FLYi Inc., the parent company of Independence Air, which is based at Washington Dulles International Airport, filed for Chapter 11 bankruptcy protection earlier this month to restructure its aircraft leases and other obligations. The company also reduced its number of daily flights at Dulles last month from 350 to 220 to save money and fuel, company spokesman Rick DeLisi said.
The bankruptcy was "not a surprise" because the airline did not have a business plan that was sustainable, he said.
"Independence was essentially selling seats under market price, and people responded to that but it never made a lot of sense financially," he said.
BWI carriers such as Southwest Airlines suffered from the competition, however, and some airlines like United and US Airways dropped airfares to fend off the threat, Mr. Dean said.
Competition from Independence Air has played a part in a nearly 22.5 percent decline in passenger traffic for Southwest, the biggest carrier at BWI. More than 3.5 million passengers boarded Southwest flights between April and August this year, according to airport figures. During the same period last year, more than 4.52 million passengers bought tickets on Southwest.
Meanwhile, Continental saw a 23 percent decline in passengers during that time period, and Delta had a 12 percent dip. US Airways saw a 30 percent decrease, while Northwest had a 10.5 percent dip.
Despite lower passenger figures, industry experts believe that the competition from Independence Air was always short-lived.
George Hamlin, a director at Merge Global, a transportation consulting firm in Arlington, Va., said Independence Air's bankruptcy could eventually lead the airline to "disappear" completely.
"It is certainly possible because they don't have a lot of cash left," he said.
If the bankruptcy leads to Independence's demise, it's also possible that another low-cost carrier may set up at Dulles to fill the void, therefore continuing competition for BWI, he said. Southwest might even consider operating flights out of Dulles to avoid that from happening, he said.
"They certainly don't want to see someone else grow strong 50 to 60 miles away," he said.
Mr. Hamlin also said he expects Southwest to see continued growth at BWI, as the airlines has made the airport its East Coast hub. The strength Southwest has built up at BWI "is considerable, and it's not going away," he said.
Southwest spokesman Whitney Eichinger said Independence Air's bankruptcy will help Southwest to grow, adding that the company never dropped its air fares to compete with the discount carrier. Southwest passengers, she said, never pay more than $299 per flight.
"We're still able to maintain a profit with that level of fare," she said. "We've been the same for our whole 34 years."
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