Funding problems forced AccessAir US regional airline to close its doors.


Funding Problems Forced AccessAir A US
Regional Airline  To Close Its Doors.

Feb 28, 2001, The decision came only two weeks before the Iowa-based carrier was to unveil a new plan to keep it flying.  "I am deeply disappointed that our vision for affordable air service for central Iowa will not be realized," said John Ruan III, AccessAir's principal backer. "I was unable to obtain the necessary level of capital support for the airline. That, coupled with low passenger loads, made it impossible to overcome the financial burden of maintaining a community-based airline. The decision stems from the decision of the Ruans to withdraw their support," said Michael J. Pankow, an attorney for the airline.

Ruan said AccessAir, which previously withdrew its reorganization plan filed under Chapter 11 in the U.S. Bankruptcy Court, apparently will proceed to a Chapter 7 liquidation. The airline cited administrative and financial problems, stemming from the former AccessAir, and the subsequent lack of funding from public and private sectors as contributory factors in the decision to shut down. The airline said poor weather and a slowing economy also influenced the decision. AccessAir was based out of Des Moines. It offered nonstop and direct flights to New York, Los Angeles and Colorado Springs with stops in Des Moines, Iowa, Moline, Ill. and Peoria, Ill. The airline operated four 117-passenger Boeing 737-200 aircraft and offered daily service to the six cities.

In May 2000, AccessAir secured $13 million needed to resume service after a short shut down of services. The carrier also picked up a route to Orlando. March 12, 1999, Attorney General Tom Miller of the Iowa Department of Justice was investigating whether TWA and other airlines were engaged in predatory pricing at the expense of AccessAir. Following is a statement of Attorney General Tom Miller:

Our office will investigate the pricing practices of TWA and two other airlines with respect to the air fares they are charging on
routes served by Iowa-based AccessAir. AccessAir has announced low air fares for flights to New York City and Los Angeles. For a period of time, the airline had offered even lower temporary, introductory air fares on the routes, as start-up airlines often do. TWA, Northwest and Delta matched the temporary introductory prices and now have indicated they plan to continue those prices even after AccessAir recently adopted its regular fare schedule. If this is true, it poses the possibility that TWA and the other airlines may be engaged in predatory pricing.

We will pursue this antitrust investigation, and we will share the results with other states, the U.S. Department of Justice, and the U.S. Department of Transportation. We also will continue our other efforts with policy makers in Washington to restore and preserve competitive air fares in Iowa and elsewhere. We are supporting efforts by the US DOT to enforce its proposed Guidelines to safeguard competition, and we are urging efforts in Congress to promote healthy competition in air fares.

March 16, 1999, Northwest Airlines Responds To Predatory Claims By AccessAir. AccessAir in several published reports has incorrectly stated their fare actions and the pricing actions of Northwest and other carriers. On January 29, 1999, AccessAir issued a press release detailing their schedule and price structure for travel commencing on February 4, 1999. Northwest Airlines filed to match their introductory fares on February 4.

Contrary to AccessAir's claim that they ended the introductory fares on March 5, Northwest has accurate, verifiable data showing that AccessAir never discontinued the promotional fare, and in fact, it's still available for sale. To remain price competitive in the marketplace, Northwest continues to match those fares. At no time did Northwest Airlines sell seats at prices below competitive levels.

"While we have not seen the letter to Secretary Slater, it appears that what AccessAir wants is a sign from Northwest that we will go along and raise our fares when they do. We cannot and will not give them such a signal. Northwest, along with several other major carriers, is subject to a consent decree with the Department of Justice that forbids us from disclosing our future fare intentions. We intend to continue to comply with the obligations of the decree," said Elliott M. Seiden, Northwest vice president law and government affairs. He added, "It is particularly perverse that we should be subjected to a complaint such as this for doing nothing more than complying with obligations mandated by the Justice Department."

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