Photo: Pertti Sipilä.
American Trans Air, primarily stylized as ATA, was a well-known low-cost carrier that made a run of approximately 35 years before closing shop in 2008. Headquartered in Indianapolis, ATA additionally had hubs in Honolulu and Oakland. The airline was also well-known for its charter services, much like Sun Country is today. With a combination of a unique fleet matrix and livery, the airline left a lot to be admired by aviation enthusiasts alike.
History
American Trans Air’s existence can be traced back past airline deregulation to 1973 when the airline was established as a charter operator for the Ambassadair Travel Club. For five years, the airline operated a single Boeing 720 (a slightly shorter variant of the Boeing 707) before acquiring their second aircraft in 1978. In 1981, ATA received its operating certificate as a common charter operator and quickly grew to a fleet of eight Boeing 720 aircraft, establishing its base in Indianapolis.
Paralleling its growing size as an airline, ATA introduced the larger McDonnell Douglas DC-10 to its fleet in 1983. The following year, the airline began to phase out its Boeing 720s in favor of the Boeing 727. ATA would also add the Lockheed L-1011 TriStar and Boeing 757 to their fleet in 1985 and 1989, respectively.
With an impressive fleet for a charter airline, ATA decided to launch its first scheduled passenger service in 1986 between Indianapolis and Ft. Myers, FL. The first scheduled international service began in 1990, delivering a one-stop service between New York-JFK and Riga, Latvia (with a stop in Belfast) on Boeing 757s. This unique city pair was due to the founder, J. George Mikelsons, who was of Latvian descent.
Much of ATA’s growth in the early 1990s was thanks to backing from their US military contracts. During the Gulf War, ATA carried over 100,000 troops on almost 500 missions as a part of the Civil Reserve Air Fleet (CRAF).
As the military missions died down, the carrier focused on leisure travel. In 1992, ATA opened a hub at Chicago-Midway, where they competed directly with Southwest Airlines.
In 2000, ATA Connection, operated by Chicago Express, served smaller cities in the Midwest utilizing Saab 340 aircraft. These flights would feed a growing network of leisure destinations, including flights to Hawaii through West Coast cities.
In 2001, the United States Department of Transportation formally recognized the airline as a major air carrier. The airline placed its first order for newly delivered aircraft in the same year, ordering 39 Boeing 737-800s and 12 Boeing 757-300s. ATA served as the North American launch customer for the stretched Boeing 757-300 variant.
While no airline made it through the 9/11 aftermath unscathed, ATA was one of the carriers substantially stricken. Their first Chapter 11 bankruptcy was filed in October of 2004, claiming the fallout from the terrorist attacks coincided with the expenses of introducing the Boeing 737-800 to their fleet, a severely inverse relationship.
ATA agreed with Southwest to surrender six gates at Midway and 27% of non-voting stock in exchange for a codeshare agreement on select flights to survive. As a result, much of their network and resources in Indianapolis were shifted to Midway to maximize their financial output.
One of ATA’s Boeing 757-300s. The airline would serve as the type’s launch customer in North America.
In 2005, ATA pulled out of Indianapolis altogether to further expand its codeshare partnership with Southwest. At the same time, ATA began to outsource several functions of its operation to reduce overhead costs, including heavy maintenance. Several planned destinations, such as Miami and Sarasota, FL, were shut down before starting, and the existing network was again consolidated. In 2005 alone, ATA announced the suspension or termination of the following cities:
Boston.
Ft. Myers.
Minneapolis-St. Paul.
Newark.
Orlando.
San Francisco.
In 2006, the private equity firm MatlinPatterson and pre-bankruptcy creditors invested over $100 million to take the airline private. Thanks to this effort, ATA, previously de-listed from the NASDAQ Stock Exchange in 2004, emerged from bankruptcy yet continued to downsize and sell aircraft.
The organizational restructuring would continue into 2007. After appointing a new CEO, the recently-rebranded holding company Global Aero Logistics, LLC would acquire World Air Holdings, Inc., including their subsidiaries World Airways and North American Airlines. Further, three of the remaining nine acquired Douglas DC-10 aircraft would be shifted to World Airways’ operating certificate.
The final blow would come in 2008 after FedEx canceled a sizeable military contract with ATA to transport military assets. Not having the required capital to withstand such an impact, ATA was forced into its second and final bankruptcy on April 2, 2008. Three additional carriers suspended service this week; Aloha Airlines, Champion Air, and SkyBus.
The airline’s shutdown came with little notice to passengers and employees. While their demise was a long time coming, the shutdown was announced with little forewarning, resulting in airborne aircraft landing at their destinations to discover dark news upon arrival.
Southwest Airlines, already the largest benefactor of ATA’s financial problems, would acquire all of ATA’s remaining assets for $7.5 million in 2008. This included 14 slots at New York-LaGuardia, trademarks, and logos. This move involved no aircraft, facilities, or employees of the now-defunct ATA.
In 2010, a Federal jury in an Indianapolis court ruled that FedEx must pay $66 million to ATA because the company broke a contract forcing ATA into bankruptcy. However, in December 2011, the decision was overturned by an appellate court.
Business Model
The first thing that stands out about ATA is its status as a low-cost carrier while simultaneously operating various aircraft types. This combination, not historically replicated with much success, likely was the primary contributor to most of ATA’s high operating costs. Following their venture into scheduled service, it seemed that ATA never quite settled into one particular model that bolstered their intermittent success.
For this reason, in 2005, ATA began returning aircraft to manufacturer Boeing in favor of leasing used aircraft from airlines such as United. Consolidating the fleet type was in their best interest, but financially it was too late to stop the bleeding, with the sunk costs mounting from their previous days operating a diverse fleet.
The codeshare agreement with Southwest would prolong the airline’s lifespan as long as it did. Current Southwest CEO Gary Kelly stated that their revenues saw a 20% increase from the codeshare agreement alone. Thanks to the economic viability of these routes, ATA began to focus on business routes and markets not served by Southwest in 2005. ATA also offered point-to-point service to feed other Southwest hubs, such as Las Vegas and Phoenix.
Charter contracts are a good way for airlines to add to the bottom line, particularly low-cost carriers. However, ATA began to rely on these contracts, leaving them vulnerable should they lose any of them. While the rising fuel costs played a significant role in the carrier’s demise, they should not have been in a position to declare bankruptcy following the termination of a charter contract. Ideally, this financial cost should have been hedged and offset somewhere else.
Network-wise, ATA never entirely gained momentum in the right direction. Their hub in Indianapolis did not perform comparably to other Midwest hubs due to building a network of mainly leisure routes. It was not until they collaborated with Southwest that ATA started to feed more traffic to these destinations. Even with ATA Connection, Saab 340 aircraft only fed 34 passengers at a time through hubs, requiring significant utilization to yield any profit.
Their expansion was sometimes too aggressive, significantly scaling back cities and cutting losses.
Marketing
At times, there was brand confusion between American Trans Air and AirTran, notably with ATA’s parent organization Amtran, Inc. In 2002, the holding company changed its name to ATA Holdings Corp. American Trans Air was always informally referred to as ATA. However, the name was officially changed the following year to ATA Airlines. In the 1990s, ATA identified its first target customer - leisure travelers from the Midwest. Feeling a hole in the market, ATA coined the slogan “On ATA, You’re On Vacation.” Several aircraft were painted in fun, leisure-oriented special liveries, including a revised livery and a wholly dedicated livery celebrating their 25th anniversary.
Additionally, the airline offered a quality experience for customers. In coach, customers were provided footrests and leather seats. Television was plastered on flat-screen TVs, and e-tickets were the preferred ticketing method. Although these are airline industry standards today, ATA was an innovator well ahead of its time in the 90s.
ATA Today
Most of ATA's fleet at the time the airline ceased operations are still in the skies today, including their entire fleet of thirteen Boeing 757-300s. Continental Airlines had acquired them, which were then transferred to United when they merged in October 2010.
Southwest once again benefitted, as well. Their current service to several cities, including New York-LaGuardia, resulted from purchasing ATA's assets. Anyone seeking to relaunch the airline must acquire the required trademarks and branding from Southwest. They, however, did not take on any of their Boeing 737-800 aircraft. A few of ATA's Boeing 757s also went on to live exciting lives.
M-RISE, formerly N516AT
VP-BBE, formerly SX-RFA and N523AT
02-4452, formerly N59AW
Chicago-Midway is also dominated by Southwest present day. ATA's collapse only added to its market share, which has put them in a position long-term to provide a central hub for low-cost passengers traveling throughout the country.
While ATA had discontinued service to many of its original destinations, like Indianapolis, they proved the markets viable. Allegiant Air currently operates a focus city there, but other carriers have a significant presence of their own, mainly from the passenger volume ATA was able to obtain.