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Low-Fare Airline Will Shut Down

January 03, 2006|From Associated Press

CHANTILLY, Va. — Independence Air, which won fans with its low fares, announced plans Monday to cease operations.

The carrier said its money troubles would force it to cancel all departures after 7 p.m. Thursday. The end came less than 19 months after the airline's first takeoff.

"Things traditionally in the airline industry slow down drastically in January, so the total number of people that are going to be affected by this is much less than it would have been during the holiday season," said Rick DeLisi, a spokesman for Independence Air.

It was not immediately known how many people had tickets, which DeLisi said the airline would continue selling through Thursday. On Monday afternoon -- hours after the announcement -- flights could still be bought on its website.

"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," DeLisi said.

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

The airline filed for Chapter 11 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, said in a statement Monday.

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

Passengers holding round-trip tickets were being contacted to see whether they could return before the shutdown. Independence Air will ask the U.S. Bankruptcy Court to award refunds to those who cannot do so, as well as to customers who booked flights for Friday and beyond. There will be no refunds for vouchers or free tickets.

Other U.S. airlines operating on the same routes as Independence Air are required to offer standby seats for $50 each way to passengers holding unrefunded tickets, according to a message posted on the Independence Air website. Passengers must make their requests to the carriers within 60 days after Independence Air halts it service.

Independence Air's hub at Washington Dulles International Airport west of Washington was busy 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, of Indian Rocks Beach, Fla.

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.

Independence Air, formerly known as Atlantic Coast Airlines, launched in June 2004. At the time of Monday's announcement, it was serving 37 largely East Coast cities and Las Vegas.

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