Strategy

Airline Fails; Private Jets Soaring

Independence may have been the wrong model for an airline, but it seems to be the right concept for many corporate executives.
Stephen TaubNovember 7, 2005

Soaring prices for jet fuel have pushed yet another commercial airline into bankruptcy: Independence Air. The discount airline and its corporate parent, FLYi Inc., announced Monday that Independence would file for bankruptcy.

Reuters reported that Dulles, Virginia-based Independence has been hit especially hard by high fuel prices “because of its reliance on inefficient 50-seat regional jets.” Standard & Poor’s analyst Jim Corridore reportedly observed that “they had the horrible luck of adopting that strategy at the worst possible time.”

Apparently not all small jets have fallen from favor, however. Sales of new business jets are poised to set a record in 2006, according to press accounts of a survey by parts supplier Honeywell International Inc.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

This year, Honeywell expects that aircraft manufacturers will sell 745 new business jets, and the company reportedly projects that next year’s sales will exceed 850 aircraft, topping the record set in 2001. Within ten years, the company expects annual deliveries of aircraft to reach 1,000.

According to The Wichita Eagle (that Kansas city is home to three aircraft manufacturers), “buying plans from North American operators are down from a year ago…. Many have recently ordered or taken delivery of new planes and don’t expect to buy in the next five years.” On the other hand, buying plans are on the rise in Asia, Africa, the Middle East, Europe and Latin America, the newspaper reported.