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Southwest deal prompted ATA pullout

Observers say ATA is leaving the Pinellas airport to harmonize its routes with its partner's.

By STEVE HUETTEL
Published January 28, 2005

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ATA leaves local airport

ST. PETERSBURG - Low-fare king Southwest Airlines swept in last month as the white knight to rescue ATA Airlines with cash and an operating partnership.

Bankrupt ATA embraced the deal. But airline experts say the partnership that allows each to sell tickets on the other's flights inevitably led to ATA's decision Wednesday night to pull out of St. Petersburg-Clearwater International Airport, effective April 10.

These agreements, called "code shares," let airlines sell customers a ticket to fly part of a trip on one company's plane and the rest on the partner's aircraft. The point is for both airlines to be able to sell routes they don't fly, not compete head-to-head.

But from St. Petersburg-Clearwater International, ATA offers just two destinations: Indianapolis and Chicago's Midway International Airport. Southwest flies both routes from nearby Tampa International Airport.

"The decision is not surprising," said Darryl Jenkins, a visiting professor at Embry-Riddle Aeronautical University. "Southwest has a big presence in Tampa. ATA is going to rationalize its route network to work with Southwest."

An ATA spokeswoman declined to comment. The airline also is dropping flights to Fort Lauderdale and Orlando, big markets for Southwest. ATA will remain in Fort Myers and keep winter-season flights to Sarasota, both cities without Southwest flights.

"Come to your own conclusion," said Noah Lagos, director of St. Petersburg-Clearwater International.

ATA officials had assured him after the Southwest deal that the airline would keep all five daily roundtrip flights - three to Indianapolis and two to Chicago - at least through May, then re-evaluate the schedule, Lagos said.

But the airline abruptly announced plans Wednesday to slash flights at Indianapolis, a hub and home of its corporate headquarters. Executives blamed fierce competition.

Northwest Airlines recently tripled its presence in Indianapolis, and Independence Air and AirTran Airways beefed up their flights.

ATA has struggled in recent years. The nation's 10th-largest airline replaced its gas-guzzling Boeing 727s with new 757s and 737s, due for delivery from 2000 to 2003. ATA got into leases with high upfront costs just as the airline business soured. The carrier filed for bankruptcy court protection in October.

ATA decided to retrench at its Indianapolis hub and sell leases for 14 gates at Midway.

AirTran made a $90-million bid but was trumped by Southwest, which offered a $117-million deal that included acquiring six of ATA's 14 gates at Midway.

Many carriers have code-share arrangements, but this is the first for Southwest, with passengers changing planes at Midway.

Each airline could reap up to $50-million, said Southwest chief executive Gary Kelly, although code sharing would amount to less than 1 percent of Southwest's flying.

The deal lets Southwest offer customers flights to places it couldn't before, including Honolulu and New York's LaGuardia Airport, and it lets ATA sell tickets to Philadelphia and Los Angeles.

This month, Southwest included St. Petersburg-Clearwater on its list of code-share cities. The airline didn't consider the flights a threat to its Chicago-Tampa service, said spokeswoman Melanie Jones.

"We felt it just gave more flexibility to our customers," she said. Southwest didn't find out ATA was dropping St. Petersburg-Clearwater until after its partner made the announcement Wednesday, she said.

Steve Huettel can be reached at huettel@sptimes.com or 813 226-3384.

[Last modified January 28, 2005, 00:20:16]