ATA problems felt here

Indiana airline's bankruptcy filing affects BWI's international plans

April 04, 2008|By Tricia Bishop | Tricia Bishop,Sun reporter

When an Indianapolis airline canceled its flights yesterday -- stranding thousands -- and announced that the company had filed for bankruptcy, the effects were felt all the way to Baltimore.

ATA was supposed to expand BWI Marshall Airport's international operations by offering inexpensive flights to Europe through a partnership with Southwest Airlines, the airport's No. 1 carrier.

The deal would have turned BWI into Southwest's international hub and boosted BWI's languishing foreign travel services. But it came to an abrupt halt Wednesday, after ATA filed for Chapter 11 protections in Indiana U.S. Bankruptcy Court, listing assets and liabilities of more than $100 million.

It is ATA's second such filing in four years, spurred by the loss of a key military charter contract and an early cancellation of a lucrative agreement with FedEx Corp., the company said in a statement. The company, which employed 2,230, shut down operations yesterday. Aloha Airgroup Inc. also filed for bankruptcy last month and stopped passenger service this week.

ATA's filing underscores the difficulties within the nation's airline industry and calls into question the future of international flights at BWI, which have been steadily declining despite a $147 million investment in an international terminal a decade ago.

Other airlines

Air Ghana was grounded in 2004, the same year that Ireland's Aer Lingus abandoned BWI. In May, Mexicana Airlines suspended its BWI flights, as did North American Airlines. In December, Icelandair cut its operations here. Last month, Air Greenland also announced plans to pull out. That leaves four international carriers: USA3000, Air Jamaica, Air Canada and British Airways, which offers the airport's only daily trans-Atlantic flight.

In a statement yesterday, Gary C. Kelly, Southwest's chief executive officer, said he was disappointed by the news but not surprised.

"It's extremely difficult for an airline to flourish in today's arduous financial environment that has been plagued by soaring fuel prices," he said.

In 2005, Southwest and ATA began a "code-sharing" agreement that allowed the two airlines to transfer passengers between them. For BWI, that meant people could fly Southwest out of the airport, then pick up a connecting ATA flight to Hawaii somewhere else. ATA does not fly directly from BWI.

Last year, Southwest said it planned to expand the code-share partnership to include flights through BWI to Canada, Mexico and the Caribbean by next year and then Europe a year later.

Southwest spokeswoman Whitney Eichinger said the company was still on track to offer international flights on the same timelines, it just needs to find a new partner.

"There's a lot of opportunity out there, [the challenge will] just be finding what's right for Southwest," she said.

Other possibilities

Airline industry analyst Henry Harteveldt, a vice president with Forrester Research, said there were some partner possibilities but no clear choices or reasons to make BWI an international gateway.

"When fuel is as expensive as it is now, it's very, very hard for an airline to decide to expand operations," Harteveldt said. "It will be hard for them to make the case at BWI, but Southwest is also a very compelling partner to have. They've been profitable for 30-something years, they have a loyal base of customers, and they represent value in air transportation."

BWI spokesman Jonathan Dean said he expects Southwest has been in discussions with multiple carriers, and a deal still will come through.

Last year, the airport had more than 21 million passengers move through it -- a record for BWI. But the number of international travelers has fallen 40 percent since a peak in 2001. About 535,000 people flew internationally through BWI last year, down from 925,000 six years earlier.

"Increasing international service is a target for BWI" from an economic impact for the region and the airport, Dean said. "The airport has aggressive air-service development efforts. BWI officials meet with multiple airlines each year in an effort to boost both domestic and international service."

Last year, BWI talked with Irish airline Ryanair about offering service to Europe, but no deals have been announced.

tricia.bishop@baltsun.com

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