The History of American Trans Air

The History of American Trans Air

Indianapolis-based American Trans Air, once an emerging carrier, continually searched for an identity.

Established in 1973 as an aircraft provider for the Ambassadair Travel Club, it inaugurated service with a single Boeing 720 dubbed “Miss Indy,” doubling its fleet five years later with a second, “Spirit of Indiana.” But its March 1981 issuance of common-carrier certification enabled it to operate in its own right.

Retaining its Indianapolis roots, it acquired ever larger aircraft, including eight 707s; its first widebody, a former Laker Airways DC-10-10 registered N183AT in 1983; and an ex-Northwest Orient DC-10-40, itself bearing registration N184AT. The quad-engine 707s were eventually replaced by more fuel efficient 727-100 tri-jets.

Annual passenger totals climbed: 96,426 in 1981, 269,086 in 1982, and 618,532 in 1983.

Relying upon Northwest for additional DC-10 acquisitions, but forced to substitute the comparable TriStar when it elected to retain its aircraft, American Trans Air purchased its first in 1985, ultimately operating 15 L-1011-1s, one -100, and four -500s.

It assumed a new operational profile when it inaugurated limited scheduled service on the JFK-Belfast-Riga (Latvia), Indianapolis-Fort Myers, Indianapolis-Las Vegas, and San Francisco-Kahului (Maui)-Honolulu routes, billing itself both as “American’s vacation airline” and “The nation’s largest charter airline.”

“We create the comfort. You create the excitement,” it advertised. “At American Trans Air, we know the only excitement you want on a vacation is the excitement you create. That’s why you can count on American Trans Air’s courteous, professional staff, top flight aircraft, consumer conscious prices, and all the little extras that have become characteristic of our growing company.”

Growing it was. Seeking to avoid scheduled airline competition, it had become the United States’ largest charter operator, attributing up to 90 percent of its revenue to both the civil and military divisions of this sector, with the remainder from scheduled operations, wet leasing, third party pilot training, and contract maintenance.

Operating a 23-strong fleet by 1992-including seven 727-100s, 12 L-1011-1s, and four 757-200s-it was profitable for 18 of its 19-year history, posting a $2 million loss the previous year for the first time because of the recession and the travel trepidation created by the Gulf War. It transported 2.4 million passengers that year.

It was that very Gulf War, however, which served as the cornerstone of its military operations, since its aircraft counted as part of the Civil Air Patrol fleet. Carrying 108,000 troops on 494 missions in support of Operation Desert Storm, it was also instrumental in operations Iraqi Freedom and Enduring Freedom, and provided 727-100 shuttle flights between Nellis Air Force Base and the Tonopah Test Range in Nevada.

Stretched -200s replaced the -100s in 1993.

American Trans Air once again adopted a new image when it devoted a significant portion of its aircraft resources to scheduled operations from a Chicago-Midway hub, in addition to continuing its military and government contract flights.

To facilitate its intended growth and modernize its fleet, it ordered 39 737-800s and 12 757-200s in 2000, taking delivery of the first of the former (N301TZ) in June of the following year and the first of the latter (N550TZ) two months later, introducing a livery change in the process to emphasize its new scheduled-airline, business-oriented route system, now branded “ATA Airlines.”

Equally seeking feed from small and secondary cities with more suitable turboprop regional equipment, it purchased existing Chicago Express for $1.9 million in 1999 and operated it as a separate “ATA Connection” subsidiary.

Its latest, elevated-image strategy, however, proved unprofitable, forcing it to file for Chapter 11 bankruptcy protection five years later, on October 26, 2004. The best method of keeping it alive, it decided, was to employ its assets for the benefit of a healthy carrier, which, in this case, was deregulation-synonymous Southwest Airlines.

Transferring six of its Midway Airport gates and 27 percent of its nonvoting stock to Southwest in exchange for a life-injecting cash infusion and continued operation under a code share agreement in December of 2004, ATA reduced its number of Indianapolis-served destinations to three and redeployed aircraft to Chicago, now assuming a business airline profile by flying to cities that Southwest did not, including New York-La Guardia, Dallas/Fort Worth, and San Francisco. Midway-bypassing services also enabled it to link Southwest focus cities, such as Orlando, Phoenix, and Las Vegas, with other voids in its route system, Denver and Honolulu among them.

The strategy resulted in a 20-percent revenue increase for Southwest, but did not necessarily suture ATA’s financial bleed.

To further reduce costs, it significantly pruned its fleet, selling 20 737-800s and eight 757-300s and only marginally plugging its capacity gap with the two-year lease, between November of 2005 and November of 2007, of three former United Airlines 737-300s. Even the lease rates, in the event, proved too high.

Coincident service reductions, not surprisingly, were extensive, as the lights dimmed on numerous destinations over a short interval: Boston, Newark, and Minneapolis in October of 2005, Indianapolis and Denver in November, and Orlando, Fort Myers, and San Francisco the following April, leaving little more than the skeleton of its once fully fleshed body. Indeed, 18 daily departures were dispatched form a single gate at Midway Airport and only 52 were offered system wide. A previous court approval had enabled it to sell its Ambassadair Travel Club division to Grueninger Cruises and Tours.

Although a $100 million financial package form the MatlinPatterson investment firm and pre-bankruptcy creditors enabled the now-privatized carrier to briefly emerge from bankruptcy and establish service to New York-La Guardia, Houston-Hobby, Ontario, Oakland, and Hilo (Hawaii), rising fuel prices, the rapid resignation of a shortly-serving CEO, the poorly executed replacement plan of its L-1011s with DC-10s, and the loss of a major military contract caused it to spiral back into bankruptcy, leaving Flight 4586 from Honolulu to Phoenix to mark its last landing at 0846 on August 2, 2008.

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