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No takers in Independence Air’s bid to sell company
By Dan McCue
Staff Writer
A federal bankruptcy court in Delaware has granted Independence Air’s request to provide severance and other payments to its furloughed employees but wants more time to consider unspecified payments to what court documents described as six “insiders” with the company.
The ruling by Chief U.S. Bankruptcy Judge Mary F. Walrath was issued Jan. 5, the same day the long-struggling discount airline ceased flight operations.
Under the wind-down employee plan authorized by the court, Independence Air will pay the bulk of its 2,520 workers, including 13 customer service employees at the Charleston International Airport, a severance package including remaining salary and commissions due them and for all sick leave they have taken prior to the end of their employment, as well as for any remaining vacation time they may have.
The airline will also provide medical benefits to the employees for 60 days after the discontinuation of service.
But given the complexity of the demise of an airline, a number of employees will remain on Independence Air’s payroll well into 2006 and earn bonuses based on continued length of service, court documents show.
Under the plan approved by Walrath, 171 employees will be retained for periods ranging from one week to six months or more to assist in the transfer of Independence Air’s assets and related documents to its creditors. Walrath established a total payroll limit for this workforce of no more than $4.4 million.
Airfares expected to rise
In the wake of Independence Air’s demise, airline analysts predict that airfares in the 30 markets the airline served, including Charleston, could double and perhaps even triple.
“We’re going to learn the true meaning of ‘sky high,’” said airline consumer expert Tom Parson, CEO of Bestfares.com. “People in some of the marginal markets the airline served are going to wish they supported Independence Air.”
One of the factors contributing to the anticipated rise in air fares in these markets is that Independence Air’s sharply low costs, at one point reaching $29 one way to certain destinations, forced its competitors to hold the line on or lower their prices.
Now that Independence Air is defunct, they won’t have to, Parson and other industry analysts said.
No rush to fill the niche
In the meantime, at least one discount airline that was previously wooed by the Charleston County Aviation Authority has told the Business Journal that it has no current plans to fill Independence Air’s shoes in this market.
Judy Graham-Weaver, spokeswoman for Atlanta-based AirTran Airways, said that while her employer is growing at about 20% a year despite the tough airline industry environment, it currently has no plans to add Charleston to its route map.
“However, we will continue to monitor the market and keep in touch with the airport authority there for possible future opportunities,” Graham-Weaver said.
Two other discount airlines that the aviation authority continues to be in discussions with, Southwest Airlines and
JetBlue, did not return calls for comments.
While Independence Air failed as a company, Charleston’s status as its No. 2 market should make it easier in the long run to lure another discount airline here in the future, said David Jennings, chairman for the Charleston County Aviation Authority.
“What Independence Air’s experience here showed is that if you provide low cost service from Charleston International Airport, the citizens of Charleston will support it,” Jennings said.
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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