Low-fare airline ATA halts all flights

Travelers with visions of Waikiki, sandy beaches and island cruises were stranded Thursday at Los Angeles International Airport and across the nation as low-fare carrier ATA Airlines Inc. abruptly grounded all flights and ceased operations.

A single sheet of paper posted at an empty ticket counter at LAX delivered the bad news for travelers on the carrier’s three scheduled daily flights from Los Angeles to Hawaii. Passengers scrambled -- with limited success -- to make alternative arrangements.

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

Flying to Hawaii is likely to be harder to book and more expensive as the peak summer season approaches. With less competition, airlines will have an easier time passing along fare increases to travelers on what is one of the more popular routes for Southern California travelers, experts said.

About 3.3 million passengers flew from LAX to Hawaii last year, according to the airport.

At Terminal 3 at LAX, ATA ticket holders were aghast.

“It’s just horrible. I can’t believe this,” said Amy Chen as she and husband Steve juggled three cellphones, three fidgety children and their grandfather and two carts of baggage at the airport Thursday afternoon. They were headed for Honolulu and then an ocean cruise.

Like other stranded ATA passengers, the Westlake Village family found out only when they got to the airport that ATA was not flying, most other carriers were not honoring their tickets, and most other planes were booked for days to come.

Steve Chen raced from terminal to terminal in search of six tickets, returning each time with bad news. “Continental said they could get us on an April 7 flight.” But Monday would be too late, he said. “We have a cruise to catch Saturday afternoon.”

By late in the day, fingers were crossed as airlines added ATA passengers to their standby lists for the days ahead.

LAX is now the only airport in the region that offers daily nonstop flights to Hawaii, and the number of airlines flying from the region to the island has been slashed from eight to six.

The biggest beneficiaries are expected to be American Airlines and United Airlines, which have a combined market share of nearly 50% of the flights from LAX to Honolulu.

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, said Joe Brancatelli, a business travel consultant in New York.

ATA was a small airline focused mostly on the Hawaiian market. It operated 44 flights a day, including eight at Oakland International Airport and three at LAX, two of which flew to Honolulu and the other to Kailua-Kona.

Combined, ATA and Aloha accounted for about 15% of the flights to Hawaii from Southern California.

“We deeply regret the disruption and hardship caused by the sudden shutdown of ATA, an outcome we and our employees had worked very hard and made many sacrifices to avoid,” Doug Yakola, the airline’s chief operating officer, said in a statement.

The company said it filed for bankruptcy protection late Wednesday.

Although the latest bankruptcy filings are likely to affect travel to Hawaii, they are not believed to be harbingers of any broader airline industry collapse.

Much of the U.S. industry is likely to post a loss this year, but most carriers are expected to survive the high fuel costs and a slump in air travel with the slowing economy.

“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,” Ray Neidl, an airline analyst for Calyon Securities, said in a report to investors.

The latest bankruptcy filings by ATA and Aloha came after both airlines have struggled financially despite having recently emerged from bankruptcy reorganization.

Aloha exited Chapter 11 bankruptcy in 2006 after a private investment firm led by Los Angeles billionaire Ron Burkle took a majority stake in the airline and pumped more than $100 million into the business.

For ATA, the latest bankruptcy filing was its second since 2004. The airline said in a statement that it was forced to ground operations because it lost a key military charter contract. In addition to scheduled airline service, ATA provided charter service for the Pentagon.

ATA said passengers should seek alternative travel arrangements on their own. Those who paid by credit card should call their credit card provider to seek a refund. Those who paid by cash may be able to recover some of it by submitting a claim with the Bankruptcy Court. Passengers with travel insurance should contact their insurers.

Southwest Airlines Co. said its passengers who purchased ATA tickets through the airlines’ code-share arrangement could rebook or receive a refund.

At LAX on Thursday, 10-year-old Jocelyn Gomez of Oxnard sat on her red suitcase as her mother frantically made calls nearby. A five-day beach vacation, her first trip to Hawaii, was looking less certain.

After about 30 minutes of calls, Jocelyn asked plaintively, “So, we might not go?”

Her mother, working her way through a list of airlines, whispered that the search was not over. “I don’t know yet, honey.” Their next destination was the Hawaiian Airlines counter in the next terminal.

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peter.pae@latimes.com

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(BEGIN TEXT OF INFOBOX)

What to do

Stranded ATA passengers had limited options Wednesday. The airline said:

* Passengers should seek alternative travel arrangements on their own.

* Those who paid ATA by credit card should call their credit card provider and try to get a refund.

* Those who paid by cash may be able to recover some of the money by submitting a claim with the federal Bankruptcy Court.

* Additional information is available at ATA’s website at www.ata.com.

Source: Times staff