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Independence Air to shut down

Bankrupt carrier will cease flying on Thursday night

Bankrupt low-fare airline Independence Air, which has operated 20 or more daily flights from Boston and New England cities to Dulles International Airport in northern Virginia, said yesterday it will shut down operations Thursday night, two days sooner than previously warned.

Independence said it was trying to reach passengers holding round-trip tickets with return flights after the shutdown deadline to switch them to flights returning before 7 p.m. Thursday. After that, other airlines operating flights on the same routes as Independence that have standby seat capacity are obligated to honor Independence tickets if passengers pay a $50 or $100 switching fee, under a provision of the airline industry bailout bill enacted after the Sept. 11, 2001, terrorist attacks.

Analysts said Independence's failure reflects its own missteps, rather than any fundamental flaws in the low-fare carrier strategy pioneered by Southwest Airlines Co. and imitators.

Terry Trippler, who runs the CheapSeats.com travel website, said in an interview, ''They had too many planes flying to too many cities too often and too low prices. There was just no way they could make money. Fuel prices didn't help either," Trippler added, noting that costs soared after this fall's Gulf Coast hurricanes.

Independence, based in Dulles, Va., said it will ask the Delaware federal Bankruptcy Court handling its case to let it issue cash refunds to people holding tickets after Thursday. But banks, bondholders, and other creditors will likely challenge that move.

Independence spokeswoman Valerie Wunder said last evening that only ''a minimal number" of customers hold tickets for flights to or from New England airports after Thursday. ''We've had very little bookings for January," Wunder said, both because it's normally a slow month for travel and because passengers held off buying tickets until Independence's fate became clear. Wunder said she did not have precise figures for Boston or the five other New England cities the airline serves.

Today, Independence is scheduled to operate five round trips between Logan International Airport in Boston and Dulles, and three round trips apiece between Dulles and airports in Burlington, Vt.; Manchester, N.H.; Portland, Maine; Bradley International Airport in Windsor Locks, Conn.; and T. F. Green State Airport in Warwick, R.I., outside Providence. Independence operated six daily Logan-Dulles round trips as recently as November before trimming service to conserve cash.

Independence had warned this fall that it might have to cease operations as soon as this coming Saturday. The airline sought to auction some or all of its operations, but Independence chief executive Kerry Skeen said, ''To date, there has not been a firm offer put forward that meets the financial criteria necessary to maintain operations as is."

Skeen added that ''we've been clear in reminding everyone that this was a possibility," but Independence had usually warned that Jan. 7, not Jan. 5, was the likely shutdown day. ''The financial pressures in the industry have prevailed. We have run out of time," Skeen said.

Independence was formerly known as Atlantic Coast Airlines and operated connecting flights for United Airlines' United Express affiliate. It decided to try to become a low-fare carrier under its own brand in June 2004. The 2,700-employee company built up a route network serving 36 destinations from its Dulles hub.

Despite the demise of Independence, two other low-fare carriers are preparing to jump into the Logan-Dulles route, which United has dominated as a hub carrier at Dulles. JetBlue Airways Corp. will launch six daily round-trip flights Jan. 17, with promotional fares as low as $50 round trip and regular fares ranging from $110 to $280. AirTran Holdings Inc.'s AirTran Airways said in November it plans to begin four daily round trips on Feb. 15 but hasn't published fares.

Low-fare carriers have not disclosed plans to replace a significant share of Independence's Dulles service to and from Bradley International, Burlington, Manchester, Portland, or Providence.

Despite Independence's promise to seek Bankruptcy Court approval, CheapSeats.com's Trippler said people holding post-Thursday tickets are unlikely to get cash refunds. ''That's a long shot," Trippler said. ''The banks and bondholders will want to get what they can" and challenge any plans that give available cash back to ticket holders, Trippler said.

Independence said free tickets or those obtained through vouchers or frequent-flyer points won't be eligible for cash refunds, but in many cases those may be used for stand-by travel on other airlines.

Other industry analysts have said Independence was hurt by a strategy of relying heavily on 50-seat regional jets, which many passengers considered cramped and loud, and which for Independence did not offer the more favorable economics of 100- or 120-seat jets. Flyi Corp., the airline's parent company, sought bankruptcy protection Nov. 7.

Peter J. Howe can be reached at howe@globe.com.

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