Independence Air Opens Sales, and Rival's Fares Fall

Kerry B. Skeen, Atlantic Coast's chief executive, said that selling a ticket through flyi.com will cost the company about 50 cents, compared with $10 for a ticket sold through another site. "It lowers our cost, so we are able to pass it back to you," Skeen said at a news conference yesterday.

Independence is the largest addition to a crop of low-fare carriers to recently enter the Washington market, among them Ted, United's low-fare unit; Spirit and Frontier airlines; and JetBlue Airways.

Atlantic Coast officials announced the idea for Independence last summer amid a battle with United over the amount it was being paid to operate each United Express flight. Atlantic Coast broke from its contract and will start winding down United Express service on June 5.

"Our goal was to select the best markets from D.C.," said Skeen, when it was noted that Independence's routes are similar to United's. "We expect a very competitive response.

"I think we're going to change the competitive landscape and enhance the vitality of communities we serve."

As expected, competitors dropped fares at Dulles immediately, "leveling the playing field," said George Novak, lead research scientist at the George Washington University Aviation Institute in Ashburn. "What will differentiate them is the ability to have a low-cost structure to operate."

To cut costs, Atlantic Coast has subcontracted some call center functions and reduced labor expenses, Novak said. But rising jet fuel prices may throw the company off course, he said.

Independence, unlike many airlines, does not have a reserve of fuel and could not lock in a supply when prices were lower because it did not buy its own fuel as a contract carrier for United. Its business plan had projected costs of about 90 cents per gallon for fuel, but fuel now costs about $1.25 a gallon.

"We don't like what fuel is at today, but competitors have the same cost," Skeen said.

The company might also find itself in a traffic jam. Dulles has had significant increases in delays in recent months, and Independence plans to add 300 daily departures at Dulles by summer's end, contributing to an anticipated 17 percent increase in traffic there this summer.

Atlantic Coast's conversion "is risky, no doubt about that," said Darryl Jenkins, visiting professor at Embry-Riddle Aeronautical University in Daytona Beach, Fla. "At the same time, I don't know what their alternatives were. How far in do you tie yourself with a partner that can't make money?"