Airline Halts Service, Strands Thousands

From staff and wire reports

The turbulence in the nation’s skies is getting even bumpier.

On Thursday, low-fare carrier ATA Airlines Inc. said it has filed for bankruptcy court protection, grounding all flights, laying off nearly all 2,230 employees and stranding thousands of passengers.

The Indianapolis-based airline became the second U.S. carrier this week to end passenger service. On Monday, Aloha Airlines ended passenger service, grounding the only carrier offering nonstop flights from Orange County, Calif., to Hawaii.

For passengers using Norfolk International Airport, the demise of ATA also means an end to code sharing with Southwest Airlines, an arrangement which the local No. 1 carrier had hoped to use to fly internationally. A code-sharing relationship allows passengers to fly to a destination via two different airlines with the purchase of only one ticket.

Dallas-based Southwest began its code-sharing arrangement with ATA in February 2005. Southwest officials have said they would consider using Baltimore-Washington International Airport as a “launch pad” for international service in coming years and would begin to test that using code sharing with ATA to destinations in Canada, Mexico and the Caribbean.

Southwest, which began flying out of Norfolk in fall of 2001, became the No. 1 carrier in market share here last year. The Norfolk route to Baltimore is one of its most popular, typically with five flights scheduled to leave Norfolk daily.

ATA operated 44 flights a day, including eight at Oakland International Airport and three at Los Angeles International Airport, two of which flew to Honolulu and the other to Kahului on the island of Maui.

Joe Brancatelli, a business travel consultant, said the loss of ATA service coupled with the closure of Aloha Airlines “is going to create a real crisis” in the availability of flight options for travel to and from Hawaii in the upcoming months.

ATA filed for bankruptcy protection late Wednesday.

The latest bankruptcy filings are not expected to foretell broader airline woes, however. Though the industry is expected to post a loss this year, many carriers are expected to survive fuel costs and a slump in air travel .

“Our conclusion is that the network carriers and most of the low- cost carriers will survive the weak economic environment and high fuel prices over the next two years,” said Ray Neidle, an airlines analyst for Calyon Securities, in a report to investors.

In a statement, ATA said it was forced to ground operations because it lost a key military charter contract. In addition to scheduled airline service, ATA also provided charter service for the Pentagon. The airline said its operations had depended on revenue generated from its military business to offset a “tremendous spike” in prices for jet fuel.

Southwest Airlines said its passengers, who bought ATA tickets through the airlines’ code-share arrangement, can rebook or receive a refund. For Southwest, which faces a proposed $10.2 million fine for missed inspections, it was another tough week.

Calvin Scovel, the Transportation Department’s inspector general, told a House panel Thursday that Southwest’s lapses “are symptomatic of much deeper problems” at the Federal Aviation Administration.

Committee Chairman James Oberstar, a Minnesota Democrat, said the “FAA needs to clean house .” His panel’s investigation of the agency, he said, “raises serious questions about whether higher officials in FAA are carrying out their safety responsibilities for the entire industry.”

In written testimony, Southwest Chairman Herb Kelleher and Chief Executive Officer Gary Kelly said they should have used “better judgment” when they allowed 46 planes to fly after the discovery that the Boeing Co. 737 jets hadn’t gotten required checks for fuselage cracks.

Kelleher and Kelly told lawmakers that the airline’s senior managers should have been consulted on such a “significant issue” but weren’t.

Six days after the FAA proposed fining Southwest, the airline grounded 44 jets while it verified that they underwent required inspections. That forced the carrier to cancel 4 percent of its daily flights, and Kelly met with FAA Acting Administrator Robert Sturgell to brief him on how Southwest was responding to agency directives.

Scovel told lawmakers that the FAA office overseeing Southwest had “an overly collaborative relationship” with the carrier. The FAA repeatedly accepted Southwest’s proposed solutions to compliance issues that weren’t solved, he said.

This story was compiled from reports by the Los Angeles Times, Bloomberg News and The Virginian-Pilot.

second time this week

ATA Airlines Inc. became the second U.S. carrier this week to end passenger service. Aloha Airlines stopped service Monday. daily schedule

ATA operated 44 flights a day, including eight at Oakland International Airport and three at Los Angeles International Airport, two to Honolulu and the other to Kahului on the island of Maui.

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