ATA Flies Closer to Black

The data reflect ATA's first full quarter since coming out of bankruptcy last February.

Not that low prices aren't an ATA selling point. Karnik argues that ATA has some of the lowest fares in the industry, something it can better afford thanks to the massive expense reductions. ATA's cost of flying one seat one mile was 10.3 cents in the second quarter better than all the major carriers, but about mid-pack among the so called low-cost carriers, according to DOT data.

It costs Southwest 8 cents to fly a passenger one mile. JetBlue had the lowest cost per mile at 7.8 cents.

But in revenue yield how much an airline makes for flying one seat one mile ATA and JetBlue made the least of all carriers, at 8.5 cents a mile.

The good news for ATA is that it's packing its planes, breaking company records in June and August at nearly 90 percent load factor for scheduled service.

The heavy passenger loads verify that ATA is targeting the right markets, Josef Loew, vice president of scheduled service, said in July.

Among those markets is the Hawaiian city of Hilo, which had no mainland service for almost 20 years despite its industrial, agricultural and tourist attractions.

Niche key for small carrier

Historically, ATA prospered when it picked niche routes that it flew under the radar of larger carriers.

If you're trying to be a really small carrier in this day and age, you have to have a clearly defined niche, said Clint Oster, an aviation expert and professor at Indiana University's School of Public and Environmental Affairs.

Of course, much of ATA's fortunes now are tied to Southwest. For now, the deal appears to be favorable to Southwest, which said it generates at least $ 50 million a year from the ATA code sharing deal. ATA won't quantify what the deal brings to its revenue stream.

Oster said while the ATA deal initially was attractive to the Dallas carrier as a way to snatch ATA gates at Midway and dominate the airport, Southwest benefits in other ways.

ATA has a fleet of Boeing 757s and longer-range Boeing 737s that can fly to distant locations, like Hawaii, that Southwest's smaller fleet of 737s can't. The partnership is more cost-effective for Southwest than adding larger planes to its fleet and upsetting the economics it enjoys from aircraft commonality.

For Southwest, it would be a huge departure from their business plan to buy 757s and operate them themselves. ATA really does, at this point at least, fill a niche Southwest would like to draw on, Oster said.

As for what growth is planned, Karnik holds his cards tight. This year and next are hunker down years to get the airline fine-tuned and to potentially do a little growing.

One way to enhance revenue has been to expand ATA's onboard food/beverage and merchandise sales. Flight attendants now carry portable credit card scanners on West Coast and Hawaiian flights.

The question everyone has asked since Karnik moved to Indianapolis from Atlanta: Will ATA resume scheduled service from here? Karnik said the answer is no. It's too risky right now, with the intense competition here in the wake of ATA's pullout. But Karnik said he realizes there's danger in waiting too long to capitalize on the local market.

I completely and totally continue to be amazed at the loyalty to this airline, he says. At the back of one's head is the knowledge the loyalty will eventually dissipate.

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