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Independence Airlines

Failure Case
by

Frank Hettlinger

on 20 April 2010

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Transcript of Independence Airlines

INDEPENDENCE AIRLINES Timeline Late 1989 Atlantic Coast Airlines is born
from West Air 1993 ACA goes public on NASDAQ 1998 Up to 2,000 employees
New $10M Maintenance hangar at IAD
Now flying Jets and turboprops 2000 Teamed with Delta to fly
Delta Connection 2002 United Airlines goes bankrupt
All Airlines are dropped from the stock exchange Nov 19, 2003 Independence Day! Heavy on Buzz Marketing
Bargain air fare
Exceptional service
General Marketing Scheme Washington Redskins Promotion Part of Independence Air’s Kick off Promotions
Became official sponsor of Redskins
3 year deal
Television, internet, and radio advertising as well as Buzz marketing
Glide Summer Travel Pass Created to fill seats and create buzz marketing
$250- May 1st-August 31st
Restrictions
College students 18-25
Limited amount of passes
Available Tuesday, Wednesday, Saturday only
Only destinations east of the Mississippi
Non-refundable, non-transferrable


Independence Air, A bunch of comedians Deal with Laugh Factory
Instructional videos performed by Laugh Factory
Advertisements Narrated by Laugh Factory
Dave George (the “flyi guy”) becomes the comedian spokesman of Independence Air
“Jet Trucks”… Basically a truck with an airplane tail
Revenue $300 million start-up capital
2004
Opening loss: $36.4 million
2005
First Quarter: -$101.1 million
Second Quarter: -$95.7 million
CEO Kerry Skeen Independence is modeled after Southwest
High-energy
Customer-oriented staff
Simplicity in booking procedures and fare structure Business Model "faster, easier, simpler travel and good value," Defining factors 1. Customer First
2. Genuine
3. About Integrity
4. Going the extra mile
5. Operational excellence Why It failed (2005) U.S. airlines lost $10 Billion
due to fuel crisis
Business Model based on $30 per barrel
Oil at $70 per barrel
Poor Hub Choice Washington, Dulles (IAD) was chosen
Airlines flying out of IAD when Independence started
United
US Air
Delta
American
Others July 2004 First Independence Air flight January 2006 Last flight of Independence Air March 30, 2007 All assets are fully liquidated
Independence Airlines no longer exists 2006-2007 With Loss of United contract, Independence no longer had cash to operate
Liquidation and sell off of assests begins Lesson Learned Start with a better business strategy
Try to implement DIM, Be disruptive and innovative
Don’t goof around when it comes to business
Enter a profitable industry
Don’t compete directly with already existing strong companies
What would we do different Be more professional in appearance
Make payments on time
Start with a reasonable business plan.
Be prepared for change in the economy
Evaluate level of competition


Full transcript