American Trans Air Lived The American Dream Until They Didn’t

An American Trans Air 757-200. Photo: Justin Cederholm

Ancient Airlines: A look at unique and quirky airlines throughout aviation history

American Trans Air, also known as ATA, was highly successful in its heyday, taking passengers to destinations all around the world. It operated as the largest charter airline on the continent and transported more U.S. troops than any other commercial airline. It seemed like it had a great business model of connecting business passengers through major markets, offering discount travel to vacationers, and steady income with troop movements. We take a look at the rise and fall of ATA.

The Start of Greatness

American Trans Air started as Ambassadair originally, in 1973, when it was founded as a charter flight provider. For over a decade, it took its passengers all over the world, using an impressive fleet of Boeing 720, 707 and 727 aircraft. It didn’t start its regularly scheduled commercial service until 1986, when it offered American Trans Air service between Indianapolis and Fort Myers. 

Once commercial service started, so did the expansion. Within a few years, ATA had begun service to other U.S. destinations, as well as service to Belfast and even Latvia (the Latvia service wasn’t a hit and was discontinued). 

During the Gulf War, ATA also transported troops for the U.S. Military and U.S. Department of Defense, transporting more than 100,000 personnel for nearly 500 missions. The service also included the chartering of Lockheed L-1011 TriStar wide-body jetliners to the Department of Defense, for use transporting personnel between overseas air bases and Philadelphia. 

Further into the mid-90s, ATA turned its commercial attention to leisure travelers, with flights to the Caribbean, Latin America and Hawai’i, as well as flights to the United Kingdom (though even then, many of the seats on these routes to the United Kingdom were filled with military personnel).  At this time, the famous moniker, “On ATA, you’re on vacation” was plastered on billboards and TV spots.

As ATA continued to grow with the turn of the millennium, its fleet grew in turn, with new Boeing 737-800NG aircraft. ATA was even the North American launch customer for the Boeing 757-300 aircraft.  

ATA was a market leader in innovation even as a smaller airline. The airline had foot rests in coach. They offered flat screen TVs (brand new back in the late ’90s) and leather seats on their new 737 and 757 aircraft. And the airline offered flexible e-tickets, now industry standard.

Before the airline began its descent from airline greatness, it would launch a regional service in 2000, called ATA Connection, linking Midwestern hubs such as Chicago and Indianapolis. 

The Downward Spiral

Photo: Ed Groenendijk

The first hard hit ATA took was in 2001, when the Sept. 11 attacks heavily impacted the air travel industry. The decline in air travel and the recent purchase of new aircraft spelled disaster for ATA and, in 2004, it filed for bankruptcy. ATA transferred most of its gates at Chicago Midway to Southwest.

Southwest starts its first-ever codeshare with ATA

As part of the agreement for the gates and coveted East Coast slots, Southwest commenced its first major code share with an airline. The goal was for ATA to fly routes where Southwest didn’t (like Washington Reagan, DFW Airport, and Hawaii) while Southwest used the new gates to cement its position as a market leader. Overall, ATA drastically reduced flights and cut routes. It focused on cutting routes where it would face direct competition from Southwest or other low cost rivals like Frontier or JetBlue. ATA Connection shuttered too.

In 2006, though, ATA did make an effort to return to profitability. It began new service between Houston and New York City, as well as additional routes between California and Hawaii inline with the Southwest partnership. The airline realized that even with bankruptcy, the expensive leases from their newer fleet and the high costs of operating the L1011 were a consistent drag on the bottom line. It purchased some used DC-10 aircraft from Northwest’s retired fleet with the intent to replace their aging fleet of L1011. They also purchased a few used classic 737s in an effort to save costs as they returned the more expensive 737-800s. New flights were added to the Chicago Midway hub in 2007, largely eliminating service from Indianapolis. However, later in 2007, ATA once again abruptly announced the termination of several of these routes. The airline seemed to have lost its way.

ATA’s loss is Southwest’s gain

In 2008, ATA declared bankruptcy a second time, at which point all operations stopped.  When ATA shut down, it was serving 13 destinations with 29 aircraft. Southwest bought ATA’s remaining assets.  ATA at its end was just a shell of the former airline that it was just 8 years earlier.

The price of operating, especially the price of jet fuel, combined with the abrupt cancelation of ATA’s military charter contract, meant the end. But aggressive expansion, a poor economy, and high-cost aircraft definitely didn’t help. After ATA ceased service, Southwest replaced much of the service lost from the code share by launching new routes on its own metal. One notable exception was Hawaii. It wasn’t until 2018 that Southwest finally launched service to the 50th state. Southwest almost treated ATA as a proof of concept for new service and aircraft. By partnering with the flailing airline, they were able to vet new routes, larger 737-800 aircraft, and grow their Midway focus city into the near fortress hub that it is today.