Independence Miles May Vanish
When Delta, Northwest, United and even US Airways filed for bankruptcy protection, few consumer advocates warned travelers to quickly use up their frequent-flier miles.
But as soon as Independence Air sought bankruptcy court protection yesterday, travel experts immediately began advising the airline's 1 million frequent fliers to cash in their frequent-flier points as soon as possible.
While the travel experts expect the other airlines to emerge from bankruptcy reorganization, they are less certain about the prospects for Independence Air.
The Dulles-based airline said yesterday it hopes to auction some of its assets or find an equity investor by Jan. 5. Without the additional cash, most observers say it's unlikely Independence will be able to emerge.
Independence says it plans to continue flying its regular service, and travelers should not expect any immediate day-to-day changes in the 35 cities it serves. "There have been no changes to our service or schedule," Independence spokesman Rick DeLisi said yesterday.
He declined to comment on the carrier's future.
In an e-mail to its frequent fliers yesterday, the airline sought to convey its intentions at least through the end of the year. "We look forward to taking you where you need to go this holiday season," the airline said. "It will be 'business as usual' for Independence Air."
But many travel experts aren't looking far past the New Year. Tim Winship, editor and publisher of Frequentflier.com, says Independence's frequent fliers should start cashing in their miles as quickly as possible. "Those miles could ultimately be lost. People who have enough miles for an award should cash them sooner rather than later."
Winship said he doesn't believe another airline will have the financial capital or interest to take over Independence's frequent-flier program and honor the miles. Independence's members aren't very attractive to other carriers because there are so few of them and they are primarily concentrated at one airport, Dulles International. Airlines that acquire another's frequent-flier database typically want one that has millions of members spread among a number of cities, he said.
Booking a flight on Independence after Jan. 5, travel experts say, could be risky. "I'm not going to say they're going to go away overnight, but I would be less confident to encourage someone to go ahead and buy their ticket for a trip in May," said Terry Trippler, an analyst with Cheapseats.com. He advises customers to buy their Independence tickets with a credit card -- not cash. If a ticket is purchased on a card and the trip does not occur, the traveler may be able to dispute the charge.
Independence is a much smaller airline than the others -- Delta, United, Northwest or US Airways -- that plunged into bankruptcy, and that could impair its chances of emerging. The carrier does not have the hundreds of deep-pocket suppliers and creditors who could be willing to cut deals or make large investments into the airline to keep it in business.
With its $29 and $39 fares, Independence Air was one of the biggest discount travel boons to hit the Washington area since Southwest Airlines began flying out of Baltimore in 1993. Air fares from Dulles to various cities dropped between 30 and 65 percent in the first quarter of 2005, with the average fare declining as much as $110, according to a September report by the Transportation Department. In the same quarter, fares nationwide had begun rising.
Before Independence began operating in June 2004, Dulles had the sixth-highest fares in the nation, according to the Transportation Department. After Independence arrived, the airport's fares dropped dramatically, with Dulles falling to the rank of 25th-highest-priced airport, according to the report.
Its discount fares made Independence a favorite among travelers. Travel and Leisure magazine recently ranked it as third-best domestic carrier, behind Midwest Airlines and JetBlue. But Independence struggled since its first day, largely because of stiff competition from other larger carriers that matched its fares. Independence also had the misfortune of launching around the time fuel prices began rising quickly.
Independence, however, did manage to bedevil its competitors. Southwest executives have repeatedly said that the airline was responsible for a decline in its own revenue at BWI. JetBlue Airways -- which also flies out of Dulles -- recently announced plans to expand in the Northeast, but its executives said the carrier had no immediate expansion plans at Dulles because of the low-cost competition there spurred by Independence Air.
But while cheap fares may have made Independence popular with travelers, they also led to its downward spiral, some observers say.
"Those $29 fares were too low. You don' t charge those kind of prices and continue to operate. The bus even costs more," Trippler said.