. DAVID FIELD (US Editor, Airline Business): Good morning.

MONTAGNE: Now you were in this very studio two summers ago talking about the launch of Independence Air. What happened? Why did it fail?

Mr. FIELD: No one anticipated it. No one, particularly the people at Independence, anticipated the volatile response of others, the competitive response of airlines like United which had been a partner of Independence before it declared independence. The response of other low-fare carriers that matched it and undercut it even on fares on which Independence was losing money and no one at that time back in 2004 realized how much fuel was going to go up. So Independence was caught in a vise. People were undercutting it. It couldn't make money even at low fuel prices. When fuel went up, its fate was sealed.

MONTAGNE: And will other airlines honor Independence Air tickets? You know, what about refunds, frequent-flier miles, everything that the consumer wants to know?

Mr. FIELD: Frequent flier-miles are probably gone forever unless there's a special in-the-mail offer from another airline. Other airlines by law have to honor an Independence ticket if they have room. It's basically on a standby basis. You have to spend $50 for the processing fee and you have to do it within 60 days. That shouldn't be a great problem. It's the people who invested a lot of time in Independence to build up frequent-flier points. They're gone.

MONTAGNE: And the employees of Independence Air? Will they be picked up by other airlines?

Mr. FIELD: A lot of the pilots have already left to join JetBlue which is probably going to pick up a lot of the Independence slack here at Washington Dulles. Despite what we just heard at Northwest, mechanics are very much in demand, and they will probably be able to find jobs, if not at other airlines, at some of the maintenance shops, the outsourcing shops that do work for airlines. Flight attendants? That's another question. Service people? That's another question. I think given the fact that 2006 may be a better year for the airlines than 2005, I think a lot of these folks will find new homes.

MONTAGNE: Well, the question, of course, when any airline goes out of business and sometimes even into bankruptcy, but in this case, out of business is: What does this do to the industry?

Mr. FIELD: Well, I hate to say it but it's good for the industry. One of the things that industry observers have wanted for the last couple of years is fewer seats out there chasing dollars, less capacity. Even though Independence was small, taking it out of the system helps to reduce capacity and taking out the Independence wild card factor. These guys were offering really crazy fares which are good for you and me but they're not good for the rest of the airline industry. If you make people think you can fly from here to California for $29, you're not doing anything with a long-term service.

MONTAGNE: Thanks very much for joining us again.

Mr. FIELD: It's a pleasure.

MONTAGNE: David Field is America's editor for Airline Business magazine.

This is MORNING EDITION from NPR News. I'm Renee Montagne.

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