Warning off Independence Air

Three and a half weeks ago I declared that Independence Air had some financial breathing room and that it was safe to make bookings through February.

While they’re running some significant sales to promote their new West Coast service which starts in the next few months, I’m not recommending that folks buy those tickets at this point.

I’m taking a wait and see attitude with the carrier, and wouldn’t suggest significant advance bookings at this time.

One of Independence Air’s 73 planes was repo’d on Sunday. And one of the conditions of their cash infusion from GE was that they successfully renegotiate their aircraft leases. The repossession is a pretty good indication that they weren’t completely successful, and I worry about the carrier’s ability to meet the covenants of its GE loan.

United seems to be doing a good job of (coming close to) matching Independence Air’s fares out of Dulles, so on routes and flight times where they compete I would tend to book United. You’ll get Mileage Plus miles to boot, which are far more valuable than iClub points. United has its own problems, but seems more stable than Independence at this point… which is saying something.


Independence has had problems from the start, two of which were:


(1) They were the largest carrier at Dulles before becoming an independent airline. They had the leases on the planes, the terminal, the gates. They didn’t have the luxury of a startup carrier of slowly building business, starting with a few flights and establishing a presence in a city before expanding. They needed to send those planes somewhere. An unknown carrier can’t simply send more than half a dozen flights a day to Lansing and expect to have enough customers to support the service.


(2) They compounded this problem by remaining an unknown airline in the cities they served. While they had a large advertising budget, it’s difficult to enter into consumer consciousness. Most decisions about what airline to fly are made at the time of ticketing. And Independence Air began by selling tickets only by its own website and reservation number. Southwest can more or less get away with this. People know to check with Southwest (although they participate to a limited degree in certain reservation systems). But Independence Air was an unknown. Customers who would have flown them didn’t know it was an option. While participating in broad distribution networks is costly, Independence Air proves that customers not knowing you exist is even costlier.

They’ve taken steps to address their appearing in global distribution systems. And they’re reducing capacity while giving back some planes. Both of those are positive steps. But it may not be enough. Their best bet is to split their fleet, operating both as a regional feeder for a major airline and, with a smaller operation, building an independent carrier.

Developing….

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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