Independence Air Folds Wings

Independence Air announced today that it’s going bankrupt. I’ve bought a number of tickets on their comfortable planes, especially when I could fly a thousand miles for $89. According to George Will the airline industry has lost money for the last sixty years. Where have we gone wrong?

3 Comments

  1. The airlines lose money flying people, but creditors shore them up because the creditors get (or have and need to protect) a lucrative stake in the frequent flyer program. With the frequent flyer programs come credit cards with high loyalty from customers, etc. So the flights may be the loss leaders, and it’s just the corporate structure that hides the trade-off. It also helps that the airlines have such financial clout–United has a host of employees in Hastert’s district, and the new pension bill had special accomodations for airlines. The big ones may have become too big to fail.

  2. Yeah…I only flew them once up to Newark, but I have to say I was really impressed with their service, especially for the price. Unfortunate that they’re going under, because they were a good last-minute option, but I found that most of the times, because of layovers and the per-segment cost of Independence, it was still cheaper to go with USAir…that and the frequent flier miles I have stored up with USAir.

  3. I haven’t been around for the last sixty years of commercial aviation, but I do see some reasons for the industry’s problems in the last four years. After 9-11 there was a mindset that it would be a national tragedy for an airline to go out of business. Thus, the government adopted a policy of giving bailouts and generally trying to prop up failing carriers.

    This kind of government aid hurts the whole industry. It keeps the least efficient carriers afloat to compete with the airlines that are more efficient. With government aid comes new levels of regulation that have unintended consequences for the airlines being helped and the rest of the industry.

    A market solution would be to let struggling airlines go out of business unhindered. This would tighten the airline industry–not necessarily leading to higher prices–and allow the strongest companies to consistently make respectable profits.

    Today a bunch of the country’s major airlines are in bankruptcy. I can’t help but wonder if Delta, Northwest, and now Independence Air would have been saved from bankruptcy if United and others had been allowed to die a natural death a couple of years before.

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