Airline Falls Out - Independence

There's got to be a real cost to running an airline. With Northwest, United, Delta in bankruptcy, and with the frequent collapses of the predatory non-traditional airlines, it's clear that the "market" hasn't found what it is.

Maybe the business model here is for executive-investors to borrow a bunch of money, or sell a bunch of stock. The "entrepreneurs" pocket their money up front. They lease airplanes, lease unused gates at airports, contract with a maintenance firm and a baggage handling firm [notice the uniforms?], hire some pilots from the pool of displaced pilots, flight attendents and some ticket people. They run for a while, until the debt payments get so high they can't pay for fuel and salaries, then they go bankrupt. The entrepreneur pockets their upfront, collects fees for admnistering the bankrupt entity.

When it's over, the planes, pilots, flight attendents go back into the pool, the maintenance company looks for a new customer.

Meanwhile, the "traditional" carriers stay in bankruptcy. Under the old system, the FAA set the fares and allocated the routes for stable operations. Now, the bankruptcy court divides assets between workers and lenders.

It remains to be seen how this affects air fares to NY, BOS and DC

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Jan 2, 10:41 AM EST

Independence Air to discontinue flights

CHANTILLY, Va. (AP) -- FLYi Inc., parent of low-fare airline Independence Air, said Monday it will discontinue flights after Thursday evening because of its continued financial challenges.

The company had warned last week that it would cease operating Jan. 7 if it was unable to find a major investor or buyer.

FLYi, which filed for bankruptcy protection in November, said it is now seeking bankruptcy court approval to automatically refund customers with reservations for flights scheduled to depart beyond Thursday at 7 p.m.

"While we've been clear in reminding everyone that this was a possibility, we remained optimistic that there would be a way to avoid reaching this juncture," Independence Air Chairman and Chief Executive Kerry Skeen said. "To date there has not been a firm offer put forward that meets the financial criteria necessary to continue operations as is."

Advertisement

Independence Air began service in June 2004 and currently offers more than 200 daily departures to 37 destinations.