Aloha Airlines and ATA Airlines both abruptly ceased operations last week, leaving more than 50 aircraft grounded and disrupting the travel plans of thousands of passengers.
Aloha's sudden collapse created havoc in the Hawaii travel industry after lenders pulled the plug on more financing to keep the bankrupt carrier in operation. Thousands of passengers had to be quickly re-booked on new flights.
In Hawaii, travel agents and tour operators put in long hours scrambling to accommodate clients.
"A four-letter word is what I have to say," said Rachel Shimamoto of Honolulu-based Travel Ways, whose husband, Cy, lost his 30-year job at Aloha while she struggled to find seats for her agency's clients. Adding to the chaos were airline bulletins directing customers to travel agents for help.
"I guess they wanted us to give them the bad news: unless you buy a new ticket, you're stuck," Shimamoto said.
Aloha had filed for Chapter 11 bankruptcy protection on March 20 but was unable to arrange financing to keep operating through the reorganization. On Sunday, March 30, it announced that the next day would mark the end of passenger service.
ARC ceased processing agency transactions for Aloha dated on or after March 31, advising agents that cash refunds would not be processed and that other transactions for Aloha had to be included in sales reports for the period ending March 30.
ATA, meanwhile, entered bankruptcy in its hometown, Indianapolis, Ind., on April 2 and ceased all operations the next morning, blaming the decision on the sudden loss of a military charter contract.
The carrier's principal routes were from Chicago to Guadalajara and Cancun, and from Oakland, Los Angeles, Phoenix and Las Vegas to Honolulu.
The carrier advised passengers that it could not make cash refunds nor honor any outstanding obligations such as baggage claims or frequent flyer credits, advising them to file claims with the bankruptcy court. Ticketholders who had paid by credit card were advised to seek refunds through their credit card.
ARC advised agents that it would no longer process cash refunds on ATA but that all other transactions would be processed for the sales period ending April 6.
Southwest, which had a code-share relationship with ATA that fed Southwest passengers to Mexico and Hawaii, pledged to "take care of all customers" who had purchased tickets from Southwest for travel on ATA or on ATA-Southwest code-share itineraries, either by rebooking them on alternate itineraries or by offering full refunds.
Southwest said its immediate focus was to accommodate passengers scheduled to travel within the next 14 days.
Airlines add 10,000 seats
The loss of Aloha's interisland service prompted the state's other three airlines -- Hawaiian, Go and Island Air -- to add about 10,000 new seats the first week after the Aloha shut down. Aloha normally carried about 9,000 interisland passengers daily at this time of year, according to the Hawaii Visitors and Convention Bureau, which created a Web page for Aloha ticketholders at http://www.gohawaii.com/AlohaAirlines.
In a statement, John Monahan, president and CEO of the HVCB, said, "It's a sad day for a great airline with a long history of serving Hawaii. However, the airline community serving Hawaii anticipated that this might happen and has been quick to fill the void left by Aloha's closing."
Hawaiian Airlines temporarily added a 260-seat 767 on some routes to clear the backlog. The carrier and low-cost rival Go offered free standby space for flights through April 3. Go, the Mesa Group subsidiary that Aloha had accused of "predatory pricing," also boosted frequency from an average of 54 flights a day to 94.
United, which had a code-share partnership with Aloha, is offering Aloha ticketholders discounted one-way fares through the end of April. Northwest offered standby seats for $100.
Aloha had about a 6% share of the Mainland-Hawaii market, flying to Oakland, San Diego, Sacramento, Orange County, Las Vegas and Reno. Agents and operators initially said they did not have problems re-accommodating passengers from the mainland, although some clients had to spend thousands of dollars for new flights, had to be rerouted through other mainland cities and could not fly nonstop to Hawaii.
After ATA followed Aloha into oblivion, Richard Karnes, United Vacations vice president and general manager, predicted, "There will be a scramble for seats" to Hawaii through at least mid April because of the two airline shutdowns.
He said that between 150 and 200 of United Vacations' customers had been affected in the first week after Aloha's shut down, and as many as 2,000 would needed to be re-accommodated for future travel.
Ray Snisky, executive vice president of LME, parent company of Mark Travel Corp., which includes Funjet, ATA Vacations, Blue Sky Tours, United Vacations and Southwest Airlines Vacations, all of which had contracts with either Aloha, ATA or both, said the companies were "working around the clock" to contact travelers in Cancun or Hawaii.
Funjet and the other brands are applying the cost of the original bankrupt carriers' tickets purchased through the Mark Travel brand toward the price of the new flight. "The amount we're protecting them will add up to over $500,000 for us," Snisky said. Thousands of Mark Travel customers have been affected, but none was stranded due to the ATA demise, he said.
Snisky added that in addition to having to deal with the Aloha and ATA shut- downs Mark Travel received news last week that Champion Air, which provides charter air for Funjet programs out of Dallas, was ceasing operation in May. Those passengers also have to be reaccommodated.
Travel agents said Hawaii wholesalers had handled the crisis well.
"The reality is that wholesalers have been very accommodating," said Alan Reader, president of Orinda Travel of Orinda, Calif., where Oakland, served by both ATA and Aloha, is the closest airport. "Aloha created havoc, and now, once again, we have another situation with ATA, and they are stepping in again. This may create some challenges with lift from the Bay Area [to Hawaii], and we hope other carriers will add flights again at Oakland."
Brent Mayes, president of All About Tours in Tigard, Ore., a Hawaii wholesaler, said his firm was offering passengers credit equal to the price paid for an Aloha or ATA ticket toward the cost of new air fare.
In the long run, he said, "Fewer seats will most certainly mean higher fares. Without Aloha and ATA, we will be missing four flights a day out of the Oakland airport."
Jack Richards, Pleasant Holidays president, said the wholesaler had "thousands" of passengers booked on packages that included an Aloha flight.
Pleasant Holidays; its sister company, Hawaii World; and other Hawaii wholesalers, Classic Vacations and Happy Vacations among them, are offering their customers credit for the value of Aloha tickets toward a new flight.
Richards estimated that 90% of passengers booked on a Pleasant package that included an Aloha flight would be re-accommodated "on the same day scheduled, although perhaps not on the same routing, at the same time or from the same departure city."
Hotels waive fees
Hotels in Hawaii are allowing changes in reservations without cancellation fees. They also offered discounted rooms to those affected by the shutdowns.
"The Hawaii Visitors and Convention Bureau, Hawaii hotels, airlines and other suppliers have stepped up and been extremely good partners," Richards said.
Adding to the confusion was conflicting advice about credit card chargebacks: customers who purchased their Aloha ticket by credit card were advised in press reports to initiate a chargeback and stop the charges.
But if they bought the ticket as part of a package, the chargeback creates problems. "Consumers should not initiate a credit card chargeback," Richards said, "because we will be unable to move their records. Credit card companies put a freeze on the transaction."
Classic President Tim MacDonald told Travel Weekly that by end of the day April 2, all Classic customers with vacation plans on the books -- and they number in the thousands -- had been re-accommodated on new flights, most on the same day.
Neither Richards nor MacDonald would disclose what Aloha's demise would cost their companies, which expect to join a long line of creditors in bankruptcy court.
Richards said: "Every tour operator and every supplier will be negatively impacted by the Aloha shutdown ... and prices will go up. "
June Wolfe, a Hawaii specialist with The Travel Store, Los Angeles, said several of her clients had no choice but to buy expensive new tickets at full price.
Wendy Goodenow, president of HNL Travel in Honolulu, said agents had watched in frustration as Hawaiian and Aloha matched Go's prices when it jumped into the market 18 months ago with fares as low as $1: "I screamed and yelled at them not to match. ... You won't survive if you keep matching. Now, the fares will go up, which is what everyone expected all along."
To contact reporter Laura Del Rosso, send e-mail to [email protected].