ATA Airlines and Skybus Airlines both went belly up last week, the second and third carriers to abruptly cease operations in the span of a week.
On April 2, Indianapolis-based ATA filed for bankruptcy, and on April 3 at 4 a.m. EDT, ATA discontinued operations effective immediately, leaving thousands of passengers stranded and scrambling to book alternative flights. Columbus, Ohio-based Skybus announced on Saturday, April 5, that it was closing up shop.
This follows the abrupt March 31 shutdown of Honolulu-based Aloha Airlines.
ATA had cut back routes significantly since filing for bankruptcy the first time in 2004. The vacation-oriented airline was serving primarily Hawaii, Chicago, Mexico, and a few other West Coast cities when it shut down. According to published reports, thousands of ATA passengers were stranded in Hawaii. At the time of the shutdown, ATA had approximately 2,230 employees, virtually all of whom have been let go. The company, founded in 1973, operated 29 aircraft and was serving approximately 10,000 passengers per day.
In a statement, the airline said the unexpected cancellation of a key military charter business it had contracted through FedEx Corp. made it impossible for ATA to continue. “We deeply regret the disruption and hardship caused by the sudden shutdown of ATA,” said Doug Yakola, chief operating officer of ATA. “Unfortunately, the cancellation of a critical agreement for our military charter business undermined ATA's plan to address the current conditions facing all scheduled service airlines, including the tremendous spike in the price of jet fuel in recent months. As a result, it became impossible for ATA to continue operating."
All flights have been canceled, and ATA is no longer able to honor any tickets or reservations. Customers who purchased tickets from ATA using a credit card should contact their credit-card provider directly for refund information. Tickets paid by cash or check will not be refunded. For more information, go to ATA’s Web site.
ATA has contacted airlines that serve ATA destinations and asked them to provide assistance to ATA customers. Southwest Airlines had an agreement with ATA that allowed ATA customers to be booked on Southwest flights in four airports—Chicago Midway; Las Vegas; Phoenix; and Oakland, Calif. Southwest also marketed and sold ATA flights. In a statement on its Web site, Southwest said it plans to rebook all customers who purchased an ATA flight through Southwest on a new itinerary closest to their previous travel plans or refund any unused tickets. Also, Delta Air Lines and US Airways are offering discounted standby airfares for a limited time to ATA ticket holders headed to Hawaii or Mexico.
Skybus had been in operation for less than a year, commencing operations last May out of Port Columbus International Airport. “Skybus struggled to overcome the combination of rising jet fuel costs and a slowing economic environment. These two issues proved to be insurmountable for a new carrier,” read a statement on the company’s Web site. Passengers with tickets to fly Skybus on or after April 5 should contact their credit card companies for refunds.
So what’s the impact on travelers? “Fares are bound to go up, especially in the Hawaii market, as both Aloha and ATA were major providers,” states Jack Keady, president, Keady Transportation Consulting, Playa del Rey, Calif. In addition there is less overall domestic capacity in the industry and that, along with fuel price related fare hikes, might bring year-over-year total fare increases into the double digits, he adds. And that still won’t provide adequate profitability, he says. He expects domestic capacity to drop another 1 to 3 percentage points in an already tight market.
Any more surprises on the horizon? Yes, says Keady. Mergers, acquisitions, and bankruptcies are all quite possible, due in large part to rising fuel costs. He mentioned Delta as one carrier that’s revived merger talks. Also, low-cost carrier Sun Country Airlines just announced that it is reducing the number of its pilots by some 30 percent for the summer.