Airline Follows Independence on West Coast Routes

By Bill Brubaker

Washington Post Staff Writer

Thursday, February 10, 2005; Page GZ04

Dulles International Airport`s reputation as a low-fare mecca continued to grow this week as upstart Independence Air announced new service with bargain fares to five West Coast cities, beginning this spring, and United Airlines quickly matched those fares on selected flights.

The result is that local leisure and business travelers should have more choices and markedly lower fares on flights from Dulles to San Francisco, Los Angeles, San Diego, San Jose and Seattle.

Say you`re thinking about taking a quick trip to San Diego, leaving May 1 and returning May 3. As recently as Monday afternoon, United was charging $1,212 for nonstop flights from Dulles on those dates.

But after studying Independence Air`s announcement Monday morning that it would offer introductory $188 round-trip fares -- that`s $84 each way, plus taxes -- to its five newest destinations, United matched Independence`s fares dollar for dollar Monday night.

Within hours, United`s fare had tumbled 84.5 percent.

Wall Street analysts had predicted that competitors would match Independence`s ticket prices on the West Coast routes.

``I fully expect United to be aggressively competitive against them in those markets,`` Betsy R. Snyder of Standard & Poor`s said late last week.

Kerry B. Skeen, chairman of Flyi Inc., parent company of Independence Air, had also predicted a swift reaction by the major carriers.

``When you go head to head with anyone, it`s pretty standard in the industry that the fares are matched,`` he said.

Skeen`s financially troubled, 7 1/2-month-old airline plans to roll out the West Coast service -- on new 132-seat Airbus A319 jets -- on April 14 to San Diego and on May 1 to Los Angeles, San Francisco, San Jose and Seattle.

Once the introductory $84 seats are sold, Independence`s fares will begin at $99 one way to Los Angeles and San Diego and $119 to San Jose, San Francisco and Seattle. The airline has capped its one-way fare for any West Coast flight at $298. Taxes are extra.

Independence, which plans to fly twice a day to San Francisco and once a day to the other four cities, won`t be able to match the frequency of service offered by United, which also has a hub at Dulles.

United, for example, has six daily nonstops from Dulles to Los Angeles and six to San Francisco. (American Airlines has three nonstops a day from Dulles to Los Angeles.)

How many travelers will choose Independence over the larger airlines if they offer equal, or similar, fares?

``United, they`re in bankruptcy, but they do have frequent-flier miles and all kinds of things they can offer,`` Snyder said. ``If that`s the case, what`s the incentive to fly Independence Air?``

United boasts that its frequent-flier program offers free tickets to more than 700 destinations on six continents served by United and its partner airlines.

Independence has a frequent-flier program but offers free tickets to only the 39 U.S. destinations it serves.

The larger carriers also reward the loyalty of their best customers with business- and first-class upgrades. Independence can`t offer upgrades because it sells only economy-class tickets.

``For someone who`s in a frequent-traveler program with the premier status -- someone who is a heavy mileage user for United or whoever -- those aren`t people that we have a good shot at getting,`` Skeen said.

``They are the people who have the ability to upgrade to first if it`s available`` on the larger carriers, he said.

Skeen said he suspected, though, that his airline would offer more low-end fares than its competitors. ``We offer these fares every single day,`` he said. ``We will have, I believe, a lot more inventory available at those fare structures.``

Snyder said Independence needs to offer something extra, as New York-based low-fare carrier JetBlue Airways did when it was launched five years ago. From Dulles, JetBlue has nonstops to three California cities: Oakland, Sacramento and Long Beach.

``You know, JetBlue offered a new product -- live TV,`` Snyder said. ``And people just like that stuff, so they said: `I`m going to fly JetBlue. I like their friendly service, and I like the live TV.`

``So what is Independence Air offering that is unique? I think you have to be offering something for passengers to want to fly you. What difference are they offering?``

Skeen planned to install live television in every Airbus seat back but dropped the idea because of the company`s financial problems.

But Skeen said he was considering an ``alternative product`` such as the digEplayer, a handheld device that plays movies, music and television shows. Alaska Airlines offers the device free to first-class passengers and charges a $10 rental fee for others.

Alaska Airlines, as it turns out, is a new competitor for Independence. It also has nonstop flights from Dulles to Los Angeles and Seattle.

On Tuesday afternoon, Alaska Airlines was charging $298 (taxes included) for a round-trip flight from Dulles to Seattle in May, compared with the $188 fare for Independence and United.

Business travelers who need to make a quick jaunt to the West Coast may have the most to gain from this latest fare war. Traditionally the airline industry has charged last-minute travelers five, sometimes 10, times more than leisure passengers who have the luxury of buying tickets weeks or months in advance.

On Tuesday morning, for example, United was quoting round-trip fares from Dulles of $1,790 to San Diego, $1,628 to Seattle, $1,564 to San Francisco, $1,468 to San Jose and $783 to Los Angeles for nonstop flights leaving Tuesday afternoon and returning today.

Come spring, United will probably lower its last-minute walk-up fares to keep pace with Independence Air`s, analysts said.

Robin Urbanski, a spokeswoman for United, said that as Independence adds cities, ``we will continue to offer our customers a very competitive fare.``