Phoenix-Hawaii Options Dwindle

Other carriers' fares apt to rise amid ATA bankruptcy
Dawn Gilbertson
The Arizona Republic
Apr. 4, 2008 12:00 AM
azcentral.com/arizonarepublic/news/articles/0404biz-hawaii0404.html

Gilbert travel agent Minnie Hodge scrambled Thursday to rebook a Valley couple's July trip to Hawaii in the wake of ATA Airlines' sudden shutdown.

She found seats on US Airways but at a price: $300 more per ticket.

Hodge worries it's a sign of things to come, with the number of airlines offering daily non-stops from Phoenix to Hawaii cut by one-third overnight. Tempe-based US Airways and Hawaiian Airlines also offer the flights.

Travel agents see ticket prices to Hawaii rising unless additional flights are added or demand falls because of the economy or other factors.

"I think fares are going to go up partly because they can go up," said Matt Saczawa, co-owner of Classic Travel in Scottsdale.

He and Hodge said demand to visit Hawaii is strong year-round and often off the charts during school breaks and summer vacations, when many flights sell out.

It's a popular family and honeymoon destination, and the non-stop service flies to the island paradise in roughly the time it takes to fly to the East Coast. For some families, it has become an annual vacation, in contrast to the once-in-a-lifetime trip it historically had been, airline officials say.

Two additional factors drive demand today: Travelers don't need a passport like they do for Mexico and the Caribbean; and they don't have to deal with the weak dollar, which is spiking the cost of travel to Europe.

"Whenever there's any kind of a problem in Europe, we see our Hawaii and Mexico business go up," Saczawa said.

Indianapolis-based ATA, which had been shrinking its operations and finally succumbed after it lost a military contract, offered daily service between Phoenix and Honolulu and Maui, and was best known for its relatively low fares.

"People are definitely cringing who have already purchased tickets," said Hodge, a travel adviser with A World of Travel in Gilbert.

US Airways said it has no plans to add new service to Hawaii beyond a previously planned 25 percent increase in capacity this summer, which works out to an additional 1.5 trips per day over last summer.

The airline has the most extensive service between Phoenix and Hawaii, with daily flights to Honolulu, Maui, Kauai and the Big Island.

The airline told employees it doesn't have plans to add more service in the wake of ATA's demise because the combination of too many flights and $100 oil is what doomed ATA and, earlier this week, Aloha Airlines.

Aloha did not offer service between Phoenix and Hawaii, but many local travelers flew Aloha among the Hawaiian islands.

Hodge said the couple she had to rebook for the July trip were hit by both the ATA situation and Aloha.

"We're barely recovering from Aloha, and now we're hit with another one," Hodge said.

Hawaiian, which offers daily non-stop service to its Honolulu hub and connecting service to the outer islands, has no plans to add additional Phoenix flights, a spokesman said. However, the airline is adding daily service from Oakland, another ATA Hawaii stronghold.

Travel agents said customers seeking the lowest fares to Hawaii in the absence of ATA likely will find it on connecting flights. United is the biggest player in that arena out of Phoenix, with frequent one-stop service to Hawaii via Los Angeles and San Francisco.

The collapse of ATA and Aloha likely will have other implications, too. ATA sold seats through vacation wholesalers such as Apple Vacations, so their flight options suddenly are more limited, too.

On the frequent-flier front, if ticket demand surges at Hawaiian, US Airways and other carriers, they are likely to further limit availability of free seats for cashing in miles.

Southwest frequent fliers lose Hawaii as an option outright with ATA's demise because the free Hawaii flights in the airline's frequent-flier program were on ATA.

The two have had an extensive partnership since ATA was in bankruptcy the first time in 2005. Southwest passengers could buy tickets to Hawaii on the airline's Web site, with the Hawaii portion flown by ATA.

Southwest spokeswoman Whitney Eichinger said Hawaii, which required two frequent-flier awards per round trip, unlike one for other U.S. destinations, was a popular destination for award redemption but not overwhelmingly so.

The airline warned salivating frequent fliers when the partnership started that free seats to Hawaii would be tight because ATA was considerably smaller than Southwest and offered only a limited number of flights to Hawaii.

Aloha collapse a harbinger of more to come?

By Ben Mutzabaugh
blogs.usatoday.com/sky/aloha_airlines/

At least one finanical blog –- 24/7 Wall St. –- seems to be asking that question. It runs a post under a headline wondering if Aloha's shutdown is the equivalent to "a canary in the coal mine." The blog notes that while Aloha was small and focused on Hawaii, "the reasons for its demise still had to do with falling ticket prices forced down by competition and (rising) fuel prices." 24/7 says "it is no coincidence that carriers like (American), Delta and Northwest are near their 52-week lows (in share values). Someone, somewhere thinks that one or more of these airlines won't make it, at least in its current incarnation," 24/7 writes.

Perhaps highlighting just how precarious conditions are in the airline industry, The Honolulu Advertiser writes "the speed with which Aloha Airlines shut its passenger business has surprised many, but not those familiar with the airline's bankruptcy case." The paper says no lenders were willing to put up money to help keep Aloha's passenger service going. "I'm not blaming the lender," one unidentified bankruptcy attorney involved in the case tells the Advertiser. "It was a business decision. They didn't want to keep losing money, either."

The paper adds "a tight credit market nationally added to Aloha's woes, making it difficult to find new lenders willing to risk their money in a slowing economy and a bare-knuckles interisland fare ware, several people said." Another unnamed attorney says: "In this credit market, no one else is crazy enough to lend."

ATA Airlines Shuts Down After Filing for Bankruptcy Protection

Thursday, Apr. 3 2008

Ray Hennessey
foxbusiness.com/markets/industries/transportation/article/ata-airlines-shuts-filing-bankruptcy-protection_546847_8.html

ATA Airlines, the Indianapolis-based low-cost air carrier, shut down operations early Thursday after filing for Chapter 11 bankruptcy protection.

The company, which was founded in 1973, said it entered bankruptcy after losing a contract in its military-charter business. It was the second bankruptcy filing in the company's history, and came without warning to the hundreds of passengers scheduled to fly ATA Thursday.

Many of these travelers won't be able to get refunds for their tickets. ATA said on its website early Thursday that those who paid by credit card would have to contact their credit companies to get refunds, but those who paid cash or check would have to apply as creditors to ATA with the bankruptcy court in Indiana.

ATA operated hubs at Chicago Midway, Honolulu International Airport and Oakland International Airport.

It is the second airline to file for Chapter 11 in as many weeks. Last week, Aloha Air also shut down.

ATA's bankruptcy filing comes at a difficult time for air travelers. Just yesterday, United Airlines canceled several flights over safety issues with its Boeing 777 aircraft. That came after thousands of passengers saw their flights canceled nationwide last week as airlines like American and Delta did new safety checks.