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ATA Airlines pulls the plug

4 April 2008

LAS VEGAS, Nevada -- The sudden bankruptcy of ATA Airlines on Thursday left passengers in the lurch and disrupted service from Las Vegas to Hawaii, the second time this week a Hawaii-focused airline abruptly stopped flying.

The shutdowns by Indianapolis-based ATA and Hawaii-based Aloha Airlines will reduce direct, scheduled service between Las Vegas and the islands as much as 40 percent, according to passenger records from McCarran International Airport.

The bankruptcies won't stop charter flights Boyd Gaming Corp., uses to import more than 70,000 gamblers annually to its downtown Las Vegas casinos.

But they will make it harder -- and probably more expensive -- to book scheduled service between the destinations.

Hawaiian Airlines, the largest direct service provider between Las Vegas and Hawaii with more than 360,000 passenger arrivals and departures annually, remains intact.

It is the second bankruptcy in three years for ATA, once the nation's 10th-largest carrier.

In a statement, airline officials said ATA was unable to absorb the loss of a charter contract largely because of the high cost of fuel.

"It's basically a disaster," said travel observer Joe Brancatelli, who writes travel tips at the Web site

The abrupt cancellations of flights interrupted vacations, disrupted business trips and made life difficult for people who needed to get to Hawaii.

"I was supposed to get to work tomorrow, so, it sucks," said Fainga Koli, 28, a construction worker from Las Vegas.

Koli showed up at McCarran for a 3 p.m. flight only to be handed a list of airlines instead of a boarding pass. He started calling airlines from his mobile phone hoping to find an alternate flight.

"I don't know, I might have to pay more," Koli said.

In addition to charters, the airline operated about 50 commercial flights daily, mostly between Hawaii and Las Vegas; Oakland, Calif.; Phoenix and Los Angeles.

Harvey and Charlotte Peltz, a senior citizen couple from Honolulu, arrived in Las Vegas on Tuesday, their last stop after spending more than a month on the mainland.

"They can't get us out until Tuesday," Charlotte said of one option.

The couple was hurrying off to another terminal to try and catch a flight on Hawaiian Airlines. In addition to their tickets, they had a $400 ATA travel voucher they assumed would be worthless.

"We just lost that," Harvey said, adding that he wondered how the airline could pack up its service so abruptly.

He'd heard the news ATA lost a big contract with FedEx Corp. for military charters but was surprised just how dependent the airline had been on such a deal.

"They lose the contract one day and go bankrupt the next," he said. "They were living paycheck-to-paycheck."

Brancatelli said it is unlikely other carriers will swoop in and pick up the passengers ATA and Aloha left behind, either.

That's because flights to popular leisure destinations such as Hawaii and Las Vegas are often less profitable for airlines than business routes.

"The profit motive for airlines is against it because so many travelers want to fly to Hawaii and Las Vegas for free using frequent-flier miles," he said.

The ramifications of worse service to Hawaii could be significant for Las Vegas.

More than 500,000 Las Vegas visitors annually come from Hawaii, making it the 10th largest source state for the market, behind Michigan and ahead of Pennsylvania, according to the latest-available figures from the Las Vegas Convention and Visitors Authority.

People will still be able to fly between Las Vegas and Hawaii, but it may get more expensive and less convenient.

Southwest Airlines, a code-share partner with ATA, is already working to reschedule passengers who booked flights on the defunct airline via Southwest.

But Southwest doesn't have the proper certification to fly its own planes to Hawaii so it can't take passengers directly.

"We are finding the best travel replacement that we can," Southwest spokeswoman Brandy King said. "If that isn't satisfactory for the customer, we are offering a full refund for their ticket."

Airline analyst Jim Corridore of Standard & Poor's said he doesn't think there are any more major airlines on the brink of bankruptcy. But he said problems at ATA are a sign of tough times for the industry.

"I think that they will certainly be weakened and unable to offset higher oil with higher revenues," Corridore said.