ATA might end isle service

Fuel costs threaten airline's flights to Hawaii

ATA Airlines, which has operated scheduled flights to Hawaii since the mid-1990s and charter flights before that, is considering leaving Hawaii due to soaring fuel costs.

The Indianapolis-based carrier said yesterday it was discontinuing scheduled service at Chicago's Midway Airport on April 14 and would cease international service effective June 7.

ATA said the Chicago shutdown would not affect remaining service between the West Coast and Hawaii, but an internal memo and sources familiar with the situation indicate that the airline is re-examining its future in Hawaii.

ATA has between 11 and 15 daily departures to Hawaii from Phoenix, Las Vegas, Los Angeles and Oakland, Calif.

The airline emerged from bankruptcy reorganization in February 2006.

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ATA Airlines is considering pulling out of the Hawaii market as it grapples with soaring fuel costs, according to an internal memo and sources familiar with the situation.

The Indianapolis-based carrier, which emerged from bankruptcy reorganization in February 2006, announced yesterday it was discontinuing scheduled service at Chicago's Midway Airport on April 14 and would cease international service to that city June 7. Those moves would leave West Coast-Hawaii flights as ATA's only remaining scheduled service.

Although ATA said those West Coast-Hawaii flights would be unaffected by the Chicago pullout, a memo sent from ATA's unit of the Association of Flight Attendants to its members said the outlook for those routes is uncertain.

The memo said the board of directors of Global Aero Logistics Inc., parent of ATA, is looking at the following scenarios: "the sale of the Hawaii market, sale with possible subservice back to (ATA), liquidation, keeping the service with a prayer of lower fuel, or possibly a concept we haven't thought of yet."

The memo, sent yesterday following a Global board meeting on Wednesday, appears to go a step further than the Securities and Exchange Commission stock-offering prospectus that privately held Global Aero Logistics filed in January. That prospectus said that Global continues "to explore strategic opportunities for our scheduled service businesses, including network restructuring, international expansion, business combinations and partial or complete divestitures."

ATA spokesman Steve Forsyth said yesterday that he could not comment on rumors concerning the Hawaii market.

"We can say today that fuel costs are a continuing concern for the Hawaii service as they were at Midway, but at this time none of the West Coast service is being affected."

In yesterday's announcement, ATA said the affected domestic routes from Chicago include Oakland, Calif., and Dallas/Fort Worth, while the international routes include Cancun and Guadalajara, Mexico.

Rob Binns, chief commercial and planning officer for ATA, said the high cost of fuel made it "economically unfeasible" to continue with the airline's low-fare service at Midway and that the ATA aircraft would be deployed in the company's profitable charter service.

If ATA leaves Hawaii, that would be good news for Hawaiian Airlines and Aloha Airlines, which have complained about excess capacity in the market. ATA has between 11 and 15 daily departures to Hawaii from Phoenix, Oakland, Los Angeles and Las Vegas. ATA, which had a 4.4 percent share of the Honolulu market and a 6.6 percent share of the Maui market last year, also flies to Kauai and the Big Island.

Hawaiian competes with ATA on service to Phoenix, Los Angeles and Las Vegas, while Aloha competes with ATA on service to Oakland and Las Vegas.

ATA's possible departure could be particularly beneficial to financially ailing Aloha, which flies 737-700s and could expand or transition its fleet with ATA's 12 Boeing 737-800s. However, the airline could be forced to incorporate ATA's pilots in that scenario, which could create problems involving seniority.

Aloha had "very early and exploratory talks" with ATA, but nothing came out of them, according to someone familiar with the situation.

Both Hawaiian and Aloha spokesmen declined to comment.

Rhonda Hogard, president of ATA's flight attendants union, said the airline's Hawaii bookings are solid for the summer and that the union could hear more about ATA's Hawaii future by the end of this month.

"Hawaii has been our mainstay. We built it from the ground up, and we certainly don't want to see it go," she said.