Independence Air ceased operations on Thursday night, 18 months after launching service as a low-cost carrier.

The airline's last scheduled flights trickled into Independence's hub at Washington Dulles Airport late Thursday. The company shut down its web reservations and flight information system earlier in the evening.

Roughly 2,700 employees will lose their jobs.

Independence, a unit of FLYi, sought Chapter 11 bankruptcy protection in November but failed to attract investors to keep flying into 2006. The carrier was squeezed by low-fare competition and record-high fuel prices.

A bankruptcy judge in Delaware approved the Virginia-based company's plan on Thursday to end service and begin an orderly shutdown of its corporate operations.

US Chief Judge Mary Walrath approved much of a USD$3.2 million bonus plan proposed for 171 employees, who will remain to help the carrier wind down its affairs.

A decision on extending the retention plan for six senior executives was postponed, pending a hearing next week, according to an order issued by Walrath.

The company offered the bonuses as an inducement to keep employees on the job through liquidation. However, a new federal bankruptcy law seeks to limit retention programs for officers at bankrupt companies.

Walrath permitted Independence Air to reject its remaining aircraft leases and abandon the planes it owns.

Walrath approved more than USD$11 million in severance and benefit payments to union and non-union workers.

The judge also permitted the company to spend up to USD$4.4 million -- USD$1.7 million in salaries and USD$2.6 million in bonuses -- to keep 171 employees on the job temporarily. Most will be out of a job within eight weeks, but more than a dozen could stay at least six months. The company had sought about USD$5.1 million for retention purposes in court papers earlier this week.

Independence joins a long list of carriers that have failed since industry deregulation in 1978.

Other airlines have offered stand-by seating to Independence Air passengers, which is required by federal law to protect consumers holding tickets on carriers that go out of business.

Independence passengers can be charged a fee of up to USD$50 to fly on another airline.

As Independence Air and its 200 daily flights exited the market, US Airways lowered fares on flights to nearly 20 cities.