Independence Air's downfall was that too many people were drawn to its promise of low fares
A sad irony in the business world is that you can learn a lot about what is wrong with a business by listening to people's reactions after it has collapsed.
For Independence Air and its parent company, FLYi, news stories reporting customer reaction are fairly unanimous in that the customers will greatly miss the service - especially those served by the Dulles hub - and the low fares. Industry experts were equally unanimous: Independence Air was doomed from day one. And the employees? A Washington Post article quoted former FLYi employees as holding not management responsible for the demise, but the customers and their insatiable demands for low fares.
CEO Kerry Skeen had said at launch that the market was "screaming" for this low-fare, small-aircraft service in the affluent Northern Virginia corridor, and the airline did what it could to undercut even its low-cost rivals, as well as the legacy rivals like former partner company United. The airline's TV spots made it even clearer: Independence's USP was low cost.
But why wasn't it, say, its smaller jets? Its focus on business travel for the Northern Virginia area? The airline even had another great USP at its disposal - that it had fewer rules and regulations than its rivals - but even though it got a mention in the advertising, it was ultimately lost amid the price message. Given this focus on price in its advertising from the get-go, the customer can't really be held accountable.
And it does the customer a disservice. Former Continental CEO Gordon Bethune, regarded as one of the best of his kind, is famously of the opinion that a customer would rather have a meal (albeit a very basic one) and a pillow on a three-hour flight than pay $20
less. And it just so happens that Continental is almost unique among the legacy airlines as being nowhere near bankruptcy.
But if we are to look at the problem through the prism of price, the challenge for Independence was magnified because of the relatively established low-cost airline market. JetBlue and Southwest were able to define their brands through virtually creating the category themselves. Yes, price was a prominent message for them. But as their competitors at the time were the hated legacy airlines, they were able to differentiate themselves on personality, too. By the time Independence launched, however, the competition was as much the charming low-cost airlines as it was the big, nasty legacies.
The key difference between Independence and these other two - as well as other low-cost brands like Ted and Song - is that it appealed more to business travelers than the others, which are seen primarily as leisure brands. One post from a former Independence flyer on a travel forum operated by airline expert Chris Elliott read, "I refuse to deal with the cattle-call lines and 'perky' employees of Southwest Airlines," which just goes to show how different business and leisure audiences are.
In fact, a major part of Southwest's success can be attributed to those very characteristics so irksome to the above traveler. JetBlue similarly is known for its personality - and even more, probably, for its seatback TV. Independence was only ever known for its price - a killer in an industry so enslaved to such external factors as oil prices, not to mention a cutthroat competitive one.