There are many speculations surrounding the reasons behind the fall of this airline, but the massive drop in number of passengers and route loads can explain the closure.
Ideally close to 21,000 passengers would travel using the American Falcon but by March 2004, the number had dropped to 16,000 passengers within one year. This automatically led to the reduction of route loads from an impressive 85% to 45%. So from such statistics, it is possible to see why the airline could not sustain itself.
While the management categorically stated that the bankruptcy was due to the rising cost of fuel, sources reveal that this is just one of the many reasons behind the fall of this airline. It is true that the airline borrowed in millions from the government in order to stay afloat, however, this worked to the disadvantage when Fayez Chehab was mentioned in a fraud case with respect to this money. It was therefore very daunting to revitalize the falling empire owing to the enormously tragic magnitude of fall. On the other hand, an alliance between two airlines in Argentina managed to cause the massive attrition of passengers and completely destroy the financial muscle of the American Falcon.
There is a lot that can be said about the bankruptcy that befell the American Falcon; however the truth of the matter remains that it was interplay of many factors that resulted in the fall of this airline. Following the bad numbers, the American Falcon had to return one of its air crafts, the Fokker F28, to LAER. Reducing the fleet by one airplane did the company no good. Rumor has it that the airline was adopted by Edelweiss airline which is now doing very well and filling in the gap accordingly. There are many lessons to be learnt from the fall of the American Falcon but the greatest of all is, never underestimate the potential of your opponent.