Federal action is needed to stabilize airline industry

THE ISSUE Both Aloha Airlines and ATA ended passenger services in the past week.

Both of this week's blows to airlines serving Hawaii came under unique circumstances but reflect an industry staggering from an ailing economy, fierce competition and soaring fuel prices. Measures by the Bush administration and Congress are needed to prevent the grounding of other airlines.

After more than 60 years, Aloha Airlines called it quits following a fare war that included what company officials called predatory practices. Indianapolis-based ATA, founded 35 years ago as American Trans Air, blamed its demise on FedEx Corp.'s cancellation in January of its contract for ATA to carry military personnel.

However, even before the FedEx exit, ATA had struggled to stay in the air. It had been the nation's 10th-largest airline before first filing for bankruptcy protection four years ago. The company was restructured in 2006 but reported a loss of $75 million last year and had to borrow money from a sister company to keep operating.

Both Aloha and ATA said the weak economy and high oil prices contributed to their woes. Oil prices remain at nearly $100 per barrel, and economic considerations are affecting travel plans.

Hawaiian Airlines, the state's largest interisland carrier, stands to benefit most from the collapse of the two airlines. Aloha had been flying more than 10,000 passengers a day, including 1,800 trans-Pacific flights. ATA's 29 planes carried about 10,000 daily from Chicago and several West Coast routes to Hawaii. Hawaiian flies between Hawaii and nine mainland cities.

Hawaiian said it has added capacity of 6,000 seats a day and has openings for 12 pilots, 35 flight attendants and seven mechanics. Phoenix-based Mesa Air Group has expanded the service by its go! airline from 54 to 94 interisland flights, adding two planes to its fleet of 50-seaters; it does not fly between Hawaii and the mainland.

Smaller Hawaii airlines such as Mokulele Airlines and Island Air also are expanding their operations because of Aloha's departure. Many of the laid-off Aloha employees should be able to find jobs.

However, David Banmiller, Aloha's president and chief executive, predicts a gloomy future throughout the aviation industry. "You haven't seen the end yet," he told the Star-Bulletin's Dave Segal. "Other things are going to happen in this business because this environment of fuel cannot be sustained." The industry needs to make specific proposals for the White House and Congress to come to its rescue.