Independence Air has won plenty of notice among business travelers in its first two months with low fares and fun and friendly service.
But now it looks as if some of those fares have disappeared.
That $59 walk-up, one-way ticket to Boston was replaced with a $119 fare. To get those $59 fares, travelers now have to book 14 days in advance.
The same goes for many of the fares to the cities Dulles-based Independence began serving in June. Debut walk-up fares of $29, $54 and $59 have nearly doubled. A walk-up fare to Burlington, Vt., went from $69 to $120. The walk-up fare to Albany, N.Y., from Dulles was $59; now it is $100.
Before Independence Air's fare changes, its ticket prices were about 80 percent lower than the fares of other airlines on the same routes. With the changes, Independence's fares are about 60 percent lower.
Independence Air executives said they changed prices to make more room available for last-minute business travelers. Eric Nordling, senior vice president of marketing, said many flights were selling out at the original prices, so many last-minute business travelers weren't able to get a seat.
Nordling said those cheaper fares are still available to travelers flying on Saturdays. So in essence, with the Saturday requirement and the 14-day advance purchase, Independence is adopting more of the price restrictions of the major airlines from which it vowed to differentiate itself. And that's not the only way it is changing its launch strategy.
Nordling said Independence is exploring the possibility of making its flights available for booking by travel agents, something it had said it would not do in order to keep the cost of selling tickets as low as possible. It also made its flight information available through the Official Airline Guide, because Independence executives discovered that business travelers use the guide as well as the Internet to plan their trips. Originally, Independence flight information and booking was available only through the company's Web site and by phone, a practice it adopted from low-fare leader Southwest Airlines.
"We are not geniuses," Nordling said. "We can't predict the future with perfect accuracy. We have made modifications to the business plan as they have become apparent that they were needed. And we'll continue to do that."
Independence began eliminating the lowest fares around the time it began expanding this month to other cities such as Detroit, Pittsburgh and Cleveland. The airline launched in June with 10 cities and now flies to 35 destinations.
"We are doing business travelers a favor by this change," Nordling said. "The planes were all sold out at those fares; now they can call and get a seat."
Depending on the city, though, it seems obtaining a seat on an Independence flight may not have been that difficult. Last month, the airline filled only between 47 and 49 percent of its seats, estimates Merrill Lynch analyst Michael Linenberg.
In addition to altering its fare structure, Independence is already cutting some of its flights. In October, the airline plans to cut daily flights to Atlanta to 12 from 16. It's also trimming one to two daily flights to Newark, Nashville, Lansing, Mich., and Raleigh, N.C.
Those are two of the ways Independence can stabilize itself, said analyst Helane Becker of Benchmark Capital.
Largely due to start-up costs, Independence lost about $27 million in its second quarter, while its revenue dropped 16 percent from the same period a year ago to $190.5 million. A year ago, Independence was operating as Atlantic Coast Airlines, a regional feeder carrier for United and Delta Air Lines.
Becker said as part of its rollout, Independence sold too many seats for too little money. The airline's $29 fare sale ended yesterday.
"They're doing poorly. They're not making any money; they have to do something," she said.
Merrill Lynch's Linenberg said one of the bigger problems Independence is having (as do most new airlines) is that the larger carriers are matching its fares. With their larger route networks, jet planes versus Independence's regional planes, larger frequent-flier programs and now equivalent fares, many of the larger airlines become more attractive to travelers.
Delta has matched Independence fares between Atlanta and Boston, while Northwest Airlines matched the airline's fares between Dulles and Lansing. And US Airways implemented its new Go Fares pricing structure out of Washington's Reagan National Airport, slashing many of its fares by 60 percent.
Tom Parsons, editor and publisher of Best Fares magazine, said Independence has stirred up the industry more quickly than many observers had expected. But to make sure Independence is around, Parsons said, travelers have to fly it. Otherwise, he said, the other airlines could begin raising their fares.
"It's a popular airline and it will probably be around for a long while. Even if it has to raise its fares a little to cover its costs, Independence has generated enough buzz that a slight increase shouldn't hurt it with travelers," Parsons said.