Independence Air (NASDAQ: FLYI) is a new, low-cost airline, based out of Dulles Airport (IAD, Dulles, Virginia) that was unveiled on November 19, 2003 and began service to several cities up and down the east coast, in June of 2004. Its story is a fair bit older than that, however.

Independence Air began its existence in 1989, as a small regional airline called Atlantic Coast Airlines, and the corporation itself still holds the "Atlantic Coast" name. Partnering with major players in the industry such as United Airlines and Delta, ACA began flying shorter, local flights, handling the bulk of the United Express routes.

This arrangement worked for some time, until around 2002 to 2003, during which time two key events occurred. First of all, United filed for bankruptcy in 2002, and attempted to change the business arrangements between the two airlines, a move which appeared particularly unsavoury for Atlantic Coast. ACA understandably balked at this notion, and thus UAL terminated the service agreement.

Secondly, shortly after ACA announced plans on July 28, 2003 to launch a low-cost airline, Phoenix-based Mesa Airlines made an unsolicited takeover bid for Atlantic Coast. This offer was summarily rejected by ACA's board of directors. Mesa persisted, however, and on October 28, 2003, ACA sued Mesa to block the bid, whereupon Mesa filed its own complaint in Delaware courts against ACA's board of directors for breach of fiduciary duty.

At this point, however, the damage had been done; soon thereafter Mesa's offer began to be investigated by the US DOJ antitrust investigators, and on December 19, 2003, a Federal judge granted a temporary injunction against Mesa. Eventually, Mesa dropped its bid for ACA, and shortly thereafter signed its own regional flight agreement with UAL.

On May 19, 2004, Independence Air officially "opened for business", beginning to sell flights to and from nine medium to large markets beginning June 2004, and announced plans to roll-out flights to twenty-six more, on a staggered basis, through the end of 2004. Its "maiden" flight, from Dulles to Atlanta, Georgia, took place on June 16, 2004.



Independence Air's website can be found at http://www.flyi.com/



Works Referenced:
  • "Atlantic Coast Airline News": http://news.airwise.com/airlines/aca.html (AirWise)
  • "Mesa Air Files Complaint Against Atlantic Coast Airlines": http://www.shareholder.com/mesa/ReleaseDetail.cfm?ReleaseID=121319
  • "Mesa terminates bid for Atlantic Coast": http://www.msnbc.msn.com/id/3791146/ (Reuters/MSNBC)
  • Independence Air Company page: http://www.flyi.com/company.htm

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