Independence Air had an unusual route to its life as an independent. The airline began life in late 1989 as Atlantic Coast Airlines. The airline provided regional service for mainline carriers before transitioning to operating as an independent carrier. As an independent carrier, Independence attempted to bring low fares to Dulles, an airport dominated by United. However numerous factors lead to their demise.
Atlantic Coast Airlines began operations by providing feeder service to future rival, United, at their Dulles and O’Hare hubs using Jetstream 32 and 41, DeHavilland DHC-8, Embraer 120s and CRJ 200’s. Beginning in 1999, ACA began operating for Delta Connection as well as United Express. Their operations for Delta Connections were based at Cincinnati, Boston, and LaGuardia. The fleet used for the Delta Connection operations were completely different from the United Express fleet. The Delta Connection fleet consisted of Fairchild Dornier 328’s.
Although the Delta operations became important for ACA they only accounted for 20% of ACA’s revenue, the remaining 80% coming from United Express operations. However in late 2002 United Airlines entered bankruptcy protection. Management hired a consulting firm to help them renegotiate the contracts with all their regional affiliates. To make them more appealing to United, ACA began a significant cost reduction program. However when United offered them a renegotiated contract in 2003, ACA believed it would limit their growth as a carrier.
With the rejection of the renegotiated contract, Atlantic Coast announced plans to begin independent operations as Independence Air. During this transition period for the airline, Mesa Air Group, owners of regional airline Mesa Air, attempted a hostile takeover of the airline due to their strong cash position. The takeover was meant with heavy resistance from ACA’s employees. The employees started a grassroots campaign to oppose the takeover. With such heavy resistance, Mesa backed out of their takeover attempt, and ACA proceeded with plans for independent operations.
On November 13th, 2003 ACA official announced plans to begin low-cost operations as Independence Air. Regional operations for United and Delta began to wind down as independent operations began June 16th, 2004. United Express flights ended on August 4th, 2004 while Delta Connection flights ended on November 2nd, 2004.
From the beginning, Independence was unique as they used 50-seat regional aircraft for their flights. The airline was based out of their former United Express hub of Dulles. They are credited with both lowering fares to the United-dominated airport and bringing in nearly 1 million new passengers to the airport in their first year. Before their first flight, the airline signed a deal with the Washington Redskins to become the official airline of the football team for 3 years.
Soon after beginning operations Independence began operating the Airbus A319 to help increase passenger capacity and to help expand westward. However their fleet was a hodgepodge of regional turboprops and jetliners and the Airbus A319. This was later cited as a primary cause of the airlines failure. Independence brought humor to the aviation industry by having celebrities record the preflight safety announcement rather then the flight attendants perform the announcement. The airline also brought on comedian Dave George as “the Flyi Guy”, a resident comedian for the airline. The airline also bought 20 pickup trucks, painted in the Independence livery and installed a mock jet tail in the bed of the truck. These “Jet Trucks” were used at promotional events for the airline and the airline also allowed 10 employees to drive trucks around for personal use to help promote the airline.
The airline struggled early on in their independent operation. Former partner United began to aggressively counter Independence operations at Dulles. United leveraged fliers in the D.C. market with their loyalty to the United MileagePlus program. They offered miles bonuses to D.C. fliers that included a round the world ticket in business class on the Star Alliance for members who flew 48 segments from the D.C. area airports. United also matched the low fares that Independence offered.
In February 2005, less than a year after operations began, one of their aircraft was repossessed after missing a lease payment. At the same time the airline also returned more than 20 regional aircraft when the airline canceled their lease. The struggles continued for the airline when later in the year three more aircraft were either sold or repossessed and by November the airlines holding group FLYi inc. declared bankruptcy. Initially it was hoped that a buyer could be found to keep the airline afloat. Richard Branson and United, as well as the Mesa Air group were all interested in the airline, however no deal could be struck with any of the three groups. On January 2nd, 2006 the airline announced that the last day of operations would be January 5th at 7:26pm. The airline lasted 18 months and carried 8 million passengers in that time.
The main reason given by Independence management for the closure was the declining economy made it difficult for a low-cost airline to succeed. However, the vigorous pressure that United pressed on the airline and the poor fleet mix also helped to bring the airline to an end. The airline was also criticized for expanding to rapidly. After bankruptcy Northwest Airlines purchased Independence Air’s operating certificate for $2 million to start a new regional airline Compass Airlines, which is still in operations today serving American Eagle and Delta Connection. This completes the circle of the ACA’s operating certificate, from regional to mainline back to regional.
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