US: low-fare Independence Air to shut down

Independence Air is the latest casualty in the US airline industry, which has seen multiple bankruptcy filings and brutal attacks on the wages and benefits of airline workers, in many cases under the auspices of bankruptcy courts. Independence is the largest US airline to go out of business since 1991, when Eastern and Midway airlines shut down.

The collapse of the Washington, D.C.-based regional carrier follows on the heels of the September 14, 2005, Chapter 11 bankruptcy filings of major airlines Northwest and Delta. US Airways filed for bankruptcy protection in August 2002; United Airlines’ parent company UAL Corp. filed for bankruptcy in December 2002.

Independence Air formerly operated as Atlantic Coast Airlines, a carrier of United Express, the regional operator of United Airlines. FLYi rejected an offer in 2003 to remain with UAL, the second-largest US air carrier. Instead, in 2004, it formed an independent carrier flooding the market with low-fare, short-distance flights, mostly on 50-seat regional jets, with many seats often empty.

Independence Air has 2,700 employees and has recently operated as many as 200 flights a day—down from a high of 600 flights—from its hub at the Washington Dulles International Airport near the nation’s capital. The airline reported carrying nearly 300,000 passengers in November on its low-cost flights to 37 small and medium-sized cities in the US Northeast and Midwest.

With some ticket prices as low as $29 one-way, Independence forced major airlines such as United, Delta and US Airways to trim their airfares. However, losses incurred from these cut-rate fares, combined with skyrocketing fuel costs, contributed to the company’s economic demise. In the wake of Independence’s collapse, its competitors are expected to raise fares significantly.

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http://www.wsws.org/articles/2006/jan2006/inde-j04.shtml