US airline goes out of business

BELLY-UP: The bankrupt Independence Air was able to hobble through the holiday season, but said on Monday that it would be canceling all flights starting tomorrow

AP , CHANTILLY, VIRGINIA

Wed, Jan 04, 2006 - Page 12

Low fares, convenience and customer service made Independence Air popular with travelers, but not even a loyal customer base could keep the airline from falling victim to rising fuel prices and competition from other discount carriers.

After making it through the busy holiday season, the bankrupt airline announced on Monday that it will go out of business less than 19 months after its first takeoff, canceling all departures after 7pm tomorrow.

It was not immediately clear how many people had tickets, which the airline said it would continue selling through tomorrow. On Monday afternoon -- hours after the announcement -- flights could still be purchased on its Web site.

Independence Air's hub at Washington Dulles International Airport was busy on Monday. More than a dozen clerks were checking in streams of passengers.

"We've flown them quite a bit. They had a lot of flight options and good prices," said Chris Turpin, 37, who also gave high marks to the friendly staff.

"I've never been made angry by this airline," said Adrian Burns, 25, as he waited to check in for a flight to Columbus, Ohio.

Tomorrow will be last day of work for most of the 2,700 employees, though about 180 will remain to close out the carrier's affairs.

"We knew there was a possibility this would happen, but I'll just hope it works out for the best," said a ticket agent who did not want to be identified.

"A lot of people have described the current economic conditions in the industry as the worst ever in history, and that's certainly proved to be the case in our situation," said Rick DeLisi, a spokesman for Independence Air.

The airline filed for bankruptcy protection in November. Parent company FLYi Inc. tried in vain to find a major investor or buyer.

"There has not been a firm offer put forward that meets the financial criteria necessary to continue operations," Kerry Skeen, Independence Air's chairman and chief executive officer, said in a statement on Monday.

Last week, the carrier reportedly sent letters to its unionized pilots, flight attendants and mechanics, warning of the looming shutdown.

Passengers with roundtrip tickets are being contacted to see if they could return before the shutdown. Independence Air will ask a bankruptcy court to give refunds to those who cannot, as well as to people who booked flights for Friday and beyond. There will be no refunds for vouchers or free tickets.

Other US airlines operating on the same routes as Independence Air are required to offer standby seats for US$50 each way to passengers holding unrefunded tickets, according to a message posted on the Independence Air Web site. The requirement is part of a federal law passed in November, 2001, to protect airline passengers following the Sept. 11 terrorist attacks. Passengers must make their requests to the carriers within 60 days after Independence Air halts its service.

US Airways announced Monday that it would also offer the US$50 standby tickets from its hub at Ronald Reagan Washington National Airport to passengers flying to Independence Air destinations.

At Dulles, Independence Air vied with discount carriers JetBlue Airways Corp, AirTran Holdings Inc and UAL Corp's Ted. It also faced major competition from Southwest Airlines Co, which flies out of Baltimore-Washington International Thurgood Marshall Airport.

The company was formerly known as Atlantic Coast Airlines. It operated as a contract carrier for United Airlines and Delta Air Lines Inc, but when United sought to renegotiate its contract with Atlantic Coast at lower rates, Atlantic Coast executives decided they had a better future as an independent carrier.

After a year of planning, flights began with great fanfare at Dulles on June 16, 2004. A water cannon salute greeted the first outbound plane on what was then a schedule of 39 departures. The first flight, to Atlanta, was full.

Independence Air expanded to fly to most states on the East Coast and major cities on the West Coast. In recent months, it was forced to drop several routes.