No easy road to independence

It’s gone. Independence Air, an experiment in low-fares that either was brave or foolhardy, is no more. The carrier, once known as Atlantic Coast, makes its last flight Thursday night after less than two year as a regional jet discounter in the bargain-hungry Northeast.

Its sad story raises some familiar questions, most universally this: can I do the job better than my boss?

The concept of Independence grew for nearly five years, starting when the airline was operating as Atlantic Coast Airlines. For nearly 14 of its 15 years, Atlantic Coast had operated as a regional carrier for United Airlines and later Delta Air Lines, but by the summer of 2000, United was cancelling thousands of flights when United’s pilots ran a slow down as part of a labour contract dispute.

Independence chief executive Kerry Skeen, angered that his airline’s fortunes were tied so closely to United’s, began looking for ways to break away. After United went into Chapter 11 reorganisation, it said it would lower the per-flight fees it paid its regional partners. So Skeen declared independence.

He saw his fleet type as his strength, while most observers saw a flaw in the fleet: 87 Canadair 50-seat RJs that it had used in its Express feeder days. Skeen told Airline Business that he could overcome the higher per seat costs of an RJ operation with lower distribution costs, and higher staff productivity. Maybe.

But fuel costs began their dizzying rise just as Independence launched – flying directly into a vicious competitive response. During the early planning stages, fuel was at about $30 a barrel, rising to the $40 range by the time the airline launched in June 2004. And by mid-2005, it was as high as $70 a barrel.

Meanwhile, United fought back, matching or undercutting the already low Independence fares and using its loyalty plans as a targeted weapon. So Skeen added Airbuses, but by mid-2005 it was too late. Skeen began looking for a buyer, but his deep commitment to being independent had already led him to rebuff a bid by Mesa and made bidders wary of his “For Sale” sign.

The inevitable bankruptcy in November was followed by an intensified search for buyers, and United actually expressed interest though it would not specify what it wanted. By New Year the shutdown talk was intense, and now is a reality.

It is expected that interest will emerge in the airline’s Washington Dulles gate leases, especially in its newly completed terminal area there, and the question now is: will United take the gates or will JetBlue and/or AirTran use them to boost their limited Dulles operations?

If United moves to pick up the slack Independence leaves at Dulles, it still leaves a question: could it do a better job than the predecessor?

Listen to Americas Editor David Field comment on the demise of Independence on US National Public Radio and read our original Kerry Skeen interview of June 2004.

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