Dulles based (Washington D.C.) Independence Air has filed for bankruptcy. Charging fares far below operating costs finally caught up with them, and cash reserves to cover operating costs are dwindling. Creditors and employees are no longer willing to subsidize consumer travel by taking cuts or re-negotiating contracts for a failing business with no business plan to turn things around.
The Washington Post is encouraging travelers to use up or cash in their frequent flyer miles: 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.
And The Charlotte Observer adds: Analysts said they believe raising money to continue operating is a longshot because the company has consistently lost money since becoming an independent airline last year.
I guess $29 and $49 fares isn't such a good business model after all.
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