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Old 09-28-2005, 12:49 AM   #1  
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Default Independence Air not looking good

Independence Air Slashes Flights, May Seek Bankruptcy Protection

By Dudley Price, The News & Observer, Raleigh, N.C.

Sep. 28--Independence Air, the low-fare carrier that landed with great fanfare at Raleigh-Durham International Airport a year ago but has struggled ever since, is eliminating a third of its flights and prompting speculation the airline will soon seek bankruptcy protection.

The carrier had made RDU one of its top destinations -- along with much-bigger cities of Newark, Boston, Chicago and Atlanta -- by offering 14 daily flights to its hub of Dulles, Va. But when the latest reduction is completed, Independence will have just three daily departures from RDU.

"Independence Air is soon to be Nowhere Air," said Colorado-based aviation consultant Michael Boyd. "They're losing their shirt; their plan doesn't work. They should have changed it in the first 30 days out."

Independence has been slicing its RDU schedule since last year. The latest cut from the four daily departures that it now offers is part of a systemwide reduction of daily departures from 350 to 230, said spokesman Rick DeLisi.

The airline wants to shift some flights from its fleet of 50-seat regional jets to its 12 larger Airbus A319 planes, which seat 132 passengers and are more economical to operate. "We have continued to reduce regional jets as a method of reducing fuel consumption and lowering the overall cost of the operation," DeLisi said.

Even more cuts may be on the way. Independence began operations last year with 87 regional jets, but now flies only 58 and "will operate considerably fewer going forward," DeLisi said.

He declined to say where more cuts might be made, but the carrier said it is eliminating service entirely between Dulles and Louisville, Indianapolis, Cleveland, New York-JFK and Stewart International in Newburgh, N.Y.

Also, once-daily fights between Dulles and Los Angeles, San Diego, San Francisco and Seattle will be phased out by Dec.1.

The cutbacks contrast sharply with high hopes when the carrier began flights just over a year ago.

Once a commuter affiliate for United and Delta, Independence was the first new airline at RDU in two years when it opened for business in June 2004. Its arrival intensified competition for United Airlines and others and offered passengers inexpensive connections between Washington and Northeast and Midwest cities.

RDU was a favorite destination for the new carrier, which for years had carried heavy passenger traffic under the United Express banner between technology companies in Research Triangle Park and Northern Virginia.

The new carrier also was closely watched by the aviation industry, because it was the first airline to exclusively use 50-seat jets, which are more expensive to operate than most larger aircraft, while selling one-way tickets for as low as $39.

But Independence Air has been battered by high fuel costs and competition, particularly from United, which also has a hub at Dulles.

The airline hasn't made a profit since it was started. It warned in November 2004 that it might have to file for bankruptcy protection.

During the second quarter, Independence's parent company, FLYi, reported a loss of $98.5 million. In the past year, share prices dropped from $4.04 to a low of 26 cents on Tuesday.

But Mark Seagle, owner of two Triangle Carlson Wagonlit travel agencies, said the low fares and service are popular with passengers.

"They were economical and a lot have flown them," Seagle said.

Raymond Neidl, an airline analyst for Calyon Securities, said Independence could seek bankruptcy protection in a matter of days.

"They've got (high) fuel costs, a model that doesn't work," Neidl said, and the company is "desperately trying to figure out how to keep their nose above the water."

-----

To see more of The News & Observer, or to subscribe to the newspaper, go to http://www.newsobserver.com.

Copyright (c) 2005, The News & Observer, Raleigh, N.C.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail [email protected].

Published: 2005/09/28 00:00:18 CDT

Rednova 2004
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Old 09-28-2005, 01:51 AM   #2  
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Wishing all the pilots at Indy Air the best.

That said, I wonder what the future has in store for high operating cost RJ's as the legacy carriers pare-down their costs? I wouldn't be surprised if many of the per departure contracts were also shed as it becomes more affordable for the majors to fly their own segments.

What would happen to RJ's with a higher CASM and no legacy dance partner?
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Old 09-28-2005, 01:16 PM   #3  
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I have always wonder where were the economics of flying small RJ at the cost of 15c/seat/mile versus the 737 at 9 or 10c or even less. I understood it on small, underserved point to point were you could charge a lot , but anywhere else?????
i guess airline management just wanted to have low paid pilots no matter what the cost was. ( either that or they are retarded.................or both).
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Old 09-29-2005, 02:15 AM   #4  
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I'll vote for retarded. It's a pity that it has come to this. Many have been saying what you just said for a long time. We just couldn't understand why airline management wanted to use these planes on routes that were previously flown by DC-9s and 737s ( full ). Many stations lost big cargo contracts because the RJ couldn't carry any cargo. Then there were the bone headed decisions to replace the RJ for flights into Myrtle Beach. Ever try to put fifty golf bags in the back of an RJ . They had to fly the bags to Charleston and pay a transportation company to deliver each bag at more than the original ticket cost Stupid, stupid, stupid.

I've got many friends at Indy Air, as they are all old WestAir buds. I really hoped that they could pull off the transformation and I really applauded their management for giving UAL the finger. Unfortunately all they have proven are that the operating economics of the RJ are flawed.

The retarded managers of the majors never understood what made the regionals profitable in recent years, so they kept giving more flying to them. It is only the fee for departure arrangement that they operate under which makes them profitable. As the regionals get bigger and bigger this will become unsustainable. The major partners will have cannibalized themselves and will be unable to afford the fee for departure arrangement. They will look to sell their wholly owned RJ subsidiaries or they will reduce their fee arrangements.

The end of the big RJ providers or, go it alone RJ operators will come. The only thing that can prevent it is if they start operating the more economical E series jets, like the EMB-170, EMB-190, etc. That is where the major pilots must make a stand, ala AWA/USAirways. That flying belongs to the majors or pilots in States will forever have to work for sub-standard wages.

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Old 09-29-2005, 04:39 AM   #5  
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Well said Typhoon. As a footnote, I just heard the rumor that AWA/US had procured 100 of the E190's and all 100 of them are going to Republic. I heard it second hand from a UsAir guy but know if its true. Anyone have knowledge of this? My hats off to all the Indy guys. We had a ton of you in our last interview class, and I hope all of them get the call.
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